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Petitioner: ABDUL WAHID and others VS Respondent: NATIONAL ACCOUNTABILITY BUREAU through Chairman and others
Court Name: Sindh High Court Judge(s): Ahmed Ali M. Shaikh, Muhammad Karim Khan Agha Title:ABDUL WAHID and others vs NATIONAL ACCOUNTABILITY BUREAU through
Chairman and others Case No.: C.Ps. Nos. D-6262, D-2717, D-7975, D-8048, D-6301, and D-7441 Date of Judgment:2018-02-23 Reported As: 2019 P Cr. L J 1503 Result: Order accordingly Judgment ORDER MOHAMMED KARIM KHAN AGHA, J.---By this common order we propose to dispose of the above petitions filed by the above mentioned petitioners. Some of the petitioners have applied for post-arrest bail whilst other petitioners have applied for the confirmation of their pre-arrest bail which was granted to them earlier through various orders of this court. 2. The brief facts of the case are that the National Accountability Bureau (NAB) received a source report against proprietors of different registered companies who in connivance with officials of the Inland Revenue Service (IRS) had received illegal refunds of sales tax against fake/flying invoices by misusing SRO No.549(I)/2008 dated June 11th 2008 and SRO No.68(1)/2009 dated 27-01-2009. 3. After carrying out an inquiry which was later converted into an investigation the NAB collected sufficient material, against Anfal proprietor of Messrs Al-Falah Impex (Impex) which was aided and abetted by other companies (who provided fake and flying invoices to Impex) who in connivance with named IRS officers, established that the IRS officials by misusing their authority/failing to exercise their authority had in connivance with Impex which was aided and abetted by other companies illegally benefited Impex by enabling Impex to obtain illegal sales tax refunds through the use of fake and or flying invoices which caused a loss of tens of millions of rupees to the national exchequer and justified the filing of a reference against Impex, aider and abettor companies and IRS officials on account of corruption and corrupt practices under S.9 of the National Accountabi lity Ordinance, 1999 (NAO) and accordingly reference No.25/2017 State v. Anfal and others was filed before the accountability court in Karachi against the petitioners and other co-accused on 27-10-2017 . According to the reference the total loss caused to the national exchequer through the illegal actions of the accused in the reference amounted to Rs. 120.1 million.
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4. Through the reference as per para 39 which is set out below it was established that; "39. That in view of the above, it has been established that Messrs Al-Falah Impex was non-existent manufacturing unit. It was shown registered in the names of accused No.1 (Anfal) just to obtain illegal Sales Tax Refund. Accused Tehsin Salim (deceased), the then Inspector IRS issued False Verification Report of the non-existing unit of Messrs Al-Falah Impex which led to issuance of illegal Sales Tax Refund. Accused No.7, Faizan (one of Anfal's brothers) one of the beneficiary of the illegal Sales Tax Refund. Accused Nos.1 and 2 (Anfal and his brother Muhammad Umair) in connivance with accused Nos.8 to 21 (proprietorships/companies) managed fake/flying invoices and other fake/bogus documents using accounts of accused Nos.22 to 25 which were forwarded, processed and sanctioned by accused Nos.3 to 6 (IRS officials) which resulted in causing loss of Rs.94.6 Million to National Exchequer and obtained illegal benefits amounting to Rs.25.5 Million besides this loss. Also accused No.3 obtained illegal gratification against sanction of illegal sales tax refund and accused No.26 was benamidar of accused No.3. Hence accused Nos.1 to 26 in connivance with each other caused loss of Rs.120.1 Million, to the national exchequer along with consequential gain derived by them in this process. Thus they have committed the offence of corruption and corrupt practice s as defined under Section 9(a) of the National Accountability Ordinance, 1999 punishable under section 10 of the Ordinance and Schedule thereto". 5. In essence the reference divides into three categories of accused. Firstly the main beneficiary (Impex), secondly the government officials (IRS/FBR) and thirdly those companies who aided and abetted Impex through providing fake and/or flying invoices in return for a Commission on the illegal fake and/or flying sales tax invoices which they gave to Impex which enabled Impex to make the illegal sales tax refund claims. The case of Impex 6. Turning to the case of petitioner Anfal proprietor of Messrs Al-Falah Impex . He is the alleged main beneficiary of illegal sales tax refunds to the tune of Rs.94.567 Million and the main accused, along with his brother accused No. 2 (Muhammad Umair who has absconded) in the reference (which in essence involves a sales tax scam perpetuated by Impex, other companies (aiders and abettors) who provided Impex with fake and/or flying invoices in return for commissions and IRS officers which enabled Impex to claim massive illegal sales tax refunds) and very specific allegations have been made against him in the reference in the following terms at Paras 12, 13 and 1 1: "12. That the investigation revealed that the accused No.1, Anfal has got registered non-existing manufacturing unit in FBR on the basis of fake documents. He also opened bank accounts to obtain sales tax refund for his so-called manufacturing unit. He submitted bogus tenancy agreement and fraudulently declared address of location which was never possessed by him on rental/owner basis. Being proprietor of Messrs Al-Falah Impex, he availed illegal sales tax refund on fake/flying invoices on the manufacturing of zero rated supplies causing loss to national exchequer to the tune of Rs.94.567 Million . 13. That, the investigation revealed that the accused No.2 Muhammad Umair is brother of accused No. 1. He used to arrange flying invoices from different suppliers and managed layering and rotation of funds for disposal of illegal refund amount as well as for deceiving FBR authorities regarding monitoring of compliance of section 73 of Sales Tax Act, 1990. 11. That, the investigation revealed that: i. Messrs Al-Fatah Impex (STRN: 1704999820573) was registered as manufacturer of Plastic Goods in the name of accused No.1 Anfal son of Abdul Wahid which never existed. Fake agreements and bogus documents were used to reflect of fices of firm at dif ferent locations; ii. No plastic manufacturing was carried out which is evident from the fact that neither electricity consumption was highlighted nor any power generating equipment was installed at so-called prem ises of AI-Falah Impex (CI-64, Sector 12, North Karachi Industrial Area.) iii. Flying invoices of different supplier were used for input tax against which illegal refund was claimed which were arranged by accused no.2 Muhammad Umair who is also brother of accused No.1. iv. Statement of Approver Muhammad Zaheer also recorded which stated that flying invoices of PMC were issued at the rate of Rs.80-100 which he supplied to accused Nos.1 and 2.
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v. 06 accused who issued invoices of 7 firms, on the basis of which Rs.14.547 Millio n were obtained as illegal sales tax refund have accepted their guilt of issuing/selling flying invoices out of which 01 is accepted by court and other are in process of approval/disposal. vi. Rs.3.422 Million of sales tax refund was obtained on the basis of fake invoices of Messrs Rasasi Traders and Messrs Interactive Technology Gateway while both are non existent and bogus firms. vii. Pecuniary advantages were taken by accused No. 3 Iqbal Ahmed Magsi in the shape of illegal gratification for purchase of Plot Nos.430-D and 432-D, 18th Street DHA Phase VIII, Karachi by Messrs Al-Falah Impex , in lieu of sanction of illegal refund claims. viii. Rs.82.767 Million out of Rs.94.6 Million of total refund claim by Messrs Al-Falah Impex were credited through Government treasury instruments into Account No.6-1-13-2031 1-714-179219 of HMB Dhorajee Branch Karachi. ix. Rs.11.8 Million out of Rs.94.6 Million of total refund claim by Messrs Al-Falah Impex were credited through Government treasury instruments into Account No.5250201 145501 Bank AlFalah Limited Dhorajee Branch Karachi. x. Out of Rs.11.8 Million Rs.11.4 Million was immediately transferred to Messr s Al-Faizan International Bank Account operated by Faizan son of Abdul W ahid brother of Accused Nos.1 and 2. xi. Payments of Al-Falah Impex were routed through Proprietors own bank accounts or their employees bank accounts which were transferred back to these firms by AI- Falah Impex to prove bogus supplies as genuine in record of FBR. Actually no supplies were made to Messrs AI-Falah Impex by any of the firms. xii. Messrs Al-Falah Impex bank accounts were also used for money laundering, illegal refund and layering of other funds. xiii. Neither relevancy of input with the output was checked by the accused Nos.3 to 6 nor any suspicion was raised by them despite the fact that multiple invoices were issued in single day or daily invoices in series was generated by various suppliers which should have raised suspicion by seeing at a single glance. (bold added) 7. In support of the above allegations various tables have been set out in some paragraphs of the reference which are not set out again in this order in order to avoid repetition but can be found by referring to the reference itself. 8. Learned counsel for the petitioner Anfal proprietor of Messrs AI-Falah Impex submitted that the petitioner was a genuine manufacturer of plastics and was entitled to the Sales tax refunds which he had claimed and that there was no question of any of his invoices being bogus. In support of his contentions he showed that he had an office address for his company and a separate address for his manufacturing business. In this connection he referred to agreements in each case along with correspondence which had been sent to him by the FBR and which he had received at such addresses and FBR reports showing that his manufacturing units were operational. The fact that his electricity bills were low he put down to load shedding and the fact that he had been running his manufacturing unit through his own personal generator . As such there was no material to connect to him to the offense for which he had been charged in the reference and for all the above reasons he was entitled to post arrest bail. Turning to the case of the Government officials . 9. Learned counsel for petitioner Abdul Rauf Nasir who was the sanctioning officer of sales tax submitted that he was completely innocent; that it was not his function to check the genuineness of claims; that all the claims went through the automated STARR system which checked the validity of any claims and that he simply signed off on such claims if they had been validated by the STARR system and as such there was no wrong doing on his part as the STARR system had validated all the claims which were subject matter of this reference and as such there was no material against him and he was entitled to post-arrest bail on merits. He also belatedly contended that he was entitled to bail on medical grounds and referred to a number of doctor's certificates in this regard. In support of his contentions he placed reliance on Rule 29.4, of the Sales Tax Rules and the cases ,of Mohammed Saeed Mehdi v. State (2002 SCMR 282 ) and Mohammed Amin Qureshi v . State (2007 PCr .LJ 105). 10. Learned counsel for the petitioner Kashif Naseer who was the processing officer of sales Tax essentially made the same arguments as petitioner Abdul Rauf Nasir above and relied on Rule 29 (Supra). According to her once the
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STARR report indicated that the claim was valid the petitioner had neither any obligation nor power not to approve the sales tax refund and if any officer had such authority/powers it was petitioner Abdul Rauf Nasir named above who was the sanctioning officer; that this was a pick and choose exercise by NAB as some of the other IRS officials involved in the scam had been let off. As such for all the above reasons the petitioner was entitled to post arrest bail. Aiders and abettors and benamidars . 11. Learned counsel for petitioner Zubair Tufail who was on pre arrest bail and was also the proprietor of Interplast (Pvt.) Limited submitted that he was completely innocent of any wrong doing and that he had paid sales tax as per the concerned SRO; that as per sales tax law he could have no liability as over 5 years had passed and there were no records of his transactions; that the offense had been committed by his employees Nisar Ahmed Vohra, Abid Rahim and Muhammad Azeem (accused Nos.22, 23 and 24 in the reference) who unknown to him had entered into a private business to sell the lower grade quality materials which he was completely unaware of and they had even admitted their liability and had applied to NAB to accept a plea bargain on account of their guilt which remained under consideration; that all his invoices were genuine; that he has not issued any flying invoices and that he had no control over what any other person such as Impex was doing with his invoices and as such this was a case of further inquiry . With regard to mala fide he submitted that this was floating on the face of the record by NAB not having any incriminating material against him yet they choose to mala fide add him to the reference. Thus, for all the above reasons he submitted that he was entitled to the confirmation of his pre arrest bail. In support of his contentions he placed reliance on Syed Muzaffar Ali v. Chairman NAB (2015 PCr.LJ 1569 ), Ali Shan v. Director of Intelligence and Investigation (IRS) Karachi (2016 PTD 2648 ) and the unreported case of Jameel Akhtar and others v . Chairman NAB (C. P . D-1 770/16) dated 13-12-2017 passed by a DB of this court. 12. Learned counsel for petitioner Anis who was the proprietor of Al Ubaid Enterprises and was on pre arrest bail submitted that he was completely innocent; that he had not issued any illegal sales tax invoice and as such had not abetted Impex in obtaining Rs. 2.4 m illegal sales tax refund and as such he was entitled to the confirmation of his pre-arrest bail. 13. Learned counsel for petitioner Majid Ali who was on pre-arrest bail submitted that he had played no role in the alleged sales tax scam. That he had nothing to do with Impex, any of the aider and abettor companies and was not a government sales tax official. He had wanted to buy a house but did not have the full amount of the purchase price and thus had asked his uncle Iqbal Ahmed Magsi who is an IRS official and accused No.3 in this reference for a loan. Such loan was given to him and he was completely unaware of the source of such loan (which documents showed had come from Impex/petitioner No.1) and thus he was completely innocent of any wrong doing. According to him at best he could be regarded as a benamidar of accused Iqbal Ahmed Magsi who has since absconded. He claimed that the mala fide of the NAB was including him in the reference in the first place and as such for all the above reasons he submitted that his pre arrest bail should be confirmed. 14. On the other hand NAB strongly opposed the grant of both post arrest bail and pre arrest bail to all the petitioners and contended that there was more than sufficient material on record to show that all the petitioners were connected with the offenses for which they had been charged and took the court through various section 161, Cr.P.C. statements and other relevant documents and as such both the petitioners respective petitions for post arrest bail should be dismissed and the orders granting some of the petitioners ad interim pre arrest bail should be recalled as the case may be. 15. We have considered the submissions of learned counsel for the parties, carefully perused the material available, on record and the case law cited at the bar . General 16. We would also like to make it clear that the findings in this order are only based on a tentative assessment of the material available on record and shall have no bearing on the trial which shall be decided on merits, based on the evidence placed before the trial court. White collar crimes
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17. At the outset, as we have done before in other similar NAB cases, we observe that cases of white collar crime are generally of an intricate and complex nature and the whole transaction and each component part of the scam needs to be viewed in a holistic manner and not in isolation. This is because in most cases the offence could not be committed without the active involvement of all the accused in the chain of events which lead to the commission of the offense. However , notwithstanding this observation it is settled law that in cases of A bail each of the accused needs in some way to be connected with the alleged offense through a specific role and in the case of non bailable offenses such as this there are reasonable grounds for believing that the accused is connected with the commission of the of fense for which he is charged. 18. The current case, as with many NAB cases, is more a case of a joint crimin al enterprise whereby every accused plays their role in order to achieve a criminal objective all of which they were aware of and could not have been achieved without the active participation of all involved. 19. In this sales tax scam case it appears that the claimant was Anfal/Impex (the main accused) who obtained illegal sales tax refunds based on the fake and/or flying invoices provided by the other proprietorship co-accused most of whom have entered into PB's and thereby have admitted their guilt and thus, this sales tax scam could not have taken place without their active involvement as aiders and abettors. Likewise is the case of the IRS/FBR co- accused who willfully failed to exercise their authority in failing to check obvious and glaringly suspicious cases of sales tax refund which would have stood out to such experienced and senior officers . In essence without the active involvement and connivance of all accused in this reference the Sales tax scam carried out by Anfal/Impex could never have taken place. 20. The accused in this case all claim that they are entirely innocent and not connected to the offence in any way. Without going into a deep appreciation of the material on record it would appear that through the reference, investigation report and material collected by NAB which we have scanned that nearly all of the accused to a greater or lesser extent are connected to the commission of the alleged of fence. It is more a question of degree. 21. With regard to the Government officials (sales tax officials) we have also taken into consideration that they are paid and employed to serve the State/Province out of tax payers money and have a special duty to fiercely protect and safeguard the tax payers money and not enable it to be illegally misappropriated through corruption in performing their duties/functions. 22. In the case of The State v. Haft Kabeer Khan (PLD 2005 SC 364) the Supreme Court observed that it would exercise its discretionary powers to grant pre-arrest bail in NAB cases in rare and exceptional circumstances in the following terms at P .372 Para 9. "Now turning towards the case arising out of Writ Petition No.20214 of 2002 wherein respondent had sought bail before arrest in Reference No.38 of 2002. It is to be noted that under the NAB Ordinance there is no provision for grant of bail before arrest, therefore, this Court while examining the vires of 9(b) of the NAB Ordinance in the case of Khan Asfandyar Wali (ibid) took view that High Court shall exercise this power sparingly in rare and exceptional circumstances for valid reasons to be recorded in writing. In this behalf reference can also be made to the case of Meeran Bux v. The State PLJ 1986 (sic) 526 and Murad Khan v. Fazal-e-Subhan and another PLD 1983 SC 82. As such we are of the opinion that the powers for grant of bail conferred by this Court has to be exercised strictly keeping in view the observation made therein. (bold added) 23. The same position remains today for offenses of corruption charged under the NAO (white collar crimes) where the Hon'ble Supreme Court in the recent case of Rai Mohammed Khan v. NAB (2017 SCMR P.1152) has emphasized that the grant of bail in such cases must be construed strictly and rigidly even if, as in that case referred to above, the amount involved was on the lesser side being only approx Rs.12M (as opposed to over RS one billion in this case) in the following terms at P .1154 para 7; "Under the principle of law and justice, each bail petition is to be decided on its own merits and the law applicable thereto, however , this Court cannot remain oblivious of the undeniable fact that the tendency of corruption in every field, has become a threatening danger to the State economy , striking on its roots. The public money , allocated for social sector and economic well being of the poor people, is consistently embezzled/ misappropriated at a large scale and why the majority of the popula tion is deprived of essential daily utilities, like pure drinking water , health
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care and education facilities, etc. It has become the foremost obligatio n of each and every institution, including the Judicator , to arrest this monster at this stage, before it goes out of proportion, posing threat to the very survival of the State and State economy , therefore, the Courts shall apply the Anti-Corruption laws somewhat rigidly , once on fact the case is made out, at bail stage, against the accused person. Distinction, however , is to be drawn between the ordinary criminal cases and of corruption on the above analysis and grounds, while dealing with bail matter to an accused person, charged for such like crimes and also at the time of conviction, once the case is proved against him then, Courts are not supposed to show any mercy by taking a lenient view in the matter of sentence." Findings on beneficiaries . 24. With regard to Petitioner Anfal who is the proprietor of Messrs Al-Falah Impex we are not persuaded by the agreements which he has submitted which showed that he rented office space and a plot where he manufactured his plastics for the following reasons: (A) Section 161, Cr.P.C. statements of Syed Tahir Mehmood and Saifullah clearly indicate that no office premises were rented to either Anfal or Impex where he claims to have rented them. Even if these offices were in the use of Impex they were mere post boxes as opposed to fully functioning offices as is evident from the section 161, Cr.P.C. statements of Muhammad Muzamil and Jawed Akhtar which show that there was hardly any electric consumption at the office. With regard to alleged TCS receipts there is no material to suggest that these were signed by Anfal or any one associated with Impex. They could have been signed by a chokidar especially as the office was apparently not in use .As to the letters sent by the FBR/IRS we place little reliance on these as it appears that IRS/FBR officials were mixed up in this sales tax scam. (B) with regard to the plot where the alleged manufacturing unit was based the section 161, Cr.P.C. statement of Syed Amir Ali states that the plot was rented to Anfal from 01-08-2010 to 30-07-201 1 which is a period of 11 months however he states that no factory was operational on the said plot for at least 7 months from the date of signing the tenancy agreement. Also no generator was installed on the said premises. This statement completely destroys the stance that there was a manufacturing unit on site which was capabl e of manufacturing such a large amount of plastics as claimed by petitioner No.1/Impex. In addition Muhamme d Muzamil clearly states in his section 161, Cr.P.C. statement that based on billing the consumption of electricity on the plot where the manufacturing unit was set up based on his expertise is not enough to run a plastic manufacturing unit. As per section 161, Cr.P.C. statement of Jawed Akhtar there was also no application to place a generator on the plot. The fact that according to the petitioner he was running his manufacturing unit almost exclusively through a generator simply does not appeal to reason, logic or common sense. Even, if such a manufacturing unit was in place it would not have the capacity to generate so many sales tax invoices for refund which we will come to below . 25. In connection with the sales tax refunds these amounted to the colossal amount of Rs.94.567 Million which indicates that an enormous amount of plastic was manufactured during this short period of 11 months even if the unit was fully operational (which the material on record suggests that it was not) which does not seem possible. 26. In fact it appears from the material before us that it was not possible and that most of the sales tax refunds are based on fake and/or flying…
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