Senate Rejects FBR‘s Proposal to Arrest Businessmen Without Trial
The Senate Standing Committee on Finance and Revenue rejected a disputed proposal of the Federal Board of Revenue (FBR) to arrest people without trial while investigating sales tax evasion cases.
The committee, headed by Senator Saleem Mandviwalla sat to consider budget proposals regarding sales tax laws. The members were adamant in their opposition to the FBR’s proposal, which would permit tax authorities to arrest individuals guilty of tax fraud at the investigation stage, without judicial permission.
Presently, the law only permits the FBR to arrest a person during the inquiry phase. But the FBR had suggested that, in the new Finance Bill, the officials would arrest the suspect after the inquiry is completed but not the investigation.
FBR Chairman Rashid Langrial clarified that the FBR had suggested more robust protection on these powers. He further said that high-profile personalities, even a former senator, have been accused of tax fraud, and video evidence is on record to this effect.
Langrial also made a revelation that a former Pakistan Customs official, who is now in FBR custody, had assisted a shoe manufacturer in evading taxes, resulting in the avoidance of millions of rupees in taxes.
Senator Farooq H. Naek stressed that only a court can authorize the arrest of an accused of tax evasion. He noted that Parliament had already curbed the jurisdiction of the National Accountability Bureau (NAB) to arrest in the absence of court orders, and the same must hold true for the FBR.
Senator Abdul Qadir admitted that although NAB could arrest individuals during investigations with approver statements, he did not agree to extend such powers to the FBR without the court’s supervision.
FBR Chairman Langrial contended that tax evasion, particularly when it crosses PKR 1 billion, is a severe offence, and such people must be arrested. But Senator Naek maintained that any arrest would have to be sanctioned by a court of law.
Bilal Kiyani, Special Assistant to the Prime Minister for Finance and Revenue, made clear that the aim of the proposed amendment was to substitute the “draconian powers” presently enjoyed by Assistant Commissioners under the law. In the new system, arrests would need to be sanctioned by the Commissioner of Inland Revenue rather than junior officers.
The FBR was directed by the committee to revisit the proposal, taking advice from the Attorney General and Finance Minister, and coming back with new proposals.
In other recommendations, the committee suggested harsher punishment for tax fraud. The persons involved in frauds up to Rs. 1 billion would be punishable for a maximum of five years imprisonment, and those with fraud exceeding Rs. 1 billion would be punishable for a maximum of ten years of imprisonment.
Also, the committee approved a proposal that enables the FBR to take enforcement action, including freezing bank accounts, sealing business premises, and seizing property, against those who do not register for sales tax.
The FBR Chairman assured the committee that no such action like sealing or seizing property would be taken without a public hearing, in which tax officials and business representatives would be invited.
