(a) Sales Tax Act (VII of 1990)‑‑‑

‑‑‑‑Ss. 37, 38 [as substituted by Finance Act (IX of 1996)], 40 & 40A‑‑ Central Excises Act (I of 1944), S. 18‑‑‑Central Excise. Rules, 1944, Rr.197 & 201‑‑‑Criminal Procedure Code (V of 1898), Ss. 96, 98, 99‑A, 100 & 103‑‑‑Constitution of Pakistan (1973), Arts. 9, 14, 15, 18, 23 & 24‑‑‑Powers of "Free Access" "Free Inspection" and "Custody" as contained in S.38 of Sales Tax Act, 1990‑‑‑Scope‑‑‑Legislature had not given such unchecked powers to Taxation Officer‑‑‑Resort to free access and free inspection provisions without essential safeguards would be violative of guarantees under Arts. 9, 14, 15, 18, 23 & 24 of the Constitution‑‑‑Legislature had incorporated necessary safeguards and standards in provisions of S. 40 of the Sales Tax Act, 1990 or S. 18 of Central Excises Act, 1944‑‑‑Sections 38, 40 and 40‑A of the Sales Tax Act, 1990 would be read together, otherwise Ss. 40 and 40‑A would become superfluous‑‑‑Provisions of S.38 read with those of S.37 of Sales Tax Act, 1990 would be adequate as complete Codes of entry, inspection, acquisition, information, evidence and custody‑‑‑Section 40 of Sales Tax Act, 1990 and S.18 of Central Excises Act, 1944 required "all searches" to be in accord with Cr.P.C.‑‑‑Exercise of powers of search without warrant as provided under S.40‑A of Sales Tax Act, 1990 was conditional upon a statement of grounds of belief as to showing of danger of removal or destruction of record‑‑‑Section 40‑A of Sales Tax Act, 1990 could be invoked only in extreme and extraordinary situations, but all searches would be carried out as per provisions of Cr.P.C.‑‑ Principles.

(b) Sales Tax Act (VII of 1990)‑‑‑--

‑‑‑‑S. 38(3)‑‑‑Powers of "inquiry or investigation"‑‑‑Scope‑‑‑Such powers are synonymous to "search" powers.

(c) Words and phrases‑‑‑--

‑‑‑‑"Search"‑‑‑Connotation.

Ihsan Yousaf Textile Mills v. Federation of Pakistan Writ Petition No. 19482 of 2002 and Words and Phrases Volume 38‑A ref.

(d) Words and phrases‑‑‑

‑‑‑‑"Search" and "Inspection"‑‑‑Distinction.

"Entry, Search and Seizure" (Sweet and Maxwell 3^rd Edn.) ref.

(e) Taxation‑‑‑

‑‑‑‑"Probe", "Investigation" or "inquiry" into affairs or business or trade or occupation or record or accounts etc.‑‑‑Effect‑‑‑Such powers are in fact the powers to "search"‑‑‑Principles.

It cannot be denied that "Probe", "Investigation" or ‑"Inquiry" into affairs or business or trade or occupation or record or accounts etc., is a search for answers to any question or allegation regarding possible evasion. of tax or violation of law. The information or the document etc. accessed or obtained or taken into custody during such inquiry or investigation are usable in evidence and are also incriminating. Such powers of access, inspection, resumption and information cannot, therefore, be termed as anything, but the powers to "search".

(f) Interpretation of statutes‑‑‑

‑‑‑‑ Fiscal statutes‑‑‑Interpretation and meaning which are protective of rights and interest of tax‑payers would be adopted, if more than one meanings could be attributed to the whole scheme of "the Access" and "Search" provisions.

(g) Sales Tax Act (VII of 1990)‑‑‑

‑‑‑‑Ss. 38 [as substituted by Finance Act (IX of 1996)], 40 & 40A‑‑ Central Excises Act (I of 1944), S. 18‑‑‑Central Excise Rules, 1944, Rr.197 & 201‑‑‑Criminal Procedure Code (V of 1898), Ss. 96, 98, 99‑A, 100 & 103‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional petition‑‑‑Raiding and seizing record without search warrant in the garb of pre textual business transaction employed as reason for entry into premises of petitioner‑‑‑Validity‑‑‑Authority had admitted that male members of raiding staff were waiting outside premises of petitioner for support and backing, while female members of team had entered premises pretending to be ordinary and normal customers interested to receive services‑‑‑Purpose of, such pretextual business transaction was to investigate and determine, gurported evasion of excise duty by petitioner‑‑‑Such pre textual business transaction by female staff of the Authority had been created and devised to test and probe into conduct of petitioner having been employed as excuse for entry into premises and consequent inquiry without a warrant‑‑‑Seizure of record was, thus, pre determined‑‑‑Danger or risk of removal of evidence, goods, record, accounts or computers had not been alleged by authority‑‑‑Authority had physically searched for, recovered and taken custody of petitioner's record and assets‑‑‑Such exercise by authority was a "search, which could not be termed as "routine inspections", but was akin to a raid and investigation in a criminal matter or an offence‑‑‑High Court accepted Constitutional petition and declared such raid and seizure of record/ assets to be without lawful authority and of no legal effect including issuance of show‑cause notice, registration of F.I.R., complaint, prosecution or recovery proceedings.

Collector of Customs (Preventive) and 2 others v. Muhammad Mahfooz PLD 1991 SC 630; Master Enterprises (Pvt.) Ltd. v. Federation of Pakistan and others CP No. 1926 of 2000; Federation of Pakistan and 4 others v. Messrs Master Enterprises (Pvt.) Ltd. 2003 PTD 1034; Shaukat Hussain v. Zulfiqar Ali and 2 others" PLD 1981 Lah. 13; S.M Yousaf v. Collector of Customs PLD 1968 Kar. 599; S.M. Yousaf v. Collector PLD 1969 SC 153 and Iqbal Akhtar v. Ch. Muhammad Mushtaq and 4 others PLD 1977 Lahore 1318 rel.

(h) Customs Act (PV of 1969)‑‑‑--

‑‑‑‑Ss. 162 & 163‑‑‑Customs General Order No. 9 of 1981, dated 27‑8‑1981‑‑‑Issuance and continued validity of Customs General Order No.9 of 1981, dated 27‑8‑1981 would show that Central Board of Revenue wanted its officers to follow such instructions meticulously and stringently.

Customs General Order, 1971‑1995 (Fourth Edition) at page 245 ref

Ali Sibtain Fazli, Shamoon Zakaria, Ahmad Sibtain Fazli and Nasar Ahmad for Petitioner.

Izharul Haq Sheikh for Respondents.

Date of hearing: 25th March, 2004.

JUDGMENT

This judgment shall deal with and decide the separate writ petitions; (1) Writ Petition No. 7035 of 2000 titled "Food Consults (Pvt.) Ltd. v. Collector of Customs etc. " (hereinafter referred to as "Food Consults"); and (2) Writ Petition No. 10311 of 2000 titled "Diplex Beauty Clinic and Institute v. Collector of Central Excise etc. (hereinafter referred to as "Diplex").

Although the facts of the two cases are unrelated and the respondent in each case is a different Tax Department, operating under distinct statutory schemes, i.e. Sales Tax Act, 1990 and Central Excises Act, 1944, the legal and factual issues arising from these two writ petitions are common. In each case, this Court has been asked to rule on the legality of a warrant less search resulting in the seizure of the taxpayers business and financial records and property.

2. Both the petitioners Food Consults and Diplex assert that their business premises were raided in an unlawful manner and the seizure of their record and property was illegal. The petitioners also invoke the Constitutional guarantees provided to them against infringement of their rights regarding person and property.

2‑(i) The petitioner in Constitutional Petition No.7035 of 2000 is an incorporated private limited company as Food Consults (Pvt.) Limited (Food Consults). It owns and runs restaurants namely "Salt N Pepper" and "Village Restaurant".

2(ii) The case of the petitioner is that on 27‑3‑2000 at about 3‑30 p.m., two officers of Sales Tax Department namely Zakir Hussain and Habib‑ur‑Rehman Inspectors visited the office premises of the petitioner located at 5‑Zafar Road, Lahore Cantt. They sought to examine the sales tax record of the "Village Restaurant". All the relevant record was provided to them. They examined the record and left. Same day at 4‑30 p.m. the afore‑referred officers visited the Village Restaurant and demanded "sales registers" etc. which were also provided to them. The officers after examining the record left the restaurant premises. However at about 6‑00 p.m. the same day after the petitioner's office had closed, about 14 to 15 members of Sales Tax staff under the supervision of the Deputy Collector Mr. Asim Majid and the Assistant Collector Mr. Asad Rizvi raided the petitioner's office at 5‑Zafar Road, Lahore Cantt. It is alleged that under threat and coercion, they forced their entry into the office after the office hours by getting the office reopened .under duress. A9d that the records and computers etc. were taken away without any receipt. They also compelled the petitioner's Chief Accountant Sajjad Hussain, Mr. Attique (Accounts Manager) and Mr. Kamran (Audit Manager) to accompany them to the sales tax office located at Shadman Colony, Lahore where these employees were kept in illegal custody till 1‑15 a.m. of 28‑3‑2000. And that threatening registration of a criminal case and prosecution, these employees were coerced to sign certain statements and documents without even an opportunity to read the same. And that despite requests the petitioner was refused the return of these documents, computers and record. Hence Writ Petition No.7035 of 2000.

2(iii) It has also been urged that later the respondents also lodged an F.I.R. No. 2. of 2000 against the petitioner who is thus faced with the criminal prosecution as well.

2(iv) The writ petition was admitted to regular hearing and the respondents were directed to return the computers to petitioners. Further that the respondents were allowed to carry out investigations and proceedings but were restrained from passing any order detrimental to interest of the petitioner.

2(v) The respondents filed their report and parawise comments stating as under:‑‑

"Pursuance upon an information received, that Messrs Village, 5‑Zafar Road, Lahore Cantt. are evading sales tax leviable on their supplies, a team comprising sales tax staff was organized to check the factual position vide letter C. No. I & P/ST/1/2000/24, dated 27‑3‑2000 (copy enclosed as Annex "A"). At about 13‑00 on the same day the members of the above team visited Messrs Village Restaurant, 103‑B‑2nd, M.M. Alam Road, Lahore as well as their registered Head Office situated at 5‑Zafar Road, Lahore Cantt. The member of above said team observed serious discrepancies in respect of payment of sales tax therefore it was decided by the Additional Collector Sales Tax‑I, Lahore to conduct thorough scrutiny of the record immediately. Other members of the team were called at the registered Head Office of petitioner at about 16‑00 hours at the same day. In terms of section 38 Sales Tax Act, 1990 all the relevant documents as defined under section 2(8) of the Sales Tax Act, 1990 of the petitioner were taken into custody from Muhammad Attique Saeed (Accounts Manager) of the petitioner through recovery memo, dated 27‑3‑2000."

The respondents, also stated that on the basis of the resumed documents/record and for the purported evasion of the sales‑tax amount of Rs.12,21,624, prosecution as well as recovery ,proceedings were initiated against the petitioners.

2(vi) No allegation was made by the respondent Sales Department that any of the material seized was in the danger of being destroyed at or removed from the premises of Food Consults.

3. On 3‑6‑2000, another Writ Petition No. 10480 of 2000 was filed by Messrs Motel Network (Pvt.) Limited, a sister company of Food Consults (Pvt.) Limited (petitioner in Writ Petition No.7035 of 2000). Repeating the facts and grounds as in Writ Petition No.7035 of 2000 it was additionally claimed that during raid on 27‑3‑2000 at the common registered office at 5‑Zafar Road, Lahore Cantt., staff of Sales Tax department also seized records, files and computers of all the sister companies and organizations of the group. And that after the interim orders passed by this Court in the above W.P. No.7035 of 2000, the respondents started action against Motel Network (Pvt.) Limited under the Central Excises Act, 1944. And that a show‑cause notice, dated 18‑5 2000 for the purported evasion of Central Excise Duty of Rs.2,283,680 by the "Village Restaurant" was also issued. Hence Writ Petition No.10480 of 2000. On 21‑11‑2002, Mr. Khan Muhammad Virk, Advocate appearing for the respondent stated that show‑cause notices against Messrs. Motel Network had been vacated and no proceedings were underway. He further stated that the show‑cause notices had been vacated, therefore, F.I.R. against Motel Network was bound to be cancelled and no action was intended thereupon. In view of this statement the learned counsel for the petitioner did not press the petition which was thus disposed on 21‑11‑2002.

4. Writ Petition bearing No.10311 of 2000 was filed on 1‑6‑2000 by Diplex Beauty Clinic and Institute and four others. It was claimed that on 28‑3‑2000 at 1‑30 P.M, the business premises of Diplex at 14‑C‑1, M.M. Alam Road, Lahore was visited by certain female staff members of the Central Excise Department They acting as clients had some services performed at Diplex and after payment for such services, demanded a receipt. As per respondents the receipt was not given wherefor excise record was demanded. The Manager of the Institute produced Central Excise record whereupon these female staff members called in the other members of the raiding team comprising the male staff. They broke into the service hall of the clinic where lady clients were receiving treatment. And that they forced and harassed the lady clients and the staff to vacate the hall. And that the cupboards and closets were broken open causing damage to expensive cosmetics, equipments and assets. And that the female managers and staff of the Institute were threatened with arrest and detention. And the respondents also illegally took away records without giving any receipt etc. And that the Manager of the company i.e. Mrs. Anila (petitioner No.5) was taken into illegal custody and was taken away to the respondents' office at Nabha Road, Lahore but was‑released at late hours after signatures were obtained (under threat) on many documents.

5. Respondents, in their report and parawise comments answered that the "male members of staff were waiting outside the premises for support and backup" while the female staff members entered the reception area. And that these female staff members received the manicuring as regular customers and made payment. Upon non‑issuance of the receipts, they demanded the record which had not been maintained. Whereupon the other members of the team were called in. And that the "private record" lying on the counter was taken into custody. Other allegations were denied.

6. Similar to the Food Consults matter, there is no showing by the respondent Excise Department that any of the records of Diplex that were seized were in any danger of being removed or destroyed during the time it would have taken the respondents to obtain a proper search warrant. Respondent Excise Department admits that the petitioner's records were seized from the petitioner's business premises. And that prior to conducting such raid, respondents had made a "pre textual business transaction" through its female staff members posing as customers who allegedly were not issued payment receipts where for the raid.

7. For the petitioners it was contended that the raid, search and seizure was neither in consonance with the provisions of the law and rules nor was the right of free access available to the respondents. And that the respondents could not have access to the premises and record without proper warrants under the Code of Criminal Procedure. It was also contended that neither the Sales Tax nor the Excise dues were outstanding against the petitioners and that the petitioners were not guilty of the evasion. The precedents and the material referred to have been discussed in the later part of this judgment.

8. Mr. Izhar‑ul‑Haq Sheikh, Advocate for respondents argued that the questions of the fact as raised by the petitioners cannot be inquired into by this Court in exercise of extraordinary Constitutional jurisdiction. And that neither the raid nor search or seizure, as contended by the petitioners, were conducted but the respondents exercised authority under section 38 of Sales Tax Act, 1990 and/or Rule 197 of the Excise Duty Rules to visit the respective premises of the petitioners and to resume the records produced before them voluntarily by the petitioners.

9. The learned counsel for the parties rendered valuable assistance. The learned counsel for the petitioners Mr. Ali Sibtain Fazli, Advocate and his learned associate Advocates namely: Mr. Shamoon Zakaria, Mr. Ahmad Sibtain Fazli and Mr. Nasar Ahmad made remarkable contribution in providing the legal literature and data.

10. Submissions of the learned counsel for the parties have been considered.

11. Power to `search' has been provided for in section 18 of the Central. Excises Act, 1944 as under:‑‑

"(18) Searches and arrests how to be made. ‑‑‑All searches made under this Act or any rules made thereunder and all arrests made under this Act shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1898 (V of 1898), relating respectively to searches and arrests made under that Code."

Rules 197 and 201 of the Central Excise Rules are also on the subject and prescribe that:‑‑ '

(197) Authorized officers to have free access to premises, equipments, stocks and accounts [relating to excisable goods and excisable services]‑Any officer authorized in writing by the Collector in this behalf, shall have free access at all times to any premises licensed under these Rules and to any place where excisable goods are processed, stored, [or where excisable services are provided or rendered], sold or manufactured, or to any place where composition for match heads, saltpeter or splint or veneers for the manufacture of matches are made, processed or stored, and may, with or without notice to the owner, inspect the building, the plant, the machinery, and the stocks, and the accounts, and may at any time check the records made of the goods stocked in, or removed from the factory, warehouse or place, or their transfer within a factory, to that part of the premises, if any, in which they are to be used for the manufacture of any other commodity, [or the account books, sales registers and bill of charges books used in the premises where excisable services are provided or rendered], whether for the purpose of testing the accuracy of any return submitted under these Rules, or of informing himself as to any particulars regarding‑which information is required for the purposes of the Act or these Rules."

"201. Power to enter and search.‑‑‑The Central Board of Revenue may empower any officer of any department under its control to,‑‑‑

(i)enter and search at any time by day or by night any land, building, enclosed place, premises, vessel, conveyance or other place upon or in which he has reason to believe that excisable goods, saltpeter or splints or veneers for the manufacture of matches are processed, sorted, stored, manufactured or carried or excisable services provided or rendered in contravention of the provisions of the Act or these Rules; and

(ii)in case of resistance break open any door and remove any other obstacle to his entry upon or into and search of such lane, building enclosed place, premises, vessel, conveyance or other place.

11. Similarly in the Sales Tax Act, 1990 (a later Statute) the powers of access, raid, search and seizure are 'contained in sections 38, 40 and 40‑A of the Act as under:

"Section 38. Authorized officers to have access to premises, stocks accounts and records.‑‑‑(1) Any officer authorized in this behalf by the Board of the Collector 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 if financed, and any other records of 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 subsection (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."

Section 40 "Searches how to be made.‑‑‑All searches made under this Act or the rules made thereunder shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (Act V of 1898)."

Section 40‑A. "Search without warrant.‑‑‑(1) Notwithstanding the provisions of section 40, where any Officer of Sales Tax not below the rank of an Assistant Collector of Sales Tax has reasons to believe that any documents or things which, in his opinion, may be useful for, or relevant to, any proceeding under this Act are concealed or kept in any place and that there is a danger that they may be removed before a search can be effected under section 40, he may, after preparing a statement in writing of the grounds of his belief for which search is to be made, search or cause search to be made for such documents or things in that place.

(2)Any officer or person who makes a search or causes to be made under subsection (1) shall leave a signed copy of the statement referred to in that section in or about the place searched and shall, at the time the search is made or as soon as is practicable thereafter, deliver a signed copy of such statement to the occupier of the place at his last known address.

(3)No suit, prosecution or other legal proceedings shall be instituted, except with the previous sanction in writing of the Federal Government against any person in respect of anything done or purporting to be done in respect of exercise of any powers conferred by subsection (1) or subsection (2). "

13. The above reproduced section 38 was introduced. in its present form by way of substitution through the Finance Act, 1996 (IX of 1996). Prior to 1996, section 38 reads as under:‑‑

"(38) Authorized officers to have access to premises, stocks accounts and records.‑‑‑(1) Any officer authorized by the Board or Collector in this behalf shall have free access to the business premises of a registered person, and such officer may, after due notice to the registered person, inspect the stocks and accounts, and may at any time check his records.

(2)If the authorized officer makes any query the registered person shall furnish such information or explanation as may be sought by him."

This section was followed by under reproduced section 39 which was omitted by the Finance Act, 1996 (IX of 1996):‑‑

"(39) Seizure of goods liable to confiscation.‑‑‑Any officer of Sales Tax empowered by the Board or Collector in this behalf may seize any goods liable to confiscation and any documents or things which in his opinion will be useful as evidence in any proceeding under this Act and where it is not practicable to seize any such goods or things, he may serve on the owner of the goods or any person holding them in his possession of charge, an order that he shall not remove, part with, change or otherwise deal with the goods except with the prior permission of such officer."

14. A comparison of the access, search and seizure provisions before and after 1996 amendment highlights striking differences. The short "free access provisions" 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 A the 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.

15. The major changes introduced by the Finance Act of 1996 were that section 39 was omitted and section 38 was totally substituted by more elaborate provisions. In the substituted section 38 "free access provisions" were substantially enlarged in respect of the accessible premises, places and persons. Additional powers of inspection and custody of the goods and records etc. were given to the authorized officer.

However all important conditions of due notice by the authorized officer prior to the exercise of powers of access, inspection and checking, were omitted.

16. The respondent Revenue interprets the removal of the restriction of due notice on the exercise of powers by the tax functionaries as the Legislature's intention to give unchecked powers to the departmental officers to enjoy "Free Access", unobstructed inspection and unqualified right to the custody and seizure. Similar meaning is ascribed by the learned counsel for the respondents to Rule 179 of the Central Excise Rules.

17. The respondents appear to be oblivious of the effects of such an interpretation. It will not only be unacceptable and distasteful to the modern day jurists in a civilized society but will also be offensive to the principles of the rule of law. It will no doubt be incompatible with and obstructive of the country's economic growth. Under the guise of Revenue collection the officers of the department will come to possess the unrestricted State power and unlimited authority. The citizens will be at their whim, wish and unrestrained discretion. The "Free Access provisions" will become usable as "free for all" process. It will be abused as a free entry pass to the business or manufacturing places or the work premises of the citizens. Armed therewith evidence, information or admissions to the officer's liking will not be hard to obtain. More often than not these provisions in the hands of the Revenue officer will become the instruments of terror, intimidation, harassment and exaction. The outcome will be patent offence to the inviolatable rights of freedom, dignity; privacy of life and sanctity of the business, trade and calling.

18. 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. Furthermore without reasonable standards upon the E 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 Excise 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 1 79 of the above Rules, to make law harmonious to the commercial activity and its development. To F 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, G 1990, which were provided for through Rules 179 and 201 of the Central Excise Rules. These rules can therefore, be invoked subject to the provisions of section 18 of the Act of 1944.

21. Similarly on amendment of sections 38 etc. in 1996, due notice standard as contained in the unamended sections 38 of the Sales Tax Act, 1990 was purposely taken out. The reason becomes evident when sections 38, 40 and 48‑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 H 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 code of entry, inspection, acquisition, information, evidence and custody. Section 37 empowers an, officer to summon a person to tender evidence or produce evidence orb 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 under section 37-A to 37‑C ibid. Exercising powers under section 37 read with section 38, the taxation officer, simply upon a notice, can obtain any informations, 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.

22. Section 40 of the Act of 1990 and section 18 of the Act of 1944 require "all searches" to be in accord with the Code of Criminal Procedure, 1898.

23. To prevent the removal of relevant documents or things, powers of search without warrant have also been provided for in section 40‑A of the Sales Tax Act. Exercise of this power is conditional upon a statement of grounds of belief as to and the showing of the danger of removal or destruction of the record. This section is in pari materia the applicable provisions of the Code of Criminal Procedure. Section 40‑A is nevertheless invocable only in the extreme and extraordinary situations. All searches otherwise have to be carried out as per the provisions of Code of Criminal Procedure.

24: 1 am thus of the opinion that once warrants for a search under section 40 of the Sales Tax Act or section 18 of the Central Excises Act are obtained as per the Code of Criminal Procedure, or once the provisions of section 40‑A of the 1990 Act for a search without warrant are invoked, the officer gains entry and access to the required places and premises. The provisions of section 38 of the Act 1990 or the above Rules of the Central Excises Rules then take over to provide "Free Access" to the authorized officer to enter the places where stocks or records are kept or maintained. And such officer can inspect and take into custody the required records, things, diskettes and documents etc. He can also obtain information and assistance in the course of his inquiry and investigation. In my opinion no other meaning to the provisions of section 40 of the 1990 Act or section 18 of the 1944 Act can be ascribed. Any other interpretation will render the word "all searches" as contained in these sections as superfluous and redundant.

25. The nature of powers exercisable under section 38 of the Sales Tax Act, 1996 have been termed in the last two lines of the sub‑ L section (3) of section 38 as the powers of "inquiry or investigation" which are obviously synonymous to the "search" powers.

26. The term "search" implies an exploratory investigation, invasion, quest, looking for or seeking out. The quest may be secret, M intrusive or accomplished by force. In judgment, dated 21‑5‑2003 in the case of "Ihsan Yousaf Textile Mills v. Federation of Pakistan" (W.P. No. 19482 of 2002) my learned brother Nasim Sikandar, J. beneficially quoted from order, dated 30‑4‑2002 of the Hon'ble Tax Ombudsman in Ihsan Yousaf Textile Mills complaint as under:‑‑

"(14)... ... ... the word "search" as explained at page 24 (Words and Phrases) Volume 38‑A) means to look for. It implies invasion with some kind of force either actual or constructive. Search is forcible seeking out, a probing in hidden places.

(15)The term search implies some exploratory investigation, or invasion and quest, a looking for, seeking out. The quest may be secret, intrusive or accomplished by force. A search has been held to applying force, prying into hidden places for that which is concealed and that the object searched for has been hidden or intentionally put out of the way."

27. The distinction between a "search" and an "inspection" was noted by Keith Committee cited on page 165 of the Book titled "Entry, Search and Seizure" (Sweet and Maxwell 3rd Edition) as under:‑‑

Inspection is by eye, search by hand, and that inspection would not allow the uncovering of anything not visible merely by walking around the premises in the absence of any clear judicial rulings.

28. It cannot be denied that "Probe", "Investigation" or "Inquiry" into the affairs or the business or trade or occupation or record or accounts etc. is a search for answers to any questions or allegations regarding possible evasion of tax or violation of law. The information or the documents etc. accessed or obtained or taken in custody during such inquiry or investigation are useable in evidence and are also, incriminating. Such powers of access, inspection, resumption and information cannot therefore, be termed as anything but the powers to "search".

29. It is also a well settled rule of law that an interpretation and meaning protective of the rights and interests of the taxpayers is to be adopted if more than one meanings can be attributed to the whole Scheme of "the Access" and "Search" provisions.

30. The sequence of events in the case of Diplex proves and it has not been denied by the respondents that the purpose of "the pre textual R transaction" was to investigate and determine the purported evasion of excise duty by Diplex. It is also admitted in their reply by the respondents that "the male members of staff were waiting outside the premises for support and backing" while the female members of the team entered Diplex pretending to be ordinary and normal customers interested to receive services. This "pre textual business transaction" or the female staff of the Excise Department was admittedly created and devised to test and probe into the conduct of Diplex. The "pre textual transactions" was employed as the excuse, reason or justification for entry into Diplex and consequent inquiry.

31. In the both Food Consults and Diplex cases, the undisputed facts are that the raiding teams of respondent Tax Departments entered the petitioner's business premises on their own authority without a warrant. In both cases, the respondents appear to have predetermined that the record of the petitioners would be seized. In each case, the danger or risk of removal of evidence, goods, record, accounts or computers was not alleged by the respondents. And in each case, the respondents physically searched for, recovered and took custody of petitioners record and assets. And such exercise by the respective departmental officers in both cases is a "search' in its classic sense.

Furthermore the actions of the respondents were specifically intended and designed to probe, investigate and discover the presumed illegal tax avoidance for which the record and accounts were seized. These acts could not therefore be termed as the "routine inspections" but were akin to a raid and investigation in a criminal matter or for an, offence. At the very least, it was a search.

32. The Central Board of Revenue has itself approved the search and seizure procedure to be followed by its officers in "Customs General Order, 1971‑1995 (Fourth Edition)" at page 245, C.B.R's Customs General Order No.9 of 1981, dated 27th August, 1981 as under:‑‑

"(3) Section 162 of the Customs Act empowers a Magistrate to issue search warrant on an application by a Gazetted officer of Customs. Under section 163, subsection (1) an "Officer of Customs not below the rank of the Assistant Collector of Customs" or any other officer of like rank duly employed for the prevention of smuggling" if he has reasons to believe that any goods liable to confiscation under the Act are concealed or kept in any place and there is a danger that the same may be removed before a search can be effected under section 162, may "after preparing a statement in writing of grounds of his belief and of goods" for which search is to be made, search or cause search to be made for such goods in that place. The officer who makes the search or causes the search to be made, is further required by subsection (2) to leave a signed, copy of the aforementioned statement in or about the place searched and at the time of search or as soon as practicable thereafter to deliver furthermore a signed copy of such statement to the occupier of the place at this last known address. Subsection (3) of section 163 directs that all searches made under this section shall be carried out mutatis mutandis in accordance with the provisions of the Criminal Procedure Code. Section 171 requires that when anything is seized, the officer making such seizure shall as soon as may be, inform in writing the person from whose possession the things are seized, of the grounds, of such seizures or arrest ....

(4)The Spirit of the Customs Law is that unless there was a danger that the goods might be removed before a search warrant could be obtained from a Magistrate this has been made a condition precedent to making a search under section 163(1) "

Relying on the relevant case law, Customs General Order further states that:‑‑

"(7) The law, as we have seen, does not recognize any general right in the police of entry into private property for the purpose of obtaining evidence of smuggled goods. The right is available only upon fulfillment of certain conditions. The defects pointed out, I am afraid, are neither minor nor just technical. They are violative of the basic conditions prescribed for carrying out a search under section 163, a breach of which will strike at the protection guaranteed under Article 4 of the Constitution itself. Clause (2)(a) of Article 4 requires that no action detrimental to the life, liberty, body, reputation or property of any person shall be taken except in accordance with law ....[Emphasis Added]"

The issuance and continued validity of the C.G.O. makes it abundantly clear that C.B.R. wants its officers to follow these instructions meticulously and stringently.

33. The Hon'ble Supreme Court in case of "Collector of Customs (Preventive) and 2 others v. Muhammad Mahfooz" (PLD 1991 SC 630) declared the law as under:‑‑

...... ordinarily a place is to be searched only after search warrant is obtained from the Magistrate as is contemplated under the preceding section of the Customs Act and only in extraordinary cases this section can be dispensed with as is permissible under section 163 of the Customs Act but then grounds are to be stated by the Customs Officer who is allowed this facility for his belief and decision in not obtaining the search warrant. He must state the grounds which justify apprehension of danger of removal of goods. For example, information is received from such and such person that the party concerned has taken steps or is about to take steps for removal of goods and if search warrant is obtained the same will consume time or the Magistrate is not available, hence there is no way but to go for search without warrants .... "

34. In a recent judgment of an Hon'ble Division Bench of the Sindh High Court in the case of "Master Enterprises (Pvt.) Ltd. v. Federation of Pakistan and others" (C.P.No. 1926 of 2000), the learned‑Judges noted that where the procedure prescribed in sections 40 and 40‑A of the Sales Tax Act was not followed while conducting a raid and seizure, such search was unlawful and documents were ordered to be returned. Relevant case opinion was that:‑‑

"After hearing the learned counsel for the parties, we are of the considered opinion that the resumption of documents by the departmental officers on 19‑12‑2000 is not in accordance with the procedure prescribed by the legislature in sections 40 and 40‑A of the Sales Tax Act, 1990. It is an established principle of law that acts, deeds and things should be done as they are required to be done or not at all. It is therefore, held that the resumption of the documents by the departmental officers on 19‑12‑2000 was not in accordance with law and as such the respondents Nos.2 to 5 cannot place any reliance on the documents which they have acquired otherwise than in due course of law."

This judgment of the Sindh High Court was affirmed by the Hon'ble Supreme Court of Pakistan on departmental petition for appeal i.e. "Federation of Pakistan and 4 others v. Messrs Master Enterprises (Pvt.) Ltd." (2003 PTD 1034). The Hon'ble Supreme Court of Pakistan also pronounced the law that "all searches" made under the Sales Tax, 1990 were to be in accordance with the provisions of Criminal Procedure Code, 1898 on a search warrant from the Illaqa Magistrate when search of the premises was to be made. It was observed that:‑‑

"(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 arid 40‑A of the Act have not been complied with by the petitioners while conducting raid and seizing documents. It is expressly stipulated in the above provisions that all searches made under the 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 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. 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."

35. In the above referred case of Ihsan Yousaf Textile discussing the provisions of the Sales Tax Act, 1990 relating to search, seizure and raid, it was held by the Hon'ble Judge that the raids conducted without strict compliance with the provisions of law were illegal and void ab initio. All the documents, records or accounts, taken into custody in the process, were ordered to be returned to the petitioners and it was also directed that the same shall not, either directly or indirectly, be used against the petitioners because "the fruit of the poisonous tree cannot be enjoyed by the offender and the material collected cannot be used in evidence against the petitioner." It was also opined that:

"A "free access" to any property of the citizen does not mean search and seizure for the purpose of collecting evidence against him. That object can only be achieved on observing the codal formalities under sections 40 and 40‑A which ensure respect for the rights of the subject. It is surprising that the department is not willing to accept the minimum level of safeguard for the person and property of a subject as are contemplated in section 40‑A. It looks for a ground that an officer of the department has been given "free access" to such property. A search and seizure by State functionaries is the hardest hit on the person, property and (self) respect of a citizen. It cannot be assumed to have been granted as a matter of course. Mere allegation of some tax evasion, here and there, cannot be allowed to be extended to justify a "storming" of business houses and factories.

"The free access" contemplated in section 38, as observed above, does not mean a storming of the fort of an un expecting enemy to pill and plunder at the fancy of the victorious prince overjoyed with the satisfaction of his having trampled the enemy. A visit by a State functionary to the person or property of a citizen should not have the colour and countenance of the royal wrath against a defiant adversary. The State has all the legal and moral justification to collect revenue. The Caesar must have what is due to him. However, the State, the Revenue acting through its functionaries should never lose sight of the hard fact that a tax in the final analysis is a forceful exaction of money from the subject."

36. On the question of relief, the learned counsel for the petitioners relied upon the above cases and also on the case of "Shaukat Hussain v. Zulfiqar Ali & 2 others" (PLD 1981 Lah. 13), declaring "the search and the seizure of the goods" to be without lawful authority and of no legal effect as well as the consequent proceedings to be non‑existent in the eye of law. The goods seized were ordered to be returned to the petitioners. The Hon'ble Sindh High Court in the case of "S.M. Yousaf v. Collector of Customs" (PLD 1968 Karachi 599) also held that if the search and seizure were illegal, the goods seized as a result of the same must be returned. The above view was upheld by the Hon'ble Supreme Court on appeal in "S.M. Yousaf v. Collector" (PLD 1969 SC 153). The Hon'ble Supreme Court observed that no conditions on return of goods could be imposed.

Similarly in the case of "Iqbal Akhtar v. Ch. Muhammad Mushtaq and 4 others" (PLD 1977 Lah. 1318), on ad judgment of the proceedings of the raid, the search, the seizure and the prosecution as without lawful authority, the subsequent proceedings based thereon were declared to be illegal and non‑existent in the eye of law.

37. In view of the above discussion, it is held that in both the cases the purported visit or access by the concerned officers were raids designed at search and seizure of the records and assets which for the above recorded reasons are declared to be without lawful authority and of no legal effect. The proceedings and actions taken in consequent of such raids, searches and seizures including the issuance of any show cause notice, registration of an F.I.R., the complaint, prosecution or recovery proceedings, are also adjudged to be illegal, unlawful and without lawful authority. The respondents shall in both cases (Food Consults and Diplex) return to the petitioners, within a period of 30 days, the records, accounts, papers or the other property seized during such raids and searches. The respondents are further restrained from using the seized material or records etc. in any manner whatsoever to any proceedings or actions against the petitioners.

38. The petitions are accepted in above terms.

S.A.K./F‑23/LPetitions accepted.