ISLAMABAD: The Federal Board of Revenue has restored powers of the Directorate General Intelligence & Investigation (DGI&I) to carry out criminal prosecution against tax evaders.
The FBR has placed 54 officers on the strength of the directorate, also retaining Shad Muhammad as its director general. The directorate of Inland Revenues Intelligence and Directorate Customs Intelligence are two distinct arms of the FBR.
The statutory regulatory order (SRO) 116, which allowed the DGI&I to conduct investigation into sales tax evasion, was declared illegal in a Lahore High Court (LHC) judgment in July last year.
According to FBR Spokesperson Dr Muhammad Iqbal, under the new notification – SRO1301 – DGI&I will be conferred with powers which were not restricted by the LHC in its 2017 judgment.
He said that minor changes were made in the SRO1301 to exclude powers like blacklisting of taxpayer, etc. which were highlighted in the court order. However, he said, under new orders the DGI&I will have the powers to raid a business, conduct investigations and make arrests.
Following the LHC judgment, the previously registered FIRs and criminal prosecution, which were already in motion, had been set aside and quashed.
To provide legal cover to earlier decisions, government through the Finance Bill 2018, proposed section 30A in the Sales Tax Act 1990 whereby the powers were conferred to DGI&I to conduct investigation into sales tax evasion.
Regarding the past cases including lodging of FIRs, a validation Section 74 was proposed to the Sales Tax Act 1990.
As per amendments, the validation section provides a legal cover to the orders of DGI&I in retrospect even before these powers were conferred through the Finance Act 2018.
As per new notification, DGI&I Inland Revenue will be able to carry out intelligence activities on all tax related issues including under-reporting, tax evasion, tax fraud and revenue leakages.
The department will also collect third party information relating to financial transactions like investment, expenses and details of persons.
It will establish and develop linkages with all major national, provincial and other databases to collect relevant information.
The department was empowered to identify cases of sales tax evasion and carry out inquiry, investigate, audit, whichever it deems fit to retrieve the loss of revenue.
The powers will also allow it to identify and investigate in accordance with applicable laws in cases of tax fraud having any financial implications and punishable as offence.