Law: Sales Tax Act, 1990

Section: 33,37,37A,46,66

Law: Criminal Procedure Code (V of 1898)

Section: 497

(a) Sales Tax Act (VII of 1990)---Ss. 33 & 37-A---Offence of tax fraud---Arrest and prosecution of accused in every case not mandatory, but within discretion of authority to be exercised judiciously---Arrest could not be made merely on basis of reasonable suspicion, which could not be equated with "belief"---Condition precedent for arrest was availability of material evidence sufficient to believe commission of tax fraud by the person to be arrested---Principles. (b) Criminal trial--- ----"Reasonable suspicion" cannot be equated to "belief". (c) Criminal Procedure Code (V of 1898)--- ----S. 497---Sales Tax Act (VII of 1990), Ss. 33, 37-A, 46 & 66---Sales Tax Refund Rules, 2002, R. 8(1)---Bail, grant of---Refund claim, pendency of---Tax fraud case, registration of---Investigation Officer had inferred commission of tax fraud by assessee due to non-availability of supplier and assessee at given addresses---Investigation Officer had not made any effort to collect evidence to show that supplier, had not deposited or accounted for tax covered by invoices---No equity has been started against supplier---Export of goods and receipt of value of goods in foreign exchange by assessee had not been denied by prosecution---Refund claim of assessee was still pending and no show-cause notice for its rejection or prosecution had been served on him---Purchases made on credit by assessee for not being prohibited could not be treated as confession of tax fraud---Assessee was in custody for more than 1-1/2 months---Completion of investigation would take a long time---Offence was compoundable and punishable with imprisonment for five years or fine or both---State had not suffered any loss of revenue---Assessee was granted bail in circumstances. JUDGMENT ALI SAIN DINO METLO, J.--- After having failed to get bail before arrest from this Court and bail after arrest from the trial Court (Special Judge, Customs and Taxation, Karachi) the applicant has approached this Court. Bail before arrest was declined on the grounds that the applicant had failed to establish the conditions precedent for its grant i.e. existence of mala fides or enmity on the part of prosecution. The Special…

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