MUHAMMAD NADEEM SOHAIL VS FEDERATION OF PAKISTAN
2019 P T D 332
[Lahore High Court]
Before Shams Mehmood Mirza, J
MUHAMMAD NADEEM SOHAIL
Versus
FEDERATION OF PAKISTAN and others
Writ Petition No.159322 of 2018, decided on 12/04/2018.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 214-C & 214-D---Sales Tax Special Procedures Rules, 2007, Rr. 4, 5 & proviso---Notification No. SRO 1125(I)/2011 dated 31.12.2011---Notification No. SRO 608(I)/2014 dated 02.07.2014---Selection of case for audit---Retailer, status of---Petitioner was taxpayer and was aggrieved of notice issued by authorities selecting his case for audit---Plea raised by taxpayer was that he was retailer and was not liable for audit in terms of S. 214-C of Income Tax Ordinance, 2001---Validity---Retailers falling in any category mentioned in R.4 of Sales Tax Special Procedures Rules, 2007 were required to be registered under Sales Tax Act, 1990 in terms of Chapter-I of Sales Tax Special Procedures Rules, 2007---Taxpayer Registration Profile showed that petitioner was retailer registered with sales tax department therefore, he fulfilled requirement prescribed by R. 4 of Sales Tax Special Procedures Rules, 2007---Return filed by petitioner was also appended with record and it showed that it enjoyed benefit of Notification No. S.R.O. 1125(I)/2011 dated 31.12.2011---Authorities could not have selected case of petitioner for audit in terms of Ss.214-C & 214-D of Income Tax Ordinance, 2001---High Court set aside notice issued by the authorities---Constitutional petition was allowed in circumstances.
Khawaja Farooq Saeed, Abdullah Akhtar Butt and Shahid Sharif for Petitioner.
Muhammad Asif for Respondent.
JUDGMENT
SHAMS MEHMOOD MIRZA, J.---This writ petition calls into question the legality of notice dated 8.1.2018 whereby the petitioner has been selected for audit in terms of section 214-C of Income Tax Ordinance, 2001, (the Ordinance).
2.Learned counsel submits that the petitioner is a "retailer" by virtue of Rule 4 of the Sales Tax Special Procedure Rules, 2007 (the Rules) and that he is required to pay sales tax under SRO No. 1125(I)/2011 dated 31.12.2011 in terms of the proviso to Rule 5 of the Rules. He further referred to subsection (4) of section 214D of the Ordinance to contend that the petitioner being a retailer under Rule 4 was not liable for audit in terms of section 214C of the Ordinance.
3.Learned counsel for the respondents, on the other hand, submitted that the petitioner was not registered as a retailer with the sales tax department. He furthermore submitted that the petitioner was in fact registered with the sales tax department on 26.12.2012 whereas Rule 4 and Rule 5 were inserted through SRO No. 608(I)/2014 dated 02.07.2014 and as such the petitioner cannot seek benefit of sub-section (4) of section 214D of the Ordinance.
4.Rule 4 of the Rules stipulates that the retailers falling in any of the category mentioned therein are required to be registered under the Sales Tax Act, 1990 in terms of Chapter-I of the Rules. Learned counsel for the petitioner has today placed on record the copy of taxpayer registration profile which clearly shows that the petitioner is a retailer registered with the sales tax department. The petitioner, therefore, fulfills the requirement prescribed by Rule 4. The return filed by the petitioner has also been appended with the record which shows that it enjoys the benefit of S.R.O. No. 1125(I)/2011.
5.The respondents do not deny that the petitioner is a retailer. The only objection raised before this Court is that the petitioner is not registered as retailer with the sales tax department. It is furthermore apparent that the respondents have taken up the position that a retailer for seeking the benefit of subsection (4) of section 214D of the Ordinance is required to be registered with the department after the issuance of S.R.O. No. 608(I)/2014 dated 02.07.2014. This plea of the respondents is without any merit. Rule 4 clearly stipulates that a retailer is required to be registered in the manner specified in Chapter I of the Rules. Notwithstanding the insertion of Rules 4 and 5 through SRO 608(I)/2014, this condition per se envisages registration of a retailer with the department prior to the issuance of the said SRO. The petitioner fulfills this criteria as he was registered on 26.12.2012 and shall be deemed to be a retailer in terms of Rule 4 of the Rules. The department, therefore, could not have selected the petitioner for audit in terms of section 214C read with section 214D of the Ordinance.
6.In the circumstances this writ petition is allowed and notice dated 08.01.2018 is set aside being without lawful authority and of no legal effect.
MH/M-198/LPetition allowed.