Criminal case against sugar mill on charges of tax fraud suspended

LAHORE: The Lahore High Court has suspended a criminal case lodged by Federal Board of Revenue (FBR) against a sugar mill on charges of tax fraud amounting millions of rupees.

SW Sugar Mills through a writ petition challenged the FIR registered by Inland Revenue department of the FBR for being an act beyond its jurisdiction.

Defending the FIR, legal adviser for the department, Zainul Abideen, argued that the mill committed a huge tax fraud by suppressing the sales and actual stock of sugar. He said assessment of tax and completion of assessment proceedings were not pre-requisites for initiation of criminal action. He further said as per settled principles of law, civil and criminal proceedings could be initiated side by side and the impugned FIR was not liable to be quashed. Representing the mill, Advocate Ijaz Awan argued that the FIR had been lodged with ulterior motives by unlawfully converting civil proceedings into criminal.

He stated that in the absence of tax’s assessment under the Sales Tax Act 1990 and without knowingly the amount/loss involved in neither compound-ability was possible nor the award of sentence was justifiable in any manner. He said directly resorting to criminal proceedings was not the mandate of the sales tax act as mandatory pre-requisites had been blatantly ignored by the respondent before lodging the impugned FIR. The counsel pointed out that the issue in hand had already been settled by a two-judge bench of the high court in a 2014 judgment titled “Taj International verses FBR & others”. The instant petition should also be decided in light of that judgment, added the counsel. However, Justice Sajid Mahmood Sethi observed that the judgment cited by the petitioner’s counsel was under challenge before the Supreme Court and the respondent/FBR had also not initiated any recovery proceedings by issuing show cause notice to the petitioner/mill.

The judge disposed of the petition ruling that the operation of the impugned FIR shall remain stayed till decision either by the Supreme Court or determination of due amount through adjudication process by the respondent department through show cause notice.