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The Federal Board of Revenue (FBR) has filed an FIR against designer Nomi Ansari for allegedly committing sales tax fraud of over Rs1.2 billion. Ansari has since challenged the FIR in the Sindh High Court.

The FIR, filed on April 18 in Karachi, read that Ansari, the proprietor of his eponymous fashion label, was charged with tax fraud under Section 2(37) (tax fraud) of the Sales Tax Act, 1990.

In an order issued on Thursday, the Sindh High Court restrained the FBR from any more “coercive measures” and summoned the deputy attorney-general as well as the official who registered the FIR on May 23 to explain their position. Ansari challenged the FIR on the grounds that it is violation of an ad-interim order passed by the court on April 18, as well as being without lawful authority or jurisdiction.

The FIR said he had also violated sections 3 (scope of tax), 6 (time and manner of payment), 7 (determination of tax liability), 8 (tax credit not allowed), 8A (joint and several liability of of registered persons in supply chain where tax unpaid), 11E (assessment of tax and recovery of tax not levied or short levied or erroneously refunded), 22 (records of goods), 23 (tax invoices), 26 (return) and 73 (certain transactions inadmissible) of the Act.

Additionally, the case may be punishable under Sections 33(2) (failure to issue required invoices), 33(5) (failure to deposit due taxes), 33(11) (false documents, altered records and fraudulent statements), and 33(13) (committing tax fraud).

The FIR also named three other people — Hussain Kazmi, Syed Ali Massum Naqvi and Imran Musel.

It maintained that Ansari was “involved in under-declaration of sales proceeds” and the “analysis of the Sales Tax Returns of [Ansari] revealed serious discrepancies and abnormal profile.” It stated that he declared taxable sales without corresponding purchase activity, “reflecting zero purchases, which is inconsistent with the nature of the business declared.”

During an examination, the bureau noted that the particulars declared by Ansari in official records were inaccurate. Third-party information from concerned banks revealed he “had been receiving foreign remittances and making frequent cash deposits without supporting documentation.”

Subsequently, the bureau obtained search warrants from the relevant magistrates on February 20, and conducted search operations at three of Ansari’s brand’s locations. “In addition to the two declared commercial premises, an undeclared manufacturing unit located in Mehran Town, Karachi, was also searched,” the FIR stated.

During the raid, the FBR team seized documents which revealed “the quantum of the business of [Ansari] is huge and he has suppressed sales when declared in the Sales Tax Returns.”

According to the FIR, “The records also revealed that there were slips and folders of the money exchange slips which showed huge cash deposits in the name of the staff of [Ansari]. The records revealed that there were slips and folders of the money exchange slips, which showed huge cash deposits in the name of the staff of [Ansari].”

It maintained that the accused persons are liable to be prosecuted as allowed under Section 37A of the Sales Tax Act. Further investigations are currently underway.