' SYED MANSOOR ALI SHAH, J. --- "If prosecution degenerates into persecution, this Court cannot sit as a helpless spectator"'
' Tax crimes are white collar crimes that impose civil, as well as, criminal penalties for evasion of tax, etc. Even though the two sets of penalties are distinct and independent with separate objectives and consequences, yet this distinction is at times forgotten, resulting in overcriminlization8, The constitutionality and legality of such distortion under the unique architecture of Sales Tax Act, 1990 ("Act") marks the high point of this case.
Facts
2. Criminal prosecution under Sections 37A and 37B of the Act for the offence of tax fraud was initiated, against 134 persons alongwith "other beneficiary being sales tax registered persons of the tax fraud9" and "other persons due to whose criminal negligence/connivance, the tax fraud occurred /was committed." Additional Director, Intelligence and Investigation, FBR, Regional Office, Lahore being the complainant documented this in the shape 'of First Information Report (FIR 4/2011) dated 26.3.2011. The said document reveals that on receipt of credible information that a cartel of fraudsters was involved in the issuance of fake sales tax invoicies for the purposes of generating illegal/ inadmissible input tax adjustments criminal prosecution was initiated against some persons, which further led to unearthing of a mega scam of sales tax evasion of Rs 7.5 {{FOOT NOTE}} 7 Parmeet v. Dinesh (169 ITR 5) (at 7) also see The Law and Practice of Income Tax by Kanga and Palkivala. Vol.II, 10th edition, Lexis Nexis p.
2921. Overcriminalization describes the trend to use the criminal law raher than the civil law to solve every problem, to punish every mistake, and to compel compliance with regulatory objectives.
Criminal law should be sued only if a person intentionally flourts the law or engages in conduct that is morally blameworthy or dangerous.
(http://www.Heritage,org/issues/legal/overcriminal ization)
9 Allegedly covering the petitioner billion involving 144 dummy suppliers who issued fake sales tax invoices. This gang of fraudsters issued fake invoices to various registered persons (including the petitioner) who claimed input tax on basis of the same causing a huge loss to the exchequer. It has therefore, been alleged that petitioners have committed the offence of tax fraud and are liable to arrest and criminal prosecution. Similar allegations have been levelled in other F.I.Rs, in the connected matters.
Arguments
3. Learned counsel for the petitioners have mainly argued that the criminal prosecution under Section 37A of the Act can only be initiated after the tax liability of the taxpayer has been duly assessed under the Act, as provided under Section 11 of the Act. While referring to the list of offences under Section 33 of the Act, learned counsel for the petitioners have laid emphasis on the term "shall be further liable" appearing in the column of penalties to underline its chronological significance. They submitted that only after the determination of the tax liability (i,e,, civil liability) can the criminal prosecution be initiated. They further argued that under Section 37A (4), the Commissioner at any stage can compound the offence if the taxpayer pays the amount of tax due alongwith default surcharge and penalty as is determined under the provisions of this Act, hence the facility of compounding the offence is available only after the assessment of tax under the Act.
4. Pursuing the same line of reasoning, they submitted that the fines available under Section 33 of the Act are dependent on the amount of "tax involved" hence no sentence can be awarded unless the tax is first determined, which is not the prerogative of the Special Judge, especially, when civil adjudication system for tax assessm ent is specifically provided for under the Act. In the present case and in many other cases it is additionally pointed out that the learned Appellate Tribunal Inland Revenue under the civil adjudicatory system has held that the 'petitioner has not committed any tax fraud and is not liable for any additional tax liability or penalties, still criminal prosecution has been initiated against the petitioner. Reference is made to Order of the ATIR, Lahore dated 5.6.2012 passed in S.T.A. No, 478/LB/2012. It was also argued that the Additional Director, Intelligence and Investigation, Federal Board of Revenue does not have the jurisdiction to initiate criminal prosecution under the act as the said Directorate exercises no jurisdiction under the Act.
5. Learned counsel for the respondents, on the other hand, have submitted that it is settled principle of law that civil and criminal proceedings are naither interrelated nor mutually exclusive, hence, the department enjoys the choice to opt for either of the two enforcement mechansims.
Criminal prosecution can be triggered if material evidence is available and the concerned officer has reason to believe that the taxpayer has committed tax fraud or any offence warranting prosecution. The term "shall be further liable" appearing in the list of penalties under Section 33 of the Act does not have a chronological significance but in fact provides for two different sets of penalties; one on the civil side and the other on the criminal side and both of them are independent of each other.
6. Learned counsel for the respondent department frankly volunteered to submit that recourse to recovery of tax under the civil regime of the Act has not proven effective over the years and, therefore, criminal prosecution is the preferred choice of the department in cases where there is material evidence attracting Section 37A. He further contends that compoundability of the offence is on the basis of the amount of tax due according to the calculation of the respondent department rather than on the basis of the amount determined through adjudicatory process under the Act. He submitted that tax assessment through civil adjudication under the Act has no bearing on the initiation of criminal proceedings against the petitioner.
Opinion of the Court
7. It is settled law that a singular act can trigger both civil and criminal proceedings simultaneously.
Proceedings against a civil wrong or a public wrong (offence) are independent and not mutually exclusive. Both set of proceedings have their own procedures, standards and consequences. The famous eighteenth century English jurist William Blackstone summarizes the distinction between civil and criminal law by observing that "private wrongs are an infringement...Of the civil rights which belong to individuals...Public wrongs, or crimes...Are a breach and violation of the public rights and duties, due to the whole community... In its social aggregate capacity.10" "There are a number of wrongs which are both crimes and civil wrongs....The offender may be prosecuted and punished or he may be tried in a Civil Court and ordered to pay compensation. This overlap of the criminal and civil law means, in effect, that a man may be tried twice for what is substantially the same wrong.11" Blackstone illustrates this difference by pointing out that the society has little interest in whether he sues a neighbour or emerges victorious in a land dispute. On the other hand, society has a substantial investment in the arrest, prosecution, and conviction of individuals responsible for espionage, murder or robbery.12
8. The standard of evidence to determine civil liability is preponderance of evidence, while a criminal conviction, as it carries loss of liberty is based on the higher standard of guilt i,e,, beyond reasonable doubt. Primarily, civil law protects the interest of the individual while criminal law protects the interest of the society. "The main purposes of criminal law are to redress criminal behaviour and to maintain social order. Each country administers its own {{FOOT NOTE}} I William Balckstone, Commentaries on the laws of England, Voluem 4, pp. 4 &5.
" An Outline of English Law by H.K. Black and D.J. Latham Brown, London Methuen & Co. Ltd. - p.9 12 Essential Criminal Law by Mathew Lippman, SAGE, p. 2 types of punishment based on the nature of the crime. The goals of punishment are retribution, deterrence, incapacitation, rehabilitation, and restitiution."13
9. In 1939 sociologist Edwin H. Sutherland published his pioneering study regarding WHITE" COLLAR CRIMES. He defined White Collar Crime to be an offense committed by a person of respectability and high social status in the course of his occupation. The financial cost of white collar crimes is several times greater than the economic consequences of common crimes. Tax is a fiscal tool to regulate the monetary policy of the State, hence, the primary focus of a tax law is the levy and collection of tax. However, as a white collar crime, tax evasion, etc has also been criminalized with the collateral effect of retribution and deterrence, in addition to achieving the fiscal incentives of the State. Under the new regime of white collar crimes or tax crimes, even civil wrongs have been categorised as an offence, attracting both civil and criminal penalties. While assessment of tax liability is characteristically a civil proceeding, tax evasion or tax fraud, etc. Can also be a tax crime and attract both civil, as well as, criminal penalties. Under civil proceedings the tax is assessed and recovered as a compensation alongwith monetary penalties, while under criminal prosecution, tax evader is punished with imprisonment or fine or. Both. Civil and criminal proceedings have different objectives and achieve different ends.
10. Jurisprudence evolved over the years shows that while criminal and civil proceedings can co- exist and proceed side by side, in cases where the subject-matter of both the proceedings is so closely interrelated, so that the outcome of the civil proceedings can have a material bearing on the criminal proceedings, a safer course to adopt is to stay. The criminal proceedings till the finalisation of the civil matter. Reliance is placed on Akhlaq Hussain Kayani v. {{FOOT NOTE}} 13 Legal' Systems of the World, A political, Social and Cultural Encyclopedia, Volume-I, edited by Herbert M. Krizer, p.
378.
' Zafar lqbal Kiyani and others (2010 SCM R 1835) and Muhammad Akbar v. The State and others (PLD 1968 SC 281).
11. Tax crimes can lead to criminal prosecution leading to conviction and punishment (i,e,, imprisonment or fine or both) and yet simulatenously, for the same tax crime, civil proceedings for assessm ent of tax and its subsequent recovery can be initiated. The role and character of an adjudicator in assessing the tax liability and of a special judge in convicting the tax evader are distinct and entail different sets of procedures and evidentiary standards (as discussed above).
These roles cannot be swa ped. Hence, a Special Judge while convicting the taxpayer for an offence cannot assess the amount of tax due and similarly an Officer of Inland Revenue carrying out assessm ent of tax cannot convict the taxpayer. Civil adjudicatory process for assessment of tax has been laid down in the Act and entrusted to the officers of the Inland Revenue followed by a complete appellate redressal system, in the shape of a departmental appeal followed by an appeal before the Appellate Tribunal Inland Revenue and then a Tax Reference before the High Court. The recovery mechanism under Section 48 of the Act comes into operation once tax is assessed and penalties imposed go unpaid. Tax assessment system based on adjudication has a central role in any tax law and precedes collection and recovery of tax.
12. With these jurisprudentially delienated contours of civil criminal proceedings, we examine the construct and architecture of criminalization under the Sales Tax Act, 1990. Admittedly, sales tax is a value-added tax, grounded in unsupervised self-assessment scheme. The taxpayer assesses his tax and deposits it alongwith the sales tax return. The scope of the Act was brought out clearly in the budget speech of the Minister of State for Finance, for the year 1990-1991 when the tax was first introduced:--
75. Under the proposed sales tax system the tax payer will be allowed the facility of deferred payment of sales tax. Instead of paying the tax before the goods are cleared from the factory premises, the tax payer under the proposed system will himself determine his tax liability in respect of sales made during the course of a month and pay the tax due by the 20th of the following month. He has also been allowed the facility to deduct the tax which he has paid on his business purchases from the tax due on his sales and thus the proposed system provides for automatic adjustment of input tax. In short the proposed sales tax system is based on self assessment procedures.14 (emphasis supplied)
13. The tax regulators monitor this self-assessment system through neutral and impartial tool of audit under Section 72B. There is no other mechanism under the Act to lift the veil of self- assessm ent, protecting the monthly tax return filed by the tax payer. Once the case of a taxpayer is selected for audit under Section 72B, the return is closely scrutinized and on completion of audit if any of the grounds under Section 11 are attracted, an assessment order is passed against the tax payer, adjudicating the actual tax liability alongwith penalties under Section 33 and default surcharge under Section 34 of the Act. The taxpayer is not a defaulter unless "tax due" is first assessed and determined under the provisions of the Act. Section 25(5) provides that before, during and after the audit proceedings the taxpayer has the option to deposit the tax alongwith default surcharge and penalties to avoid further proceedings. Recovery and collection of tax, therefore, remains the central focus of the Act.
14. Inquiry or investigation can be initiated on the basis of "information or sufficient material" received by the {{FOOT NOTE}} 14 Budget Speech by Mr. Ehsan Ul Haq Piracha, Minister of State for Finance 7.6.1990. [PTCL 1990 Jour.
88 (at 108)].
' Commissioner against a taxpayer under proviso to Section 25(2) of the Act. It is axiomatic that any such inquiry or investigation must lead to further proceedings against the taxpayer in case of any adverse finding against the taxpayer. The Act is, however, surprisingly silent regarding the nature of further proceedings to be adopted after the said inquiry or investigation is completed. We have tried to rationalize this disconnect later in the judgment.
15. At this juncture, the department was of the view that other than the mechanism of audit under Section 72B, the taxpayer can also be selected out of the pool of self-assessed taxpayers and criminally prosecuted under Section 37A of the Act, if the officer concerned has reason to believe that there is material evidence that the tax payer has committed the offense of tax fraud or any other offence warranting prosecution under the Act.
16. Can Section 37A of the Act be employed to select or pick a taxpayer out of the pool of self- assessed taxpayers to undergo criminal prosecution withhold first carrying out an objective selection process of audit followed by assessment of tax under Section 11 of the Act? The answer to the above question is YES, on the assumption, that criminal prosecution, generally, has no nexus with assessm ent of tax liability and cannot be equated with cases selected in audit. While self- assessm ent scheme guards the sanctity of self-assessed sales tax returns it affords no protection to a criminal act committed by the tax payer. Audit is a tool that strategically monitors the regime of sales tax under the Act and is primarily geared to decipher tax evasion from amongst the pool of taxpayers. It is a departmental surveillance tool for sniffing out tax that has gone unpaid.
Criminality behind any such tax evasion is a separate matter. In case both the proceedings (civil and criminal) are simultaneously initiated, the jurisprudence discussed above will regulate the criminal proceedings.
17. We now look at the unique construct of punishment (in particular the imposition of fine) under the Act. Perusal of Section 33 of the Act reveals that criminal penalties are linked with the "tax loss" or "amount of tax involved." Therefore, instead of providing for imprisonment or fine (ordinarily a certain sum of money) or both as punishment, the 'line" under the Act requires the taxpayer to pay the "tax loss" or "amount of tax involved," thereby indirectly criminalizing, the recovery of "tax due." Is this over criminalization? Is the criminal prosecution set in motion to punish the taxpayer (retribution) or is it to criminalize recovery of tax (as if in addition to recovery procedure under Section 48 of the Act) or both? Perusal of Section 33 is important which reads as under:- {{TABLE}} Offences Penalties Section of the Act to which offence has reference.
(1) (2) (3)
5. Any person who Such person shall 3, 6, 7 and fails to deposit the amount of tax due or any part thereof in the time or manner laid down under this Act or rules or orders pay a penalty of ten thousand rupees or five per cent of the amount of the tax involved, whichever is higher: 48. made thereunder. Provided that, if the amount of tax or any part thereof is paid within fifteen days from the due date, the defaulter {{TABLE}} shall pay a penalty of five hundred rupees for each day of default: Provided further that no penalty shall be imposed when any miscalculation is made for the first time during a year: Provided further that if the amount of tax due is not paid even after the expiry of a period of sixty days of issuance of the notice for such payments by an officer of Inland Revenue not below the rank of Assistant Commissioner Inland Revenue, the defaulter shall, further be liable, upon conviction by a Special Judge, to imprison-ment for a term which may extend to three years, or with fine which may extend to amount equal to the amount of tax , {{TABLE}} in-volved, or with both.
7. Any person who is required to apply for registration under this Act fails to make an application for registration before making taxable supplies. Such person shall pay a penalty of ten thousand rupees or five per cent of the amount of tax involved, whichever is higher: Provided that such person who is required to get himself registered under this Act, fails to get registered within sixty days of the commencement of tax-able activity, he shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to three years, or with fine which may extend to an amount equal to the amount of tax involved, or with both. 14
11. Any person who,--
(a) Submits ' a false or forged Such person shall pay a penalty of twenty five 2 (37) and General. {{TABLE}} document to any officer of Inland Revenue; or
(b) Destroys, alters, mutilates or falsifies the records including a sales tax invoice; or
(c) Knowingly or fraudulently makes false statement, false declaration, false representation, false personification, gives any false information or issues or uses a document which is forged or false. Thousand rupees or one hundred per cent of the amount of tax involved, whichever is higher. He shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to three years, or with fine which may extend to an amount equal to the amount of tax involved, or with both.
12 Any person who denies or obstructs the access of an authorized officer to the business premises, registered office or to any other place where records are kept, or otherwise refuses access to the stocks, Such person shall pay a penalty of twenty five thousand rupees or one hundred per cent of the amount of tax involved, whichever is higher. He shall, further be liable upon conviction by a Special Judge, to imprisonment for a term which may 25, 38, 38A and 40B accounts or I records or fails to present the same when required under Sections 25, 38, 38A or 40B. extend to five years, or with fine which may extend to an amount equal to the loss of tax involved, or with both.
Any person who commits, causes to commit or attempts to commit the tax fraud, or abets or connives in commissioning of tax fraud.
Such person shall 2(37) pay a penalty of twenty five thousand rupees or one hundred per cent of the amount of tax involved, whichever is higher. He shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to five years, or with fine which may extend to an amount equal to the loss of tax involved, or with both.
Where any person violates any embargo placed on removal of goods in connection with recovery of tax.
Such person shall 48 pay a penalty of twenty five thousand rupees or ten per cent of the amount of the tax involved, whichever is {{TABLE}} higher. He shall, further be liable, upon conviction by a Special Judge, to imprisonment for a terms which may extend to one year, or with fine which may extend to amount equal to the amount of tax involved, or with both.
18 Where any officer of Inland Revenue authorized to act under this Act, acts or omits or attempts to act or omit in a manner causing loss to the sales tax revenue or otherwise abets or connives in any such act. Such officer of Inland Revenue shall be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to three years, or with fine which may extend to amount equal to the amount of tax involved, or with both. General.
22 Any person who,-- (a) Knowingly and without lawful authority gains access to or attempts to gain access to the computerized system; or Such person shall pay a penalty of twenty-five thousand rupees or one hundred per cent of the amount of tax involved, Oh ichever is higher. He shall, 50A.
(b)
(c) #TBS
(d) further be liable, upon conviction by the Special Judge, to imprisonment for a term which may extended to one year, or with fine which may extend to an amount equal to the loss of tax involved, or with both.
(e) #TBE (f)
Unauthorizedly uses or discloses or publishes or otherwise disseminates information obtained from the computerized system; or
(g) Falsifies any record , or information stored in the computerized system; or
(h) Knowingly or dishonestly damages or impairs the computerized system; or
(i) Knowingly or dishonestly damages or impairs any duplicate tape or disc or other medium on which any information obtained from the computerized system is kept or stored; or
(j) Unauthorizedly uses unique user identifier of any {{TABLE}} other registered user to authenticate a transmission of information to the computerized . system; or
(g) Fails to comply with or contravenes any of the conditions prescribed for security of unique user identifier.
18. Review of the penalties above, clearly shows that the measure of sentence is linked with the "amount or loss of tax involved." In fact, the above linkage, uses the tool of penalty as a mode of recovery of tax. Hence, criminalization under the Act goes beyond the pale of retribution and deterrence and appears to be principally focused on recovery of tax. The said linkage between "fine" and the "amount of tax due" is missing, if we examine the criminal provisions under the Income Tax Ordinance, 2001. Part XI of Chapter X of the said Ordinance provides for criminal prosecution under Sections 191 to 200, which simply provide for imposition of "fine" but does not link it with the "tax loss or amount of tax" (except for compounding the offence under Section 202). In the case of Federal Excise Act, 2005, such a linkage is visible, however t has been pointed out that no criminal proceedings have been initiated under the said law without prior assessment of tax. It, therefore, appears that criminalization under the Act is being treated differently when compared with other tax laws.
19. The background and the departmental justification to this over-criminalization has been frankly pointed out by the learned counsel for the respondent department. He submitted that the civil proceedings leading to assessm ent of tax and penalties followed by the recovery procedure under Section 48 has not proved successful over the years. Hence, to fast track recovery, it had to be criminalized. Without commenting on the legality of this over criminalization, it is settled law that recovery of tax is possible only after the tax has been duly assessed and the amount of "tax due" determined under the Act. Recovery under civil law is initiated once tax has been assessed through the civil adjudicatory process provided under the Act. Tax assessment becomes doubly necessary, when recovery stands criminalized and entails criminal consequences. Other than the penalties hinged on "amount or loss of tax involved," criminalization of recovery of tax is also evident from Section 37A(4) of the Act. This provision permits compound ability of the offence if the amount of tax due and penalties as determined under the Act are paid at any stage of the criminal proceedings. Criminal mode of recovery reinforces the requirement of prior assessment of tax liability under the Act.
20. Talking the offence of tax fraud under clause 13 of Section 33 (above). Tax fraud has been defined in Section 2(37) of the Act as:-- " "tax fraud" means knowingly, dishonestly or fraudulently and without any lawful excuse (burden of proof of which excuse shall be upon the accused)--
(i) doing of any act or causing to do any act; or
(ii) omitting to take any action or causing the omission to take any action, including the making of taxable supplies without getting registration under this Act; or
(iii) falsifying or causing falsification the sales tax invoices in contravention of duties or obligations imposed under this Act or rules or instructions issued there under with the intention of understating the tax liability or underpaying the tax liability for two consecutive tax periods or overstating the entitlement to tax credit or tax refund to cause loss of tax."
' In essence tax fraud is falsifying a tax invoice with the intention to understate the tax liability, or to underpay the tax liability or overstate the entitlement to tax credit or tax refund to cause loss of tax.
Even if we assume that the Special Judge convicts the taxpayer, he cannot award the sentence, as "fine" is dependent on the "amount or loss of tax involved" and it is not within the competence or jurisdiction of the Special Judge to assess tax or determine the "amount or loss of tax involved" which is not part of the offence but of the sentence. Further, the facility of compoundaility under Section 37(A)(4) is not available to the taxpayer, unless the amount of tax due and penalties as determined under the Act.
21. Learned counsel for the department took pains to argue that the amount determined under Section 37A(4) of the Act is the amount calculated by the department and is not the tax assessed under Section 11 post adjudication. This argument is seriously rnisconcieved. It is settled proposition of law that "tax due" means amount duly determined under the law through an independent process of adjudication. Further, language of Section 37A(4) is unambiguous and is directly supportive in this regard. Reliance is placed on Agricultural Development Bank of Pakistan v.
Sanaullah Khan and others (PLD 1988 SC 67) and Abdul Latif v. The Government of West Pakistan and others (PLD 1962 SC 384) and Agricultural Development Bank of Pakistan and another v. Abid Akhtar and others (2003 CLD 1620).
22. Collective reading of Sections 11, 25(5), 33, 37A and 72B of the Act indicates that the criminalization under the Act is principally to effectuate recovery or is being largely used to effectuate recovery. Two clear pointers are: dependence of fine on the "amount or loss of tax involved." and the window of compoundability available to the taxpayer who can pay the "amount of tax due alonqwith such default surcharge and penalty as determined under the provisions of this Act." If the purpose was simple retribution and deterrence, there was no need to load the fine with the amount or loss of tax involved. However, if the fine under criminal prosecution is to be loaded with the amount or loss of tax, such a criminal construct must be prefaced with the mandatory requirement of assessm ent of tax through civil adjudication provided under Section 11 of the Act. This precondition is the minimum constitutional requirement to ensure fair trial and due process under Articles 4 and 10-A of the Constitution.
23. It has been vehemently stated at the bar, by almost all the petitioners that the department forcibly hauls up taxpayers under the threat of arrest and criminal prosecution and releases them after extraction of money (shown as the amount of tax due under Section 37A). In the absence of tax assessm ent under Section 11 of the Act and without knowing the "amount or loss of tax involved," neither compound ability is possible nor the award of sentence against the tax payer. Hence the process of hauling up taxpayers and effecting recovery of self-determined amount of sales tax by the officer of the Inland Revenue is brutally unconstitutional.
24. Inability of the Special Judge to compound or award a sentence including a fine unless the loss of tax or amount of tax is first assessed, freezes the initiation of criminal proceedings till such time that the tax is duly assessed under the Act. Fair Trial under Article 10A of the constitution encompasses the whole trial including all the pre-trial steps like arrest, compound ability, etc. If at any stage of the trial, the taxpayer is deprived of the facility of settlement (compoundability) or there is a clog on the powers of the Special Judge in the matter of sentencing (choice of punishing with fine only) continuance of any such trial will offend Article 10A of the Constitution. Where the civil adjudication system under the Act declares that there is no loss of tax caused by the taxpayer or no amount of tax is due from the taxpayers, initiation of criminal prosecution in such a case may offend Article 10A of the Constitution.
25. As a conclusion, we once again reiterate that civil and criminal proceedings can run independently and simultaneously or otherwise. The purpose and objective of criminalizing tax fraud and tax evasion is retribution and deterrence which is achieved through punishment or fine or both. If the law, however, goes further and criminalises recovery of tax in addition to retribution and deterence, then tax assessm ent has to take place first under the provisions of the Act. In this background the term "shall be further liable" re-appearing several times in Section 33 of the Act holds a chronological significance i,e,, that criminal prosecution follows adjudication and assessm ent of tax under Section 11 of the Act.
26. Even if the criminal prosecution under the present scheme of the Act is initiated after assessm ent of tax under Section 11 as discussed above, the constitutionality of hurriedly invoking Section 37A on the basis of material evidence requires consideration. Material evidence must be credible and definite if it is to deprive a citizen of his constitutional protection and safeguards under Articles 4 (due process), 9 (human liberty), 10A (fair trial) and 14 (human dignity). Setting in motion of the criminal prosecution cannot be left in the hands of any officer of the Inland Revenue, especially when the said Officers are under an obligation to recover the tax and meet tax targets before the close of the financial year set by the FBR. The process of initiation of criminal prosecution must comply with the requirement of due process and fair trial. The material evidence collected under Section 37A needs to be credible and can best pass the test of fair trial and due process if it is an outcome of an inquiry or investigation envisaged under the proviso to Section 25(2) of the Act. The outcome of any such inquiry and investigation must be placed before an independent forum like the Directorate General (Intelligence and Investigation), Inland Revenue established under Section 30A of the Act to first review the inquiry and investigation and the material evidence and then proceed under the law. Anything short of this process will not only lead to persecution of the tax payers, it will also make a mockery of the fundamental right of fair trial.
27. The other issue is the choice of opting for criminal proceedings against a particular taxpayer and letting go of the other. This poses a problem and amounts to vesting unstructured and unregulated power in the hands of the department, once again threatening the sanctity of fair trial.
Any such unguided and uncontrolled exercise of power will not withstand the constitutional test of fairness and equality under Article 25 of the Constitution. A more wholesome, transparent and standardized system needs to be evolved by the FBR to avoid this unconstitutionality.
28. In view of the above, we hold that the pre-trial steps including arrest and detention cannot be given effect to unless the tax liability of the taxpayer is determined in accordance with Section 11 of the Act. In this background, criminal proceedings initiated against the petitioners, and documented as the First Information Report in this case and cases mentioned in Schedule-A is quashed as being unconstitutional, violative of fundamental rights, ultra vires the Act and hence illegal and without lawful authority. For the above reasons all these petitions are allowed. In the light of the above discussion, we see no need to answer the question regarding the jurisdiction or competence of the officer who initiated the criminal proceedings in these cases.
29. This judgment will decide the instant petition, as well as, connected writ petitions mentioned in Schedule "A" as all these cases raise common questions of law and facts. {{TABLE}} SCHEDULE-A Sr. No, Case Number 1 W.P. No, 9512/2012 2 W.P. No, 28231/2012 3 W.P. No, 7514/2012 4 W.P. No, 7648/2012 5 W.P. No, 7657/2012 6 W.P. No, 7658/2012 7 W.P. No, 8191/2012 8 W.P. No, 8226/2012 9 W.P. No, 8270/2012 10 W.P. No, 8271/2012 11 W.P. No, 8492/2012 12 W.P. No, 8493/2012 13 W.P. No, 8494/2012 14 W.P. No, 8786/2012 15 W.P. No, 8848/2012 16 W.P. No, 8994/2012 17 W.P. No, 9047 /2012 18 W.P. No, 9049/2012 19 W.P. No, 9113/2012 20 W.P. No, 9157/2012 21 W.P. No, 9500/2012 22 W.P. No, 9503/2012 {{TABLE}} 23 W.P. No, 9504/2012 24 W.P. No, 9505/2012 25 W.P. No, 9506/2012 26 W.P. No, 9614/2012 27 W P. No, 9615/2012 28 W.P. No, 9616/2012 29 W.P. No, 9872/2012 30 W.P. No, 9876/2012 31 W.P. No, 9920/2012 32 W.P. No, 10246/2012 33 V.P. No, 10926/2012 34 W.P. No, 11027/2012 35 W.P. No, 11268/2012 36 W.P. No, 11300/2012 37 W.P. No, 11455/2012 38 W.P. No, 11744/2012 39 W.P. No, 12461/2012 40 W.P. No, 12E31/2012 41 W.P. No, 29471/2012 42 W.P. No, 29563/2012 43 W.P. No, 29603/2012 44 W.N. No, 29411/2012 45 W.P. No, 11020/2012 46 W.P. No, 13426/2012 47 W.P. No, 13577/2012 {{TABLE}} 48 W.P. No, 13838/2012 49 W.P. No, 13991/2012 50 W.P. No, 14205/2012 51 W.P. No, 14538/2012 52 W.P. No, 14784/2012 53 W.P. No, 14874/2012 54 W.P. No, 15470/2012 55 W.P. No, 15471/2012 56 W.P. No, 15800/2012 57 W.P. No, 16328/2012 58 W.P. No, 16329/2012 59 W.P. No, 17447/2012 60 W.P. No, 17589/2012 61 W.P. No, 17815/2012 62 W.P. No, 17918/2012 63 W.P. No, 18758/2012 64 W.P. No, 22231/2013 65 W.P. No, 19673/2012 66 W.P. No, 19674/2012 67 W.P. No, 20004/2012 68 W.P. No, 20092/2012 L69 70 W.P. No, 20657/2012 W.P. No, 20658/2012 71 W.P. No, 20674/2012 72 W.P. No, 20922/2012 {{TABLE}} 73 W.P. No, 21062/2012 74 W.P. No, 21897/2012 75 W.P. No, 22571/2012 76 W.P. No, 22572/2012 77 W.P. No, 24736/2012 78 W.P. No, 1686/2012 79 W.P. No, 417/2012 80 W.P. No, 418/2012 81 W.P. No, 1043/2012 82 W.P. No, 1082/2012 83 W.P. No, 5048/2012 84 W.P. No, 5049/2012 85 W.P. No, 5300/2012 86 W.P. No, 5333/2012 87 W.P. No, 5334/2012 88 W.P. No, 5381/2012 89 W.P. No, 5634/2012 90 W.P. No, 5885/2012 91 W.P. No, 6001/2012 92 W.P. No, 6391/2012 93 W.P. No, 6743/2012 94 W.P. No, 6794/2012 95 W,P. No, 6795/2012 96 W.P. No, 6878/2012 97 W.P. No, 7188/2012 {{TABLE}} 98 W.P. No, 7670/2012 99 W.P. No, 7695/2012 100 W.P. No, 7877/2012 101 W.P. No, 7917/2012 102 W.P. No, 7918/2012 103 W.P. No, 27578/2012 104 W.P. No, 27803/2012 105 W.P. No, 11021/2012 106 W.P. No, 11030/2012 107 W.P. No, 11137/2012 108 W.P. No, 11138/2012 109 W.P. No, 11294/2012 110 W.P. No, 11296/2012 111 W.P. No, 11297/2012 112 W.P. No, 11298/2012 113 W.P. No, 11519/2012 114 W.P. No, 11544/2012 115 W.P. No, 11555/2012 116 W.P. No, 11561/2012 117 W.P. No, 11745/2012 118 W.P. No, 11746/2012 119 W.P. No, 11921/2012 120 W.P. No, 11922/2012 121 W.P. No, 11923/2012 122 W.P. No, 11972/2012 {{TABLE}} 123 W.P. No, 12104/2012 124 W.P. No, 12248/2012 125 W.P. No, 12384/2012 126 W.P. No, 12472/2012 127 W.P. No, 12493/2012 128 W.P. No, 12670/2012 129 W.P. No, 12997/2012 130 W.P. No, 13031/2012 131 W.P. No, 13805/2012 132 W.P. No, 13969/2012 133 W.P. No, 14136/2012 134 W.P. No, 15179/2012 135 W.P. No, 15281/2012 136 W.P. No, 8015/2012 137 W.P. No, 8190/2012 138 W.P. No, 8402/2012 139 W.P. No, 8568/2012 140 W.P. No, 8740/2012 141 W.P. No, 9045/2012 142 W.P. No, 9048/2012 143 W.P. No, 9086/2012 144 W.P. No, 9087/2012 145 W.P. No, 9104/2012 146 W.P. No, 9107/2012 147 W.P. No, 9158/2012 148 W.P. No, 9166/2012 149 W.P. No, 9653/2012 150 W.P. No, 9654/2012 151 W.P. No, 9736/2012 152 W.P. No, 9255/2012 153 W.P. No, 9324/2012 154 W.P. No, 9364/2012 155 W.P. No, 9423/2012 156 W.P. No, 9486/2012 157 W.P. No, 9570/2012 158 W.P. No, 9651/2012 159 W.P. No, 9652/2012 160 W.P. No, 9742/2012 161 W.P. No, 9873/2012 162 W.P. No, 9936/2012 163 W.P. No, 10330/2012 164 W.P. No, 10331/2012 165 W.P. No, 10341/2012 166 W.P. No, 10456/2012 167 W.P. No, 10498/2012 168 W.P. No, 10499/2012 169 W.P. No, 10598/2012 170 W.P. No, 10688/2012 171 W.P. No, 10698/2012 172 W.P. No, 10721/2012 {{TABLE}} 173 W.P. No, 10838/2012 174 W.P. No, 10852/2012 175 W.P. No, 10935/2012 176 W.P. No, 15660/2012 177 W.P. No, 15791/2012 178 W.P. No, 16754/2012 179 W.P. No, 16810/2012 180 W.P. No, 16811/2012 181 W.P. No, 16812/2012 182 W.P. No, 16813/2012 183 W.P. No, 16997/2012 184 W.P. No, 16998/2012 185 W.P. No, 17106/2012 186 W.P. No, 17286/2012 187 W.P. No, 17332/2012 188 W.P. No, 17743/2012 189 W.P. No, 18029/2012 190 W.P. No, 18098/2012 191 W.P. No, 18221/2012 192 W.P. No, 20261/2012 193 W.P. No, 21671/2012 194 W.P. No, 22447/2012 195 W.P. No, 22594/2012 196 W.P. No, 22646/2012 197 W.P. No, 23402/2012 {{TABLE}} 198 W.P. No, 25801/2012 199 W.P. No, 26814/2012 200 W.P. No, 26815/2012 201 W.P. No, 28142/2012 202 W.P. No, 26440/2012 203 W.P. No, 25622/2012 204 W.P. No, 25623/2012 205 W.P. No, 22075/2012 206 W.P. No, 28912/2012 207 W.P. No, 27352/2012 208 W.P. No, 8695/2011 209 W.P. No, 9041/2011 210 W.P. No, 9019/2011 211 W.P. No, 9020/2011 212 W.P. No, 8926/2011 213 W.P. No, 7802/2011 214 W.P. No, 8256/2011 215 W.P. No, 8257/2011 216 W.P. No, 8647/2011 217 W.P. No, 6848/2011 218 W.P. No, 8359/2011 219 W.P. No, 7406/2011 220 W.P. No, 7029/2011 221 W.P. No, 9118/2011 222 W.P. Na 9354/2011 {{TABLE}} 223 W.P. No, 9355/2011 224 W.P. No, 9219/2011 225 W.P. No, 9873/2011 226 W.P. No, 7895/2011 227 W.P. No, 11343/2011 228 W.P. No, 13657/2011 229 W.P. No, 8154/2011 230 W.P. No, 18058/2011 231 W.P. No, 19644/2011 232 W.P. No, 19862/2011 233 W.P. No, 19107/2011 234 W.P. No, 20160/2011 235 W.P. No, 20297/2011 236 W.P. No, 20298/2011 237 W.P. No, 12159/2011 238 W.P. No, 12160/2011 239 W.P. No, 12153/2011 240 W.P. No, 26855/2011 241 W.P. No, 2379/2012 242 W.P. No, 26856/2011 243 W.P. No, 12568/2011 244 W.P. No, 14436/2011 245 W.P. No, 27422/2011 246 W.P. No, 1302/2012 247 W.P. No, 15927/2011 {{TABLE}} 248 W.P. No, 26489/2011 249 W.P. No, 29582/2011 250 W.P. No, 29653/2012 251 W.P. No, 29751/2012 252 W.P. No, 26857/2011 253 W.P. No, 23251/2010 254 W.P. No, 26554/2010 255 W.P. No, 26555/2010 256 W.P. No, 26568/2010 257 W.P. No, 26769/2010 258 W.P. No, 27266/2011 259 W.P. No, 27863/2011 260 W.P. No, 27864/2011 261 W.P. No, 27865/2011 262 W.P. No, 27866/2011 263 W.P. No, 29671/2011 264 W.P. No, 24686/2011 265 W.P. No, 4580/2011 266 W.P. No, 7686/2011 267 W.P. No, 9655/2011 268 W.P. No, 9656/2011 269 W.P. No, 11256/2011 270 W.P. No, 11359/2011 271 W.P. No, 11665/2012 272 W.P. No, 13721/2011 {{TABLE}} 273 W.P. No, 22737/2011 274 W.P. No, 22738/2011 275 W.P. No, 1985/2012 276 W.P. No, 2726/2011 277 W.P. No, 3173/2012 278 W.P. No, 4439/2010 279 W.P. No, 4478 /2011 280 Crl. Org. No, 476-W/2010 281 Crl. Org. No, 458-W/2010 282 W.P. No, 21725/2011 283 W.P. No, 11666/2012 284 W.P. No, 10908/2011 285 W.P. No, 10674/2011 286 W.P. No, 4440/2011 287 W.P. No, 132/2013 288 W.P. No, 57/2013 289 W.P. No, 58/2013 290 W.P. No, 59/2013 291 W.P. No, 60/2013 292 W.P. No, 61/2013 293 W.P. No, 31741/2012 294 W.P. No, 109/2013 295 W.P. No, 110/2013 296 W.P. No, 111/2011 297 W.P. No, 367/2013 {{TABLE}} 298 W.P. No, 368/2013 299 W.P. No, 887/2013 300 W.P. No, 888/2013 301 W.P. No, 1110/2013 302 W.P. No, 25182/2011 303 W.P. No, 711/2013 304 W.P. No, 2145/2013 305 W.P. No, 18521/2011 306 W.P. No, 19219/2012 307 W.P. No, 19218/2012 308 W.P. No, 1879/2013 309 W.P. No, 2526/2013 310 W.P. No, 5109/2013 311 W.P. No, 5138/2013 312 W.P. No, 5139/2013 313 W.P. No, 5450/2013 314 W.P. No, 5246/2013 315 W.P. No, 20452/2013 316 W.P. No, 21502/2013 -317 W.P. No, 6547/2013 318 W.P. No, 7056/2013 319 W.P. No, 29753/2012 320 W.P. No, 27742/2012 321 W.P. No, 6412/2013 322 W.P. No, 7074/2013 323 W.P. No, 6572/2013 {{TABLE}} 324 W.P. No, 21438/2013 325 W.P. No, 21439/2013 326 W.P. No, 21440/2013 327 W.P. No, 21441/2013 328 W.P. No, 21449/2013 329 W.P. No, 21770/2013 330 W.P. No, 17671/2013 331 W.P. No, 21884/2013 332 W.P. No, 22908/2013 333 W.P. No, 16622/2011 334 W.P. No, 1 801 5/201 1 335 W.P. No, 9017/2011 336 W.P. No, 9018/2011 337 W.P. No, 16607/2011 338 W.P. No, 21611/2012 339 W.P. No, 21612/2012 340 W.P. No, 15251/2012