WAHID BUX BROM, J.-The applications cited above are being disposed of by this common order since they arise out of the same case, F.I.R. No, 12 of 2004.
2. As alleged in the F.I.R., the Audit Collectorate, during audit of Messrs Al-Jadeed Enterprises found that the address declared therein was fake, yet the cheques continued to be delivered at that address. Upon this information an investigation was taken up to find out how the refund cheques were delivered at a non-existent and fake address and whether the invoices, on which refund claims were founded, were genuine or not, and whether other suppliers and exporters were also involved. During investigation it transpired from the courier that he delivered the cheques to one Syed Zeeshan Ali (accused No,4), an employee of Shahid Aziz (accused No,1), in violation of the procedure laid down in Sales Tax Refund Rules, 2002. It also transpired to the complainant that Major suppliers of Messrs Al-Jadeed Corporation were either fake or were untraceable at their registered addressees. Regarding Suhail Qureshi, (accused No,2), it transpired that he had registered two export companies: Messrs Aristocrate Internation and Messrs Arikocrate Enterprises and thereby managed to get refund on fake invoices inclusive of the invoices of Messrs Al-Jadeed to the tune of Rs,31.40 million which allegedly was a part of a racket led by accused Shahid Aziz.
Accused No,3 Syed Ail Jawad allegedly committed tax fraud being a part of criminal conspiracy hatched by accused Shahid Aziz by submitting the NIC and NTN of his late brother-in-law Liaquat Hussain and getting registered Messrs Ghori Garment on the basis of fake documents. The fraudulent refund amount of Rs,8.13 million was secured on fake invoices by establishing fake export companies namely Messrs Al-Amal Corporation wherein Inamul Haq (accused No,5) and Shakeel Ahmed (accused No,7) are shown as partners. As regards Syed Muhammad Zeehsan Ali, accused No,4, it was found that he managed to get the cheque issued to Messrs Al-Jadeed Enterprises and thereby caused a loss of Rs,9.20 million to the national exchequer. It was further alleged that Shahid Aziz, accused No,1 managed to get registered Messrs Al-Jadeed Enterprises on bogus NIC and conspired to get refund cheques by hand through abetment of some officials and courier and in that manner he deprived the national exchequer of Rs,9.90 million on account of Messrs Al-Jadeed Enterprises. On the basis of such F.I.R. The case was investigated and interim challan was submitted in Customs and Taxation Court against 12 accused persons including the applicants.
3. We have heard Mr. Sohail Muzaffar, learned counsel for applicant Syed Amir Ahmed Hashmi; Mr. Kh. Shamsul Islam, learned counsel for applicant Shahid Aziz; and Mr. Khursheed A. Hasmi, learned counsel for State/Deputy Collector Customs and with their assistance perused the relevant material.
4. Mr. Sohail Muzaffar, learned counsel for applicant Syed Amir Ahmed Hashmi contended that the certificate was duly issued by C.B.R and that the refund was claimed against genuine export in pursuance of S.R.O., dated 5-11-1995 issued by the Government. Relying on Saeed Ahmed v. State (1996 SCM R 1132) he submitted that the entire case depends on documents and the loss caused to Government revenue has already been made good. The applicant is, as such, entitled to concession of bail. He also referred to cases of Sikandar A. Karim v. State (1995 SCM R 387) and Imitaz Ahmed v. State (PLD 1997 SC 545) and submitted that the applicants may be granted bail as a matter of rule.
5. Mr. Kh. Shamsul. Islam contended that as far the case of applicant Shahid Aziz is concerned, the consignments were duly exported and refund was claimed under Sales Tax Refund Rules, 2002 and that there were genuine exports with due permission for which the commodities were purchased from Karachi supplier as such the allegation that invoices, on the basis of which refund was claimed. Were fake, requires further inquiry. He further argued that the applicant was a commercial exporter and the procedure laid down in Sales Tax Refund Rules, 2002 was fully observed for the purpose for export and even then if the refund claimed was not genuine a notice was to be issued under rule 8 of the Sales Tax Refund Rules, 2002,.But no notice was issued. He further submitted that the actual amounts have already been paid up and there is no loss to the exchequer. He pointed out that co-accused Imran and Zeeshan have already been enlarged on bail. He relief on ADBP v.
Abid Akhtar (2003 SCM R 1547) and Munir Muhammad v. State (1976 SCM R 145) in support of his case.
6. Mr. Khursheed A. Hashmi, learned counsel for State/Deputy Collector Customs submitted that the firm Messrs Aziz Sons was operated by accused Shahid Aziz and the accounts in Prime Bank as also in Bolan Bank were operated by applicant Shahid Aziz from where the refund of the claim was channelized. He argued that the invoices were fake, therefore, the beneficiaries were liable to prosecution since the Sales Tax Refund Rules, 2002 were grossly violated. Regarding the notice under rule 8 of the Sales Tax Refund Rules, 2002 he explained that such notice was required only when the refund claim was under process, but in the instant case refund had been made much earlier, notice was, therefore, out of question.
7. During the arguments it was consistently asserted that loss to Government revenue, if any, has already been met with as the amounts have been deposited even in excess. This position could not be rebutted. No doubt, payment of amount to Government exchequer by a defaulter would not per se wash out the criminality of the act, if any committed in violation of rules/law, but we have noted that, while introducing the scheme of adjudication under section 45 of Sales Tax Act a situation arising out of erroneous refund under the Sales Tax Act and the rules made thereunder was amenable to adjudication through different officers mentioned therein. This process was aimed at catering for the civil liability arising out of sales tax evasion or refund and eventually, looking to such aspect, while dealing with the criminality of the tax fraud the Legislature has provided a lighter sentence in respect of the offences. For instance, an offence under section 37-A(3) of the Sales Tax Act is punishable with imprisonment for 5 years, or with fine, or with both indicating thereby possibility of punishment by way of fine only. Section 36 of the Act provides a mechanism for recovery of tax, inter alia; erroneously refunded. Section 33 also provides penalties in terms of money.
8. In the instant case it is not disputed that the apparent loss to Government revenue has already been paid up. The contention that the consignments had actually been exported and, therefore, the exporter was entitled to refund of sales tax paid, while purchasing the goods from local market, could also not be controverted in precise terms, perhaps, inter alia, for the reason that the final challan has not yet been submitted. Besides, we agree with the learned counsel that entire case depends on documentary evidence, which has already been collected and is in possession of prosecution. The prosecution side has so far submitted only an interim challan and the commencement of trial is not yet in sight. The maximum punishment in terms of imprisonment is 5 years. The case law cited at the Bar also lends support to the bail plea.
9. The prime question as to whether the invoices were fake or not is yet to be determined at the trial, but for the time being in view of the foregoing discussion we are of the considered view that the applicants are entitled to concession of bail. Accordingly, the applications are allowed. The applicants be released on furnishing surety in the sum of Rs,500,000 each and executing P.R. Bond in the like amount to the satisfaction of trial Court.
10. These are the reasons for the short order announced in Court on 1-6-2004.