(On appeal from the judgment, dated 31‑1‑2001 of the High Court of Sindh Karachi passed in Constitutional Petition No. D-1926 of 2000).

(a) Sales Tax Act (VII of 1990)‑‑‑

‑‑‑‑Ss.38, 40 & 40‑A‑‑‑Access of authorized officer to the premises, stocks, accounts and records‑‑‑Search‑‑‑Procedure‑‑‑Audit of the record of the company was conducted by the Department and no fraud or fault was ever noticed‑‑‑Team was, however; constituted to scrutinize the record only as per notice under S.38 of the Act and was not authorized to raid and seize the record, as such, the team had travelled beyond its scope which was in clear violation of law‑‑‑Neither the search was made under Ss.40 & 40‑A of the Act nor any memorandum of seizure of the documents was ever prepared, therefore, entire action was without lawful authority.  

(b) Sales Tax Act (VII of 1990)‑‑‑

‑‑‑‑Ss.40 & 40A‑‑‑Criminal Procedure Code (V of 1898), Ss.96, 98, 99‑A, 100 & 103‑‑‑Search‑‑‑Mode‑‑‑Seizing the record and sealing the premises of Company‑‑‑Validity‑‑All searches made under the Sales Tax Act, 1990 or the Rules were to be carried out in accordance with the procedure laid in Ss.96, 98, 99‑A, 100 & 103, Cr.P.C.‑‑‑Principles‑‑ Where the Department had failed to show from the record that the provisions of Cr.P.C. were strictly followed while seizing the record and sealing the premises of the Company, Supreme Court declined to interfere with the judgment of the High Court declaring that raid conducted by the Department was without lawful authority.

It is expressly stipulated in the provisions of sections 40 and 40A of the Sales Tax Act, 1990 that all searches made under Act or the Rules shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1898 (Act V of 1898). 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 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. In the present case Department had failed to show from record that the above provisions of law were strictly followed while seizing the record and sealing the premises of the Company. As such, there was no cogent reason to interfere with the impugned judgment which was unexceptionable.

Akhlaq Ahmed Siddiqui, Advocate‑on‑Record for Petitioners.

Abid S. Zuberi, Advocate Supreme Court and A. Aziz Khan, Advocate‑on‑Record for Respondent.

Date of hearing: 16th December, 2002.

JUDGMENT

ABDUL HAMEED DOGAR, J.‑‑‑Petitioner seeks leave to appeal against the order, dated 31‑1‑2001 passed by a learned Division Bench of the High Court of Sindh, Karachi, whereby Constitutional Petition No. D‑1926 of 2000 tiled by the respondent was allowed.

2. Facts leading to the filing of the instant petition are that respondent‑company incorporated under the Companies Ordinance, 1984, was engaged, inter alia, in the business of polyurethane foam products since 1963 in the name of "Master Molty Foam" registered as a manufacturer‑cum‑importer. Petitioners Nos.3 to 5 regularly conducted monthly, quarterly and yearly audits of the respondent‑company. By notice, dated 9‑8‑1999, the respondent‑company was informed that audit for the period 1998‑99 would be conducted on 23‑8‑1999 which was conducted by the above mentioned petitioners whereby the respondent was required to deposit a sum of Rs.214,508 with the Sales Tax Department which was deposited. On 2‑8‑2000, the respondent was served with a notice purportedly issued under section 38 of the Sales Tax Act, 1990 (hereinafter referred to as the Act), whereby it was informed that a team of Headquarters Intelligence, Sales Tax and Central Excise had been nominated to scrutinize the prescribed Sales Tax record being maintained by the respondent for the last five years. By the said notice, the respondent was required to produce the record before the aforesaid team. It was on 2‑8‑2000, the nominated team of the petitioner conducted a raid on the respondent's premises, inspected the record, stock books accounts and diskettes relating to 'the period of five years and seized the originals without preparing an inventory on the premises and giving copy thereof. The respondent challenged the above action of the petitioners in the above mentioned Constitutional petition urging therein that the above-said notice being illegal on the face of it and without lawful authority be quashed and the raid conducted by the petitioners be declared to be without lawful authority and also that the documents seized from the company premises be returned.

3. We have heard Mr. Akhlaq Ahmed Siddiqui, learned Advocate -on‑Record for the petitioners and Mr. Abid S. Zuberi, learned Advocate Supreme Court for the respondent at length and have gone through the record in minute particulars.

4. Mr. Akhlaq Ahmad Siddiqui, learned. Advocate Supreme Court for the petitioner seriously attacked the impugned order and stated that the action taken by the petitioner‑department was quite in accordance with law. According to him, since the respondent had indulged in the evasion of the Sales Tax, the petitioners were justified in issuing notice under section 38 of the Act and did not commit any illegality by conducting the raid under sections 40 and 40‑A of the Act whereby they were authorized to have free access to the business and manufacturing premises and rightly seized the documents.

5. On the other hand, Mr. Abid S. Zuberi, learned, Advocate Supreme Court for the respondent vehemently controverted the above contentions and argued that the respondent had never indulged in the evasion of the tax but on the contrary, the audit of the record of the company, was conducted by the petitioners and no fraud or fault was ever noticed. As per notice under section 38, of the, Act, 'a team was constituted to scrutinize the record only and was not authorized to raid and seize the record, as such, it has travelled beyond its scope which is in clear violation of the law. He further contended that neither the search was made under provisions of sections 40 and 40‑A of the Act nor any memorandum of seizure of the documents was ever prepared, therefore, the entire action is without lawful authority. He supported the impugned judgment and stressed that it being in accordance with law is not open to any exception.

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 petitioners while conducting 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, 1898 (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 he obtained from the Illaqa Magistrate when 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, record that the above provisions of law were strictly followed while seizing the record and sealing the premises of the respondent‑company. As such, we do not find any cogent reason to interfere with the impugned judgment which is unexceptionable.

7. Resultantly, the petition being devoid of any force is dismissed and leave to appeal refused.

M.B.A./F‑95/SC Petition dismissed.