SC Rules Tax Arrests Without Liability Unlawful

Islamabad, June 26, 2025 — The Supreme Court (SC) has delivered a landmark ruling, declaring initiating criminal cases and arrests of taxpayers without determining sales tax liabilities unlawful, per media reports. A three-member bench—Justice Shahid Waheed, Justice Irfan Saadat Khan, and Justice Aqeel Abbasi—issued a detailed judgment, asserting that criminal proceedings cannot commence until tax liability is established, with appeal rights guaranteed, aligning with constitutional protections.

The court condemned arrests without hearings or civil proceedings as unjust, labeling direct tax evasion cases an abuse of authority. It clarified that the Directorate of Intelligence can gather data but lacks prosecution powers, with investigations only lawful after confirmed liability. Orders, appeal rights, and final decisions are mandatory before criminal action, rendering arrests based on notices or preliminary inquiries a violation of rights.

The SC nullified the FBR’s Directorate of Intelligence’s criminal jurisdiction, upheld high court rulings, and dismissed all appeals, voiding related cases, arrests, and trials. Web context highlights Pakistan’s tax enforcement issues (e.g., 70% evasion rate, web ID: 0), while posts found on X show relief—some cheer safeguards, others question FBR overreach. Critically, the narrative of “legal clarity” may mask enforcement weaknesses—web data points to systemic gaps, and X sentiment suggests distrust in reformed compliance, hinting at ongoing challenges.