ISLAMABAD: In a landmark decision safeguarding taxpayers’ constitutional rights, the Supreme Court of Pakistan has ruled that arrests made without first determining sales tax liabilities are unlawful. The ruling, issued by a three-member bench comprising Justice Shahid Waheed, Justice Irfan Saadat Khan, and Justice Aqeel Abbasi, invalidates all criminal proceedings initiated without a prior assessment of tax liability.
The apex court’s detailed judgment emphasized that no criminal action may be taken against a taxpayer without first determining the amount of tax due, providing the taxpayer the right to appeal, and following through with due process. Arrests made without completing these procedural steps were declared a “violation of the Constitution” and contrary to the principles of justice.
“Arrests made without a hearing and civil proceedings are a violation of the Constitution,” the judgment stated.
The court further clarified that directly registering cases of tax evasion without conducting a legal tax assessment constitutes an abuse of authority. It asserted that while the Directorate of Intelligence of the Federal Board of Revenue (FBR) is authorized to gather information, it does not have prosecutorial powers.
“The Directorate of Intelligence can only gather information but does not have the authority to prosecute,” the judges ruled.
The bench stressed that investigations can only begin after a proper assessment has been made and a formal notice of the amount due is issued. Additionally, the taxpayer must be granted the right to respond through appeals before any criminal proceedings are launched.
“Before any criminal action is taken against a defaulter, the service of order, right to appeal, and final decision must be ensured,” the judgment outlined.
In a sweeping conclusion, the Supreme Court upheld previous high court rulings across the country and dismissed all appeals filed by the FBR seeking to uphold its prior actions.
The judgment declared that all ongoing cases, arrests, and trials initiated without proper assessment procedures are null and void, ordering an immediate halt to such proceedings.
This verdict is being seen as a significant step toward strengthening the rule of law and ensuring fairness in Pakistan’s tax enforcement system, particularly amid ongoing concerns of arbitrary detentions by tax authorities.
