The Sindh High Court (SHC) has quashed the criminal proceedings against Pakistan Petroleum Limited (PPL), and its directors, officers and chief financial officer (CFO) in a tax evasion case.
The inland revenue commissioner had initiated criminal proceedings against the PPL, and its Managing Director Khalid Abdul Rehman, CFO Mohammad Mubashar Siddiqui, and former MDs and finance officers for making a false statement as regards a petroleum concession agreement and causing a loss of Rs56,268,389,759 to the national exchequer.
The appellants’ counsel said the company has 74.5 percent shares held by the Government of Pakistan, and the company falls within the definition of state-owned enterprise and it regularly contributes huge amounts to the public exchequer by way of taxes under the income tax law.
The counsel said that the respondent department had not furnished any document or returns under the income tax law that had been demonstrably false. He said that the special court could not have lawfully taken cognisance of the impugned criminal complaint filed by the inland revenue department. He also said that penal consequences are contemplated only in cases involving wilful false statement or deliberate concealment.
The counsel said that the jurisdictional threshold for applying these provisions are the existence of mens rea (guilty mind), coupled with demonstrable falsity in a matter of fact. He said that the present case is based on official documents relating to petroleum exploration issued in favour of the PPL by the Ministry of Energy, which fully vouches for their veracity.
He added that the matter pertaining to the returns or documentation to be true or false requires adjudication in the appropriate civil proceedings, and cannot be assumed or determined in the first instance through criminal proceedings.
He also said if the proceedings continue, the appellants would be compelled to undergo agony and humiliation of a prolonged criminal trial that would damage the business operation of the appellant, including a major international project at Reko Diq in Balochistan, as emphasised by the energy ministry in its letter to the Federal Board of Revenue.
He requested the court to set aside the special court’s order and quash the criminal complaint against the PPL and its director initiated by the inland revenue department. The appellants’ counsel also placed on record the high court’s judgments to support his case.
The inland revenue commissioner’s counsel informed the court that they do not intend to either continue with the criminal proceedings initiated or, as a matter of fact, initiate any proceedings further on this account against the appellant and its directors.
After taking the statement of the counsel on record, a single SHC bench headed by Justice Omar Sial quashed the criminal proceedings initiated against the PPL, and its MD, CFO and other directors.
