High court overturns civil court's judgment against MIRA in Treasure Biz International case

High court has overturned the verdict taken by civil court against MIRA in May 2013, in which judgment was passed that MIRA did not have the right to hold the materials of Treasure Biz International Pvt Ltd in MIRA’s custody.

In December 2012 MIRA had entered three business premises operating under Mr. Fuad Zahir (Mariyammaage, GA Kolamaafushi), under a search warrant from the Tax Appeal Tribunal to investigate for alleged tax fraud. During the raid, several documents and other materials that could assist MIRA in building a case against Mr.Fuad Zahir were taken into MIRA’s custody. However, Mr.Fuad Zahir alleged that these materials were taken illegally and had taken the case to court and the civil court had passed judgment that while MIRA can take materials under a search warrant, MIRA did not have the right to keep the possessed materials beyond the date on the search warrant. Civil court has also ordered MIRA to return the materials taken by MIRA to Treasure Biz International Pvt Ltd.

Under the Tax Administration Act, the maximum validity of a search warrant issued by tax appeal tribunal is 14 days.

MIRA had appealed the decision taken by the civil court and today the high court had overturned the verdict of civil court. In the judgment passed, it was stated that pursuant to section 36 and 37 of the Tax Administration Act, and section 15 of the Tax Appeal Tribunal regulation, MIRA holds the right to retain possession of materials collected during a search and raid. It was noted that this is because these materials will allow MIRA to build a case against the defaulting taxpayer and returning the materials could allow the alleged defaulters to tamper with evidence and hinder a fair trial.

Furthermore, it was noted in the judgment that the warrant issued from the tax appeal tribunal was a search warrant, and it is known that MIRA had conducted the raid within the time specified in the warrant, and that searching a place and possessing materials from that place for use in an investigation are two different things. The court also noted that while possession of materials should be within the boundaries of the law, it can be inferred from referring to section 36 (f)(2) and section 37 clauses (a), (c), (d) and (f) of the Tax Administration Act that an officer executing a search warrant from the tax appeal tribunal does have the right to bring required documents under MIRA’s custody. The judgment further stated that the court did not believe an additional warrant is required for the possession of materials in such cases and that the Tax Administration Act and Tax Appeal Tribunal Regulation allows MIRA to maintain custody of such materials until the relevant investigation is over. 

21 Aug 14