SHC Dismisses Millat Industrials’ Request to Quash FIR Against Alleged Tax Fraud

Sindh High Court (SHC) has dismissed an application of Millat Industrial Products Limited and its Chairman for quashing an FIR registered against the company and its chairman for alleged involvement/beneficiary of sales tax fraud. In this regard, the SHC has issued order number (961 of 2024) against Sikander Mustafa Khan, chairman of Millat Industrial Products Ltd and the said company. Presently, the case is being heard by the Trial Court (Customs Court Karachi) where the Directorate of Internal Audit Karachi had registered FIR number 1 of 2022 against the accused chairman and the company for committing tax fraud of Rs. 51,475,556. The company has alleged that it has made bogus/paper purchases of Rs. 724,545,985 to claim illegal sales tax adjustments/credits and understate sales tax liability to commit tax fraud. The company and its chairman approached the SHC to quash the said FIR registered by the Directorate of Internal Audit Karachi. However, the SHC has dismissed the application with the observation that no extraordinary circumstances exist and the trial court can take up the matter of the FIR registered against the director as well as the company. SHC has referred back the matter to the trial court for finalization of the case. SHC added that the argument that the FIR is without jurisdiction can well be taken before the trial Court under section 265-K Cr.P.C., and therefore does not present extraordinary circumstances that warrant the exercise of inherent jurisdiction under section 561-A Cr.P.C. Therefore, the application of the company is dismissed. According to the order of the SHC, the applicants have invoked the inherent jurisdiction of the High Court for quashing FIR No. 01/2022 dated June 14, 2022, lodged by the Directorate of Internal Audit (Southern Region) Inland Revenue, Karachi for an offense under section 37(A) read with section 37(D) of the Sales Tax Act, 1990. The 4th interim challan included the company as a beneficiary of the sales tax fraud; whereas the 5th interim challan also implicated the CEO as the Director of the said company. Since quashment of the FIR is prayed without availing the remedy under section 265-K Cr.P.C., the office has objected to the maintainability of this application. The counsel for the Applicants submits that quashment is being sought on the ground that the Directorate of Internal Audit (Southern Region) Inland Revenue, Karachi did not have jurisdiction to lodge the FIR; and that in such circumstances an aggrieved person doesn’t need to first exhaust the remedy before the trial Court. SHC added that the argument that the FIR is without jurisdiction can well be taken before the trial Court under section 265-K Cr.P.C., and therefore does not present extraordinary circumstances that warrant the exercise of inherent jurisdiction under section 561-A Cr.P.C. Therefore, the application of the company is dismissed. ProPakistani reached out to Millat to respond to a request for comment on this report. The company did not respond immediately.