Supreme Court declares reaudit of taxpayers illegal, rejects FBR stance
A two-member bench headed by Justice Umar Ata Bandial issued this important judgment at the Lahore Registry after the FBR had filed the appeal about re-auditing the financial affairs of Paul Leather Industry for sales tax.
The country’s top court was moved by the Commissioner Inland Revenue after the high court and appellate tribunal ruled in favour of the company.
In its detailed written judgment, the Supreme Court say the fraud allegations are not proved. The incompetence of FBR had left a serious blot on the department’s intentions, it added.
According to the verdict, the Supreme Court agrees with the decisions of the appellate tribunal and the high court on the matter. The tax authorities had levelled the allegations on the basis of mere assumptions.
The counsel representing the businessmen, Mohsin Virk, had argued that the FBR’s move regarding the re-audit as well as the show-cause notices had been declared illegal by first the appellate tribunal and then the high court.
He also contended that the use of plastic sheets in the manufacturing of rexine by the Paul Leather Industry wasn’t challenged in the previous audit.
Also, the tax authorities did not ensure impartial verification of the material procurement, Virk added.
However, the FBR’s lawyer said there was no mention of procuring cloth in the tax returns filed by the Paul Leather Industry. He also claimed that the unit had been manufacturing plastic sheets instead of rexine.