Legal fraternity at odds with FBR over tax lawyer’s detention

ISLAMABAD: The arrest of a tax lawyer by the Federal Board of Revenue (FBR) Hyderabad in a case of alleged tax fraud has triggered a confrontation between the tax authorities and the legal fraternity.

The arrest is linked to an alleged case illegal adjustments of input tax amounting to Rs10.01 billion.

Sources reveal that on December 7, 2023, the Directorate of Intelligence and Investigation (Inland Revenue) Hyderabad apprehended a tax lawyer in Karachi on charges of illicitly claiming input tax adjustments and issuing fake/flying invoices.

Despite the Directorate presenting the detained tax lawyer before a special judge, the court dismissed the case during the initial hearing.

The Directorate had filed an FIR on November 25, 2023, accusing 12 individuals from various cities of engaging in tax fraud under section 2(37) of the Sales Tax Act 1990. The department alleges their involvement in claiming illegal input tax adjustments and issuing fraudulent invoices.

The accused purportedly declared supplies worth Rs58.8 billion, including illegal output tax of Rs10.01 billion, with the department asserting that the declared business addresses for four individuals were fake, and these entities did not exist.

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Meanwhile, legal complications arose as Advocate Gulraiz Ahmed Raza filed an application against the I&I-IR Hyderabad and Karachi officials, alleging misuse of powers and violations of the Lawyers Welfare and Protection Act 2023.

The Civil Judge and Judicial Magistrate South Karachi had directed the I&I-IR Hyderabad officials to respond by December 12, 2023.

In a separate development, the Directorate of I&I (IR) Hyderabad had allowed a search warrant for specific locations in Karachi related to the FIR. The court had issued the warrant, directing an immediate report after execution. Failure to comply prompted the court to issue a show-cause notice against the officials.

Despite efforts to gather comments from the Director General I&I-IR and the FBR spokesperson, no response could be received till the filing of this story. The situation remains tense amid legal and procedural controversies.