Bank branch manager suspected in Rs3.2 billion sales tax fraud granted bail

Islamabad High Court's Justice Babar Sattar approved manager’s release on a Rs100 bond

Listen to article

The Islamabad High Court (IHC) granted bail on Wednesday to Shahid Hussain Khawaja, a suspect in a Rs3.2 billion sales tax fraud case, citing insufficient evidence and reprimanding the Federal Board of Revenue (FBR) for overstepping its authority.

Justice Babar Sattar approved Khawaja’s release on a Rs100 bond, calling the tax department’s actions an unconstitutional overreach.

The court ruled that Khawaja, a bank branch manager in Karachi, was arrested without evidence of direct involvement in the alleged fraud.

In a scathing verdict, the court accused the FBR of violating established legal principles, including a Lahore High Court ruling that barred similar actions in tax-related cases.

Justice Sattar stated that the FBR had infringed on Khawaja’s fundamental rights and criticised lower courts for failing to safeguard these protections.

“The magistrate’s decision to remand the suspect and the lower court’s rejection of bail demonstrate a disregard for constitutional guarantees and the Sales Tax Act,” Justice Sattar noted in the detailed judgement.

Khawaja was accused of facilitating the opening of a company account allegedly used for tax fraud.

However, the court highlighted that the FBR presented no material evidence linking him to fraudulent activities.

The judgement also noted that the FBR had failed to determine the actual tax liability under the law before initiating criminal proceedings.

The court found this approach not only unlawful but also contrary to the Supreme Court’s affirmation of the Lahore High Court’s decision in a similar case involving Taj International.

The court directed the FBR to distribute copies of the verdict to its officials, emphasising adherence to legal standards in future cases.

Justice Sattar warned that failure to comply could lead to punitive action against tax officers.