SHC dismisses pleas of Shell’s officer and others in Rs2.37bn reference

Sindh High Court on Friday dismissed petitions of Yaseer-ul-Haq Effendi,a district manager retail of Shell Pakistan, and others facing NAB reference of causing 2.37 billion rupees loss to the national exchequer by selling jet fuel to unauthorized buyers.

The petitioners being tried by an accountability court of Karachi had moved the SHC for transfer of their cases from the accountability court to special judge customs because their cases fall within the ambit of amended section 4(2)(a) of NAO, 1999.

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As per allegations, petitioners, employees of Shell Pakistan Limited (SPL), sold illegally aviation fuel also known as Aviation Turbine Fuel (Jet Propulsion JP-1), which is although the same kind of product as Super Kerosene Oil (SKO) but is exempted from certain duties and taxes due to its exclusive use for defense and aviation purpose, in open market to the companies not authorized and registered to deal with such product causing a loss of 2.37 billion rupees.

Counsel for the petitioner argued that petitioners were not public servants and therefore could not be subjected to provisions of National Accountability Ordinance, 1999 and order of the accountability court rejecting their applications for transfer of their cases to special judge was not sustainable in law.

The counsel argued that after the second amendment, terms of section 4 NAO, 1999, the jurisdiction of the accountability court in the matters of taxation, levies, etc. had been ousted the case against the petitioners was evasion of taxes and duties, evident from the allegation that they supplied subsidized jet fuel to non-aviation costumers at higher price causing loss to the national exchequer through non-payment of such duties and taxes.

A two-member SHC bench headed by Justice Muhammad Iqbal Kalhoro in its four-page order held that in the inquiry and investigation prima facie it was found that SPL instead of supplying jet fuel to original customers: defense and aviation authorities on subsidized price, sold the same as SKO at a much higher price to the companies such as M/s Aerolube Pvt. Ltd., M/s Lucky Oil, etc. not authorised and registered to deal with jet fuel or SKO, and thus earned huge profits.

The bench held that the petitioners’ case was not of tax evasion as tax evasion in simple parlance would mean using illegal means to avoid paying taxes, an illegal action by an individual or a company to avoid paying tax liability, misrepresentation in the form of either underreporting income, inflating deductions or hiding money and its interest in offshore accounts, etc.

“None of such incident of tax evasion seems attracted in the case of the petitioners as they are not alleged to have avoided paying tax liability, etc. on earnings. When section 4 (2) (a) of NAO, 1999 says that the provisions of this law shall not be applicable to persons or transactions, namely: all matters pertaining to federal, provincial or local taxation, other levies or imposts, including refunds, or loss of exchequer pertaining to taxation,” declared the bench.

The bench held that just because it is said that on JP-1 the government, keeping in view its use for defense and aviation purposes, has not levied certain duties and taxes would not mean that the case involves the issue of taxation.

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“The petitioners by their alleged actions are not stated to have evaded tax liability by concealing their incomes etc. but are said to have exploited state of affairs i.e. fuel subsidised due to its only use for defense and aviation purpose by selling it as unsubsidised fuel in open market at a higher price to unauthorised entities and raking in thus the illegal profits: breach of trust which is an offence inter alia u/s 9 (x) (xi) of NAO, 1999,” declared the bench while dismissing the petitions.