M/s Lesmeubles (Pvt.) Limited; Plot No.25-A, Office No.2, first Floor Selex Centre, G-10 Markaz, Islamabad. | Appellant | |
Vs | ||
The Commissioner Inland Revenue, Corporate Zone, RTO, Islamabad. | Respondent | |
Appellant by | Mirza Saqib Siddeeq, Advocate | |
Respondent by | Mr. Shamshad Gul, DR | |
Date of hearing | 01.10.2019 | |
Date of order | 01.10.2019 |
M. M. AKRAM (Judicial Member): The titled appeal has been filed by the
appellant/registered person directly as the first appeal before this Tribunal
under section 46(1)(b) of the Sales Tax Act, 1990 (“the ACT”) against an Order
bearing C.No.2620 dated 21.02.2019 passed by the learned Commissioner Inland
Revenue Corporate Zone, Regional Tax Office, Islamabad under section 38 of the
Sales Tax Act, 1990 (hereinafter referred to as “the Act”) on the grounds as
set forth in the memo of appeal.
2. Brief facts leading to the appeal are
that the Commissioner Inland Revenue on the basis of the report of the
Directorate General I & I, Islamabad, and in the exercise of the power
conferred upon him under section 25 and 38 of the Act authorized the Assistant
Commissioner Inland Revenue (Unit-IV), Range-I, Corporate Zone, RTO, Islamabad
along with seven officials comprising of Assistant Directors (Audit), Senior
Auditor, Inspectors IR, LDC and Naib Qasid to visit and conduct an
inquiry/investigation for the purpose of sales tax for the period July, 2015 to
June, 2018 vide impugned order dated 21.02.2019. In consequence of the said
order, the aforesaid team raided the premises of the appellant and impounded
the record therefrom without getting a search warrant from the concerned
Magistrate as required under section 40 of the Act. Felt aggrieved, the
appellant preferred an appeal against the impugned order dated 21.02.2019 before
this Tribunal and has called into question the very exercise of jurisdiction
with regard to the invocation of section 38 of the Act inter alia on the ground
that while issuing the impugned order dated 21.02.2019 the learned Commissioner
Inland Revenue authorized eight (08) persons out of which three (03) were
Officers of Inland Revenue in terms of section 30 of the Act below the rank of
Assistant Commissioner and two were from the lower staff i.e. LDC and N/Q, to
exercise the powers as envisaged in the provisions of section 38 of the Act.
They raided the premises of the appellant and the records and computers etc
were taken away.
3. This case came up for hearing on 01.01.2019.
The learned AR of the appellant vehemently argued that the impugned order
issued in a flagrant violation of the relevant statutory provisions of law as
neither proper procedure has been followed by the learned Commissioner Inland
Revenue nor due consideration has been given to mandatory requirements of the
law. According to him, impugned order suffers from certain legal infirmities.
He explains his viewpoint by maintaining that the learned Commissioner Inland
Revenue brushed aside the mandatory provisions contained in the proviso to
sub-section (2) section 25 of the Act which categorically states that no
appointment of officers, below the rank of Assistant Commissioner, is lawful
for the purposes of conducting enquiry/investigation under section 38 of the
Act against registered person. It has also been urged that the appointment of
officers below the rank of Assistant Commissioner and authorizing to free
access to the business premises of the appellant was clearly unlawful, without
jurisdiction, and illegal as the same lacked the availability of search warrant
that is required to be obtained from Magistrate in terms of the provisions of
section 40 of the Act. In this respect, it was argued that section 40 of the
Act is the only recourse, mandatory to be followed, for entering the premises
of a taxpayer. To substantiate his contention, the learned AR placed reliance
on the decision of the Hon’ble Lahore High Court titled as Food Consultant (Pvt.) Ltd Vs
Collector CE & ST, Lahore, (2004 PTD 1731) in which his
lordship, while dealing with the case before him in an identical nature, held
that provisions of section 38 of the Act could not be invoked without first
obtaining a warrant from Magistrate in terms of section 40 of the Act. This
Tribunal has been apprised that the aforesaid decision of the Hon’ble Lahore
High Court was subsequently upheld by the Hon’ble Supreme Court of Pakistan in
a decision reported as 2007 PTD 2356.
To strengthen the aforesaid contention, the learned AR further relied upon the
judgments of the Apex court reported as 2003 PTD 1034, 2005 PTD 1933, and 2007
PTD 1351.
4. He further asserts that without prejudice
to above and without conceding the above legal position, even if it is
considered/assumed that on a jurisdictional plane, the provisions of section 38
of the Act were lawfully invoked, these have not been legally and rightfully
imposed in the case of the appellant because the entire edifice is based on
suspicions, surmises, conjectures and presumptions, etc. On 21.02.2019 at the
time of the raid, there was no inquiry/investigation/assessment against the
appellant in respect of evasion of tax or commission of fraud pending before
any authority nor did the appellant has notice of any proceedings instituted
against them under the Act; there was no reasonable basis for the revenue to
visit the appellant’s premises and seize the appellant’s records after
conducting a search and as such, the action of the revenue authorities is
unlawful, mala fide, arbitrary, illegal and amounts to a deprivation of the
appellant’s right to be dealt with in accordance with law.
5. On the other hand, the learned DR
strongly supported the impugned order. He attempted to justify the exercise of
powers under section 38 of the Act on the legal plane that action of 21.02.2019
was taken under section 38 of the Act and that the provisions of section 40 have
no application to this case. In support of their contention, the learned DR
mainly relied upon the decision of the Hon’ble Lahore High Court titled as M/s
Firdous Cloth Mill (Pvt.) Ltd Vs Federation of Pakistan etc (2016
PTD 257) in which her ladyship dismissed
the petitions filed by certain taxpayers while challenging the order under
section 40B of the Act. Learned DR asserted that revenue visited the premises
after having credible information and material evidence on the basis of which
it was evident that the appellant is involved in tax fraud and evasion of sales
tax. On our specific quarry with regard to arguments of the learned AR
vis-à-vis availability of search warrant under section 40 of the Act, he
submitted that provisions of section 38 of the Act are independent and
therefore, do not require any search warrant. He also could not render any
satisfactory explanation with respect to the assertion of the learned AR
regarding unauthorized nominations in the impugned order passed under section
38 of the Act. He submitted that in fact authorization was given only to the
Assistant Commissioner Inland Revenue and the other officials were supporting
staff to assist him.
6. We have heard the arguments advanced by
the representatives of both the parties and also carefully gone through the
impugned order dated 21.02.2019 as well as the case laws cited from both sides.
First, we take up the decision titled as M/s Firdous Cloth Mill (Pvt.) Ltd Vs
Federation of Pakistan etc reported as 2016 PTD 257 referred to by
the learned DR while defending the exercise of powers under section 38 of the
Act in the present case. We have noted that in the aforesaid decision, the
petitions, to the extent these related to the orders passed under proviso to
section 40B of the Act, were dismissed primarily on the ground that while
invoking section 40B of the Act, the revenue can use their power under section
38 of the Act. Both sections 38 and 40B of the Act facilitate the inquiry
process subject to notice and material evidence pertaining to the allegations
of evasion of sales tax or tax fraud. It was also held in the said judgment that
both sections 38 and 40B are independent provisions and could be used
independently of each other as also simultaneously. The relevant extract of the
said judgment is reproduced hereunder: -
"10. The basic issue pertains to the issuance of a notice under Section 40B of the Act along with all powers under Section 38 of the Act. Section 40B of the Act provides for the posting of Officers of Inland Revenue within the premises of a registered person to monitor the production or sale of taxable goods and the stock position. The Commissioner Inland Revenue issued the notices under Section 40B of the Act as he had reason to believe that the Petitioners are involved in evasion of sales tax or tax fraud……………………………………..
11. The question that arises is that when Section 40B is invoked, can the Commissioner authorize the same officers to exercise powers under Section 38 of the Act. Sections 38 and 40B of the Act are reproduced below for ease of reference:-
38. Authorized officers to have access to premises, stocks, accounts, and records. (1) Any officer authorized in this behalf by the Board [or the Commissioner], shall have free access to business or manufacturing premises, registered office or any other place where any stocks, business records or documents required under this Act are kept or maintained belonging to any registered person or a person liable for registration or whose business activities are covered under this Act or who may be required for any inquiry or investigation in any tax fraud committed by him or his agent or any other person; and such officer may, at any time, inspect the goods, stocks, records, data, documents, correspondence, accounts and statements, utility bills, bank statements, information regarding nature and sources of funds or assets with which his business is financed, and any other records or documents, including those which are required under any of the Federal, Provincial or local laws maintained in any form or mode and may take into his custody such records, statements, diskettes, documents or any part thereof, in original or copies thereof in such form as the authorized officer may deem fit against a signed receipt.
(2) The registered person, his agent or any other person specified in sub-section (1) shall be bound to answer any question or furnish such information or explanation as may be asked by the authorized officer.
(3) The department of direct and indirect taxes
or any other Government department, local bodies, autonomous bodies,
corporations, or such other institutions shall supply requisite information and
render necessary assistance to the authorized officer in the course of inquiry
or investigation under this section.
40B. Posting
of Inland Revenue Officer. Subject to
such conditions and restrictions, as deemed fit to impose, the [Board], [or
Chief Commissioner] may post Officer of [Inland Revenue] to the premises of
registered person or class of such persons to monitor production, sales of
taxable goods and stock position.
Provided that if a Commissioner on the basis of
material evidence, has reason to believe that a registered person is involved
in evasion of sales tax or tax fraud, he may, by recording the reason in
writing, post an Officer of [Inland Revenue] to the premises of such registered
person to monitor production or sale of taxable goods and the stock
position.
12. Section 38 authorizes an officer to have
free access to premises, stocks, accounts, and records of the taxpayer. In
terms of the pronouncement of the august Supreme Court of Pakistan in the case
titled Collector of Sales Tax and Central Excise (Enforcement) and another v.
Messrs Mega-Tech (Pvt.) Ltd (2005 PTD 1933) the provisions of Section 38 of the
Act expects that the registered person will keep the relevant record in an open
and transparent manner at their declared premises and the use of the word 'free
access' means that the authorized officers have free access to the business
premises of a registered person at any time and the registered person shall be
bound to answer questions or explanation required. The objective of Section 38
of the Act is to inspect the business or manufacturing premises and to be able
to inspect the business record of the registered person. The Petitioners have
relied upon the case cited at 2004 PTD 1731 (supra) to urge the point that a
warrant under Section 40 of the Act was necessary before entering and seizing
the record under Section 38 of the Act. However, in that ease, the question of
issuance of a warrant arose because the respondents raided the premises. Hence
the question before the court was whether the respondents could have raided the
premises of the taxpayer and seize its business record and documents without
obtaining a warrant under Section 40 of the Act. In the instant case, the Respondents did not raid the premises of
the Petitioner but entered the premises by invoking Section 40B of the Act and
the record was handed over voluntarily. Therefore, reliance on the case cited
at 2004 PTD 1731(supra) is misplaced and not applicable to this case.”(emphasis
supplied)
14. From the aforementioned it is evident that
the objective of both sections is to give the authorized officer access to the
premises as well as the record and documents of the registered person. While
Section 38 of the Act contemplates a visit to the premises, Section 40B allows
the authorized officers to stay at the premises for a given period of time to
monitor the purchase, sale, and stock position of the registered person. The
primary requirement of both sections is a notice to the taxpayer. In this case,
a notice was issued stating the material evidence on the basis of which
monitoring is necessary to investigate into allegations of tax fraud and
evasion of tax. The Petitioners have argued that separate notices should have
been issued under Section 38 of the Act for the purposes of entry in the
premises of the Petitioners and for the purposes of seizure of the record a
warrant under Section 40 was necessary. Having gone through these provisions of
the Act it is clear that both Sections 38 and40B of the Act are independent
provisions which can be used independently of each other however they can also
be used simultaneously. There is no restriction on the authorized officers who
enter the premises of a registered person for the purposes of monitoring to
also exercise powers under Section 38 of the Act as both Sections are in aid of
an investigation into allegations of tax fraud and sales tax evasion. In both cases,
the Commissioner Inland Revenue has jurisdiction. He can invoke Section 40B of
the Act on the basis of material evidence and he can authorize the same
officers under Section 38 on the basis of the same material evidence to inspect
the premises or record of the registered person with reference to the
allegations of evasion of sales tax or tax fraud. Both the Sections require
that the Respondents have reasonable cause to believe that a visit to the
premises of the registered person where the record and the stocks are
maintained will facilitate the investigation. Both Sections 38 and 40B of the
Act give the Respondents free access to the premises of the registered person,
subject to notice and material evidence pertaining to the allegations of
evasion of sales tax or tax fraud. Therefore
when an authorized officer enters under Section 40B of the Act, a warrant is
not required under Section 40 of the Act. The need for a warrant arises when
any officer of Inlan d Revenue has reason to believe that any document or record
of a registered person may be useful or relevant to the investigation, and that
document or record is not at the business or manufacturing premises of the
registered person but some other place, then he may, after obtaining a warrant
from the magistrate, enter that place and cause a search to be made at any
time. Reliance is placed on the case cited at 2005 PTD 1933 (supra). A warrant
may also be necessary where the record is not produced voluntarily by the
registered person but in the instant case, a warrant was not required as the
authorized officers entered the business/manufacturing place of the Petitioner,
Firdous Textile Mills (Pvt.) Limited from whom the documents were handed over
as per request, without any resistance.”
However,
in the instant case, only provisions of section 38 have been invoked by the
revenue. The precise question involved in the present case is whether without
obtaining the search warrant from the concerned Magistrate as required under
the provisions of section 40 of the Act the Officers of Inland Revenue could have
raided the premises of the registered person and seized the record in the garb
of power vested under section 38 of the Act. The scope of section 38 viz-a-viz,
section 40 of the Sales Tax Act, 1990 did not arise in the case law supra
relied upon by the revenue. Hence, this precedent does not advance the case of
the revenue.
7. We now take up the main arguments of the
learned AR wherein he has questioned the very exercise of jurisdiction by the
learned Commissioner Inland Revenue under section 38 of the Act. In this
respect, the objection of the learned AR is that invocation of section 38
without a search warrant under section 40 of the Act was without jurisdiction.
For the sake of convenience, the said section is reproduced as under;
“Section
40:- Searches under warrant. (1) Where any officer of {Inland Revenue}
has reason to believe that any documents or things which in his opinion, may be
useful for, or relevant to, any
proceedings under this Act are kept in any place, he may after obtaining a
warrant from the magistrate, enter that place and cause a search
to be made at any time.
(2) The search made
under section (1) shall be carried out in accordance with the relevant
provisions of the Code of Criminal Procedure, 1898 (V of 1898).” (Emphasis
supplied)
8. The contention of the learned AR carries
substantial force. It is trite law that no provision in a statute is to be read
in isolation rather provisions of a statute are required to be read and applied
together to advance harmonious construction. Reliance may be placed on the
judgment titled as M/s Bilz (Pvt.) Ltd Vs DCIR, Multan and another 2002 PTD
1(SC), Collector ST & CE Vs Mega-Tech (Pvt.) Ltd, 2005 PTD
1933 (S.C). It is also a well-settled principle of
interpretation of the statutes that each and every word appearing in a section
is to be given effect to and no word is to be rendered as redundant or surplus.
So was held by the Apex Court in the cases of (i) In the matter of Reference by
the President of Pakistan under Article 162 of the Constitution of Islamic
Republic of Pakistan PLD 1957 SC
(Pak.) 219,(ii) Muhammadi Steamship Company Ltd Vs CIT,
(Central) Karachi (PLD 1966 SC 828), (iii) M/s V. N. Lakhani and Company
vs M. V. Lakatoi Express and 2 others (PLD 1994 SC 894) and (iv) Director General Intelligence and
Investigation FBR Vs Sher Andaz and 20 Others (2010 SCMR 1746).
The particular question involved in the instant case as to
whether, while invoking the provisions of section 38 of the Act, the authorized
officers have free access to enter into the premises of the taxpayer without
getting permission from the Magistrate as required under section 40 of the Act,
came before the Hon’ble Lahore High Court in the case titled as Food Consultants (Pvt) Ltd and others Vs
Collector and two others, (2004 PTD 1731). The said decision was
subsequently upheld by the Hon’ble Supreme Court reported as 2007 PTD 2356. The relevant part
of the judgment is reproduced hereunder:-
“14. A comparison of the access, search and
seizure provisions before and after the 1996 amendments highlight the striking
differences. The short "free Access provision" of section 38 (prior
to 1996 amendments) did allow access to an authorized person to the
"business premises of a registered person" for inspecting and
checking the stocks, accounts, and records. This power was however exercisable
after and on compliance with the condition of "due notice to the
registered person". Powers of seizure were available to an officer
empowered for the purpose under the unamended Section 39. Except for minor
changes, the provisions of Sections 40 and 40-A were retained in the Act.
18. Such
resort to the free access and free inspection provisions without essential
safeguards will be subversive of the guarantees under Articles 9, 14, 15, 18,
23, and 24 of the Constitution of Islamic Republic of Pakistan, 1973.
Furthermore, without reasonable standards upon the exercise of such powers by
the taxation officers, economic activity will decline. Instead of enhancing the
revenue, such powers will fatally diminish the sources that generate the state
revenues.
19. I believe that the legislators in
re-enacting section 38 of the Sales Tax Act, 1990 or in framing Rule 179 of the
Central Excises Rules cannot be presumed to be unmindful or unaware of the
possible misuse or mis-exercise of the powers under these provisions by the tax
officers. In my opinion, the legislators amended the provisions of Section 38
of the Sales Tax Act, 1990, or introduced Rule 179 of the above Rules, to make
law harmonious to the commercial activity and its development. To achieve
harmony and development, necessary safeguards and standards had all along been
incorporated in the provisions of section 40 of the Sales Tax Act, 1990, or
Section 18 of the Central Excises Act, 1944 which are identical. These Sections
mandate that all searches made under the Act or Rules shall be (or shall be
carried out) in accordance with the relevant provisions of Code of Criminal
Procedure, 1898. The provisions of sections 38, 40, and 40-A of the Sales tax
Act, 1990 or of Section 18 of the Central Excises Act of 1944 and Rules 179 and
201 of the Excise Rules, all relate to searches.
20. It
is also to be noted that except for Section 18 of the Central Excises Act,
1944, there are no other provisions in the said Act qua "access" or
"search" as in Sections 38 and 40-A of the Sales Tax Act, 1990, which
were provided for through Rules 179 and 201 of the Central Excises Rules. These
rules can therefore be invoked subject to the provisions of Section 18 of the
Act of 1944.
21. Similarly on amendment of Section 38
etc. in 1996, due notice standard as contained in the un-amended section 38 of
the Sales Tax Act, 1990 was purposely taken out. The reason becomes evident
when sections 38, 40, and 40-A ibid are read together. Had the legislatures
meant to treat all the three sections independent of each other and to confer
separate powers upon the taxation officers thereunder, there was no need to
incorporate or to retain sections 40 and 40-A in the Statute book. If "Free Access", "Free
Inspection" and "custody" powers contained in section 38 ibid
are given the interpretation sought by the learned counsel for the revenue
sections 40 and 40-A would become superfluous. And the provisions of section 38
read with those of section 37 will be adequate as complete codes of entry,
inspection, acquisition, information, evidence, and custody. Section 37
empowers an officer to summon a person to tender evidence or produce evidence
or any other thing in any inquiry which such officer is making for any of the
purposes under the Act. The person so summoned is bound to attend. The officer
of the Sales Tax also has the power to arrest and prosecute u/s 37-A to 37-C
ibid. Exercising powers u/s 37 read with section 38, the taxation officer,
simply upon a notice, can obtain any information, concealed documents or the
record, etc. Despite such powers in Sections 37 and 38, Sections 40 and 40-A
were enacted and retained by the legislature in the Sales tax Act, 1990.”
(Emphasis supplied)
In
the light of the ratio emanating from the decision of the said judgment, it is
abundantly clear that entrance to premises of a taxpayer essentially requires a
search warrant from a Magistrate, in the absence of which proceedings, if
undertaken, shall always lack lawful jurisdiction. The Hon’ble Court has
observed in its judgment cited supra that under the guise of revenue collection,
the officers of the department will come to possess unrestricted state power
and unlimited authority. The citizens will be at their whim, wish, and
unrestrained discretion. Such resort to the free access and free inspection
provisions without essential safeguards will be subvertive of the guarantees
under Articles 9, 14, 15, 18, 23, and 24 of the Constitution of Islamic
Republic of Pakistan, 1973. If we are to agree with the learned DR that
provisions of section 38 are independent of section 40 that would be tantamount
to rendering section 40 as redundant and superfluous especially when it speaks
of ‘any proceedings under this Act”.
Accordingly, we are of the considered opinion that the order under section 38
could have only been pressed into service once the condition of section 40 of
the Act has to be compiled. In the present case since no search warrant has
been obtained from the Magistrate under section 40 of the Act, therefore, the
exercise of jurisdiction under section 38 of the Act by the learned Commissioner
Inland Revenue lacks jurisdiction and hence is not sustainable under the law.
Further, we have noted that when the judgment cited supra of the Hon'ble High
Court was upheld by the supreme court, the provisions of section 40A was
omitted from the statute by curtailing the unbridled power of the authorities
and now without getting permission from the Magistrate no one can enter into
the premises of the registered person.
9. In another judgment titled M/s
Ihsan Yousaf Textile Mills (Pvt) Ltd and FOP etc reported as 2003
PTD 2037, this judgment is also in all fours with the facts and circumstances
of the present case. In paragraph 11 of the said judgment, the Hon’ble Judge
spelled out the issue which required to be resolved and which was that: -
“In
the guise of proceedings under section 38, the departmental officers could act
and proceed in a manner which was possible only either under the proceedings of
section 40 or those of 40A of the Sales Tax Act, 1990.”
It
was accordingly held in the aforesaid judgment that provisions of section 38
cannot be made to circumvent or override the constitutional guarantees of an
individual and the procedural formalities for a regular search or seizure given
in sections 40 and 40-A had to be completed with.
10. The last judgment relied upon by the
learned counsel of the appellant is of the Hon’ble Supreme Court judgment titled
as Federation
of Pakistan etc Vs M/s Master Enterprises (Pvt) Ltd (2003 PTD
1034). The challenge in the said judgment was the violation of sections 40 and
40-A of the Act and it was submitted that the action of the revenue amounted to
an illegal search and seizure of their records. The revenue/department before
the Supreme Court asserted that the action was taken pursuant to section 38 and
was, therefore, valid. It was under these circumstances that the true import
and extent of the provisions of section 38 were analyzed. The following
observations are pertinent for our purposes: -
“6. We are in full agreement with the contentions raised at the bar by the learned counsel for the respondent. Admittedly, the provisions of sections 40 and 40-A of the Act have not been complied with by the petitioner while conducting a raid and seizing the documents. It is expressly stipulated in the above provisions that all searches made under Act or the Rules shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1989 (Act V of 1898) (hereinafter referred to as `the Code'). Procedure regarding search has been laid down in sections 96, 98, 99-A, and 100 of the Code whereby, firstly, a search warrant is to be obtained from the Illaqa Magistrate when a search of the premises is to be made. In view of section 103 of the Code, it is mandatory to join two or more respectable inhabitants of the locality in which the place to be searched is situated to attend and witness the search, and a list of all articles taken into possession shall be prepared and a copy thereof shall be delivered there and then. Though repeatedly called upon learned counsel for the Petitioners failed to show from the record that the above provision of the law was strictly followed while seizing the record and sealing the premises of the respondent-company.”
11. A bare perusal of the provisions contained
in sections 38 and 40 of the Act shows that on one hand, the legislature has
empowered the tax officials to detect the instances of tax evasion and protect
the State revenue and on the other hand the citizens have not been left totally
at the mercy of tax officials. In order to avoid arbitrariness and misuse of
power on the part of tax officials, citizens have been provided necessary
protection, and thereby a balance has been struck by the legislature. In the
first instance, and this is essential to the proper conduct of the inspection,
the revenue must have reasonable cause for arriving at a determination that particular
premises ought to be visited for the purpose of carrying out a section 38
inspection. The revenue cannot use section 38 to enter into given premises
without reasonable cause and then look for or create the cause to take records
and documents into custody. Reliance may be placed on the judgment titled as M/s
Iqbal and Sons Vs Federation of Pakistan and three others, PTCL
2017 CL 627(H.C). We find that the impugned order is a non-speaking order,
without reasonable cause and proper authorization, the visit and all subsequent
actions taken by the officers are entirely illegal and without jurisdiction.
How and on what basis did the learned Commissioner pulled the requirement as to
access of records is not understandable. There is nothing on the record to show
that the visit on 21.02.2019 was conducted by an authorized officer or that
there was reasonable cause to conduct the visit. Mere reference to credible
information of massive tax evasion without offering the same for review by the
tribunal is not sufficient to support a finding that the impugned action was in
compliance with the requirements of section 38.
Likewise, in the context of the facts of the present case, the
authorization by the learned Commissioner of eight persons out of five officials,
which were below the rank of Assistant Commissioner, was ab-initio null and
void. Not only their authorization was a nullity in the eyes of law but also
any action was taken by them pursuant to the nomination was unlawful and
illegal. Section 38 of the Sales Tax Act, 1990 empowers the Board or the
Commissioner to authorize the only officer of Inland Revenue to enter into the
premises of the registered person. When the said provision is read with section
25(2) of the Act it further clarifies that the authorization of an Officer of
Inland Revenue should not be below the rank of Assistant Commissioner for the
purpose of investigation under section 38. Whereas in the instant case the
impugned order shows five persons authorized by the Commissioner are below the
rank of Assistant Commissioner.
12. The upshot of the above discussion is that
the impugned order passed under section 38 of the Act is illegal, void
ab-initio and without jurisdiction is hereby annulled. Consequently, the
detention of records is illegal. Reliance may be placed on the judgment titled
as Muhammad
Azim Vs CIT, East Zone, Karachi (1991) 63 Tax 143(H.C Kar) wherein
it was held that: -
“It is a well-settled principle that if the very foundation of an action is illegal or without jurisdiction the whole superstructure built upon it cannot validly and legally stand.”
Further,
it is directed to the respondent that all the documents, records, or accounts are
taken into custody in the process, are ordered to be returned to the appellant
immediately.
13. For the foregoing reasons, the appeal of
the appellant is accepted in the manner stated above. This order consists of (13)
pages and each page bears my signature.
-SD-
(M. M. AKRAM)
JUDICIAL
MEMBER
-SD-
(NADIR MUMTAZ WARRAICH)
No comments:
Post a Comment