The Islamabad High Court (IHC) granted bail to a co-accused in a Rs3 billion sales tax fraud case, against a bond of just Rs100.

Justice Babar Sattar, presiding over the case, reprimanded the Federal Board of Revenue (FBR) officials for violating legal procedures during the arrest and for exceeding their authority.

The court labeled the initiation of criminal proceedings by the FBR against Karachi-based bank manager Shahid Hussain Khawaja as an abuse of power, and criticised lower courts for their decisions regarding remand and bail rejection.

In its detailed decision, the IHC highlighted several procedural violations:

The arrest of the petitioner contravened a prior Lahore High Court decision, which was upheld by the Supreme Court.
No substantive evidence was presented linking the accused to the alleged tax fraud.
The tax department had failed to determine the amount of tax due in the case before initiating criminal proceedings.

Justice Sattar also noted that the magistrate's decision to grant remand and the subordinate court's denial of bail reflected a lack of due diligence. He said the court decisions granting the suspect remand and rejecting bail were shameful.

The court directed the FBR Chairman to circulate copies of the IHC and Lahore High Court decisions to all tax officers to ensure compliance with legal procedures in future cases. Justice Sattar warned that any further misuse of authority or violations of court orders would result in strict action against responsible officials.

The verdict noted that in an attempt to collect more taxes, the authority and officials violated the law.

The case involves allegations of a Rs3 billion sales tax fraud, with Shahid Hussain Khawaja accused of facilitating the opening of an account for a power company allegedly involved in the scam. However, the court noted that the evidence presented failed to substantiate his involvement.

The IHC emphasized the need for tax authorities to adhere to constitutional and legal frameworks when pursuing cases. While the court granted bail, it deferred the matter of the legality of criminal proceedings to the trial court, expressing hope that it would examine the issue thoroughly.

Justice Sattar’s decision has drawn attention to the need for greater accountability and procedural integrity in the operations of tax and judicial authorities.