A.R.K. TEXTILES through Proprietor VS FEDERATION OF PAKISTAN through Ministry of Finance, Islamabad and 4 others, 2006 PTD-LAHORE-HIGH-COURT-LAHORE 494 (2005)

Sales Tax Act (VII of 1990)----

----Ss.25, 37, 37-A, 38, 40 & 40-A---Sales Tax General Order No.1 of 1991 dated 7-1-1999, S.3---S.R.O. 1160(I)/96 dated 6-10-1996---S.R.O. No.232(I)/91, dated 10-3-1991---C.B.R. Letter No.3(14) ST-L and P/2001 dated 21-7-2001---Criminal Procedure Code (V of 1898), Ss.96, 97, 98, 99, 100, 101 & 102---Constitution of Pakistan (1973), Art.199---Constitutional petition---Petitioner in the present case, was a registered person under Sales Tax Act, 1990 with the Collectorate of Sales Tax at `M'---Superintendent of Sales Tax of Collectorate at "F", in order to seek clarification with regard to the manufacturing unit, took the petitioner into his office, confined him there and thereafter raided the office of his Tax Consultant, took illegally the record of various registered persons---Record was taken into possession without any preparation of list or inventory thereof and thereafter F.I.R. was lodged against the petitioner under S.37(2) of Sales Tax Act, 1990---Petitioner, consequent upon lodging of F.I.R., remained in jail and during this period Collector, Sales Tax "F" initiated audit of the petitioner's firm---Audit report was prepared which was made basis of issuance of show-cause notice---Additional Collector (Adjudication) commenced the adjudication in this respect---Petitioner through the constitutional petition had voiced his grievance against the audit report, show-cause notice and the illegal raid---Validity---Seizing of record and sealing the premises was to be carried out in accordance with the procedure laid down in Ss.96, 97, 98, 99, 100, 101, 102 & 103, Cr.P.C.---Seizure of documents without strict compliance of the provisions of Ss.37-A, 38, 40 & 40-A of Sales Tax Act, 1990 was an act without lawful authority---Raiding the premises of Tax Consultant and resumption of record by the Superintendent Sales Tax "F" was grave deviation of provisions of law as contemplated in Ss.37-A, 38, 40 & 40-A of the Sales Tax Act, 1990---Central Board of Revenue, through its Letter No.3(14) ST-L & P/2001 dated 21-7-2001, had conveyed that no F.I.R. be lodged without prior permission from the Board, but in the present case, Superintendent Sales Tax, "F" had ignored the directions of Central Board of Revenue while lodging the impugned F.I.R.---Collector, Additional Collector, Assistant Collector and Superintendent, I & P, Sales Tax Collectorate "F" had proceeded without any authority, petitioner was a registered person in the Collectorate of Sales Tax `M' and as such Officers of Sales Tax in 'the Collectorate of Sales Tax at `M' only had the jurisdiction to take any action against the petitioner and that too after compliance of provisions of Ss.38, 40 & 40-A of the Sales Tax Act, 1990---Impugned action of Collectorate of Sales Tax at `F' against the petitioner was an act of excess of the Officers of Collectorate at F, it was without jurisdiction and as such being void order was nullity in the eye of law and liable to be struck down under constitutional jurisdiction by the High Court---Adequate remedy of appeal would only be adequate remedy when Officers had jurisdiction to take action against the petitioner---High Court allowed the constitutional petition and declared that resumption of record by Superintendent of Sales Tax Collectorate `F', without making of memorandum of seizure of documents, preparation of list and compliance of provisions of Ss.38, 40 & 40-A of Sales Tax Act, 1990 was without lawful authority and of no legal effect---Authorities were directed to return the record to petitioner which they had illegally possessed from the Tax Consultant---Proceedings on the audit report and show-cause notice, thereafter were also declared to be illegal and without any lawful authority---High Court, however, observed that there was no bar against the Collectorate of Sales Tax "M" to initiate any proceeding against the petitioner, after compliance of the provisions of law.

Federation of Pakistan v. Messrs Master Enterprises (Pvt.) Ltd. 2003 PTD 1034 and Messrs Ihsan Yousaf Textiles (Pvt.) Ltd. v. Secretary, Revenue Division, Islamabad (sic) ref.

Zahid Saleem for Petitioner.

Sarfraz Ahmad Cheema for Respondents.

ORDER

SYED HAMID ALI SHAH, J.---Petitioner is a registered person under the Sales Tax Act, 1990 with the Collector of Sales Tax, Multan Division, Multan. Respondent No.5 in order to seek clarification with regard to the manufacturing unit, took the petitioner into his office, confined him there and thereafter raided the office of Latif Gill, took illegally the record of various registered persons including A.R.K. Textile, Al-Rashid Fabrics and Umer Text International. The record was taken into possession without any preparation of list or inventory thereof and thereafter F.I.R. No.1 of 2001 was lodged against the petitioner under section 37(2) of the Sales Tax Act, 1990. Petitioner consequent upon lodging of F.I.R. remained in jail and during this period respondent No.3 initiated audit of the petitioner's firm. Audit report was prepared on 7-7-2003 which was made basis of issuance or show-cause notice dated 22-9-2004. Respondent No.4 commenced the adjudication in this respect. The petitioner through the instant petition has voiced his grievance against the audit report, show-cause notice dated 22-9-2004 and the illegal raid.

2. Learned counsel for the petitioner has submitted that the petitioner is a registered person in the Collectorate within the jurisdiction of Collector Sales Tax, Multan Division, Multan and proceedings against him by respondents Nos.3 to 5 are without jurisdiction and nullity in the eyes of law. Learned counsel emphasized that the petitioner has not been associated in the audit proceedings, which as per Sales Tax General Order No. 1 of 1999 dated 7-1-999 are nullity. The respondents Nos. 3to 5 have conducted audit without 10 days prior information as provided in section 3(ii) of the STGO No.1 of 1999. The petitioner was not served with any notice at the address at which the petitioner got himself registered under the Sales Tax Act: The impugned action of respondents Nos.3 to 5 is in negation of sections 25, 37 and 38 of the Sales Tax Act, 1990. It was lastly contended that in case of action against the manufacturer by another Collectorate of Sales Tax, the permission of C.B.R. is mandatory requirement, which in the instant case has not been resorted to.

3. The learned counsel for the respondents, on the other hand, has fully defended the impugned action of respondents Nos.3 to 5. He has stated that the respondents have initiated the action within their jurisdiction as the record of the manufacturer was lying within the limits of Collectorate of Sales Tax, Faisalabad. He has referred to the statement of the petitioner duly signed and written by him wherein the petitioner has undertaken to pay voluntarily all the dues of the Government in respect of the Sales Tax and to provide the record whichever is demanded by the respondents. The learned counsel has then referred to show-cause notice and has submitted that show-cause notice was duly served upon the petitioner and thereafter the order in original was passed, wherein the petitioner was duly represented. The learned counsel in support of his contention referred to the case of "Federation of Pakistan v. Messrs Master Enterprises (Pvt.) Ltd. 2003 PTD 1034" and decision of the Federal Tax Ombudsman, dated 30-4-2002 rendered in complaint titled "Messrs Ihsan Yousaf Textiles (Pvt.) Ltd. v. Secretary, Revenue Division, Islamabad" and contended that the petitioner has the remedy to challenge the order in original passed by respondent No.4 in appeal under the provisions of the Sales Tax Act, 1990, wherein the writ against such order is not maintainable.

5. (sic) Heard the learned counsel for the parties and perused the record.

6. It is reflected from the certificate of registration No.19/2001/ ST/Reg. Dated 9-1-2001 that the petitioner is a registered person in the Collectorate of Sales Tax, Multan Division, Multan. Admittedly the record of the petitioner was recovered from the office of his tax consultant situated at 2nd Floor Arslan Plaza, Kotwali Road, Faisalabad. The premises do not belong to the petitioner. Respondent No.2 through Notification No.S.R.O. 1160(I)/96 dated 6-10-1996 has specified at serial No.6, Collector, Collectorate of Sales Tax Multan being specified Collector for the area including Civil Division of Dera Ghazi Khan, Bahawalpur and Multan. The appointment and jurisdiction of the Sales Tax Officer is notified vide S.R.O. No.232(I)/91, dated 10-3-1991 wherein Principal Appraise, Superintendents/Deputy Superintendents etc. have been assigned the task of the Officer of Sales Tax within their respective area of jurisdiction. An action against the petitioner lies within the domain and jurisdiction of Collectorate of Sales Tax, Multan and the respondents Nos.3 to 5, if intended to take an action, were under an obligation to seek prior permission from respondent No.2/Central Board of Revenue.

7. The petitioner has assailed in para. 6 of his petition that list of documents seized was neither prepared nor a copy thereof was handed over to the petitioner as per requirements of provision of section 38 of Sales Tax, 1990. Respondent in reply to para. 6, made evasive denial as regards a copy of any such list. No proof regarding issuance of notice or of handing over the list of document to the petitioner has been provided. The apex Court in the case of "Federation of Pakistan through Secretary, Ministry of Finance, Federal Secretariat, Islamabad and 4 others v. Messrs Master Enterprises (Pvt.) Ltd. through Managing Director" 2003 PTD 1034 has also held that seizing of record and sealing the premises are to be carried out in accordance with the procedure laid down in sections 96, 97, 98, 99, 100, 101, 102 and 103, Cr.P.C. The apex Court has declared that the seizer of documents without strict compliance of the provisions of sections 37-A, 38, 40 and 40-A is an act, without lawful authority. Viewing the impugned action of the respondents Nos.3 to 5 on the principle laid down in the case 2003 PTD 134 (supra), there is clear departure from the compliance of the procedure and law, by the respondents Nos.3 to 5 qua the impugned action. After perusing the relevant record I am of the view that raiding the premises of Tax Consultant and 'resumption of record by respondent No.5 is grave deviation of provisions of law as contemplated in provisions of sections 37-A, 38, 40, 40-A of Sales Tax Act. The impugned action has since not been taken in accordance with law, therefore, it cannot sustain legally. Additionally respondent No.2 through its letter No.3 (14) ST?L&P/2001, dated 21-7-2001, has conveyed that no F.I.R. be lodged without prior permission from the Board but in the instant case, respondent No.5 has ignored the directions of Central Board of Revenue while lodging the impugned F.I.R.

8. Respondents Nos.3 to 5 have proceeded against the petitioner without any authority- The petitioner was a registered person in the Collectorate of Sales Tax, Multan Division, Multan and as such the Officers of Sales Tax in the Collectorate of Sales Tax at Multan only had the jurisdiction to take any action against the petitioner and that too in c accordance with law and after compliance of provisions of sections 38, 40 and 40-A of the Sales Tax Act. The impugned action against the petitioner is an excess of respondents Nos.3 to 5, it is without jurisdiction and as such being void order is nullity in the eyes of law and can be struck down in the writ jurisdiction. Adequate remedy of appeal would only be adequate remedy when respondents Nos.3 to 5 had jurisdiction to take action against the petitioner.

9. For what has been discussed above, the instant writ petition is allowed and it is declared that resumption of record by respondent No.5 without memorandum of seizure of documents, preparation of a list and compliance of provisions of sections 38, 40 and 40-A of the Sales' Tax C Act, is without lawful authority and of no legal effect. Respondents are directed to return the petitioner's record which they have illegally possessed from the Tax Consultant. The proceedings on the audit report and show-cause notice dated 22-9-2004 are also declared illegal and without any lawful authority. There is, however, no bar against the Collectorate of Sales Tax, Multan, to initiate any proceedings against the petitioner, after the compliance of the provision of law.

M.B.A./S-5/L????????????????????????????????????????????????????????????????????????????????????? Petition allowed.