SC bars FBR from making arrests before liability assessment

The Supreme Court on Saturday barred the Federal Board of Revenue (FBR) from arresting or initiating criminal prosecution to recover tax due from defaulters without prior determination of their tax liability. “We have no hesitation to conclude that without investigative audit or issuance of show-cause notice or providing opportunity to explain the matters, registration of FIR, initiation of criminal proceeding and arrest of registered person is without jurisdiction and lawful authority,” observed Justice Aqeel Ahmed Abbasi in a judgement he authored. Justice Abbasi was a member of a three-judge SC bench, which was seized with a number of appeals against judgements of Lahore, Sindh and Islamabad high courts. The controversy at hand revolves around determining the legality of pre-trial steps including arrest and detention of individuals pursuant to registration of FIR on the charges of tax fraud as well as ascertaining the legal scope and application of Section 37A of the Sales Tax Act, 1990.