ISLAMABAD: The federal government on Tuesday restored power of Directorate General Intelligence & Investigation of Inland Revenue to initiate proceedings against the people who had possibly laundered tax-evaded money under the Anti-Money Laundering Act (AMLA) 2010.

The power was originally extended to the Directorate General Intelligence & Investigation (DG I&I) of Inland Revenue through a Statutory Regulatory Order 611 in September 2016, which was struck down by the Single bench of Lahore High Court (LHC) in January on the plea that it was issued by a federal ministry without the express approval of the federal cabinet.

It was alleged that SRO611 of 2016 has been issued without the due approval of the federal cabinet. Consequently, the impugned notification was declared as ‘ultra vires and unlawful’.

The Directorate General I&I challenged the order of the single bench through intra court appeals.

Money laundering and tax evasion inquiries against 270 people revived following the decision

The division bench of the Lahore High Court comprising of Justice Abid Aziz Sheikh and Justice Faisal Zaman has now set aside the judgment of the single bench on the ground that without issuance of mandatory notice to the office of Attorney General of Pakistan, the impugned judgment is nullity in the eyes of law.

In the wake of this decision, a tax official of the Federal Board of Revenue (FBR) told Dawn that proceedings against 270 influential people accused of laundering tax-evaded money have been revived. “We have re-launched our proceedings against these people under the AML act,” the official said.

These influential individuals were flagged by the State Bank’s Financial Monitoring Unit for possible money laundering in certain transactions, and their cases were forwarded to the DG I&I for investigation.

In the past 18 months, the DG I&I has recovered Rs10 billion under the AMLA 2010 against tax-evaded money.

The provisions of AMLA 2010 have significantly increased the powers of the tax authorities compared to the older legislation. If in case the individual denies any criminal liability, proceedings are launched against him or her. The law allows the confiscation of property as well as the lodging of FIR against any individual refusing to pay due tax.

Other agencies which exercise powers to initiate investigations and prosecution under AMLA 2010 are the Federal Investigation Agency, National Accountability Bureau and Anti-Narcotics Force.

But the procedural delay of more than four months might have an adverse impact on Pakistan’s case during the upcoming review by FAT.

The revival of the investigation and prosecution power of DG I&I at a time when the international body is already questioning Pakistan’s ability to crack down on people who have allegedly laundered money abroad without paying taxes will make Pakistan’s case strong to bring such people into the tax net.

According to the details the SRO was challenged in a number of writ petitions on the basis of the ratio settled by the Supreme Court of Pakistan in the case titled Messrs Mustafa Impex, Karachi and others vs government of Pakistan wherein it was held that the federal government is the collective entity described as the cabinet constituting he prime minister and federal ministers.

Neither a secretary nor a minister and nor the prime minister are the federal government and the exercise or purported exercise, of statutory power exercisable by the federal government by any of them, especially in relation to fiscal matters, is constitutionally invalid and a nullity in the eyes of the law.

Published in Dawn, June 6th, 2018