Z&J HYGIENIC PRODUCTS (PVT.) LTD. VS COMMISSIONER INLAND REVENUE, SALES TAX GUJRANWALA

2013 P T D 2022

2013 P T D 2022

[Supreme Court of Pakistan ]

Present: Mian Saqib Nisar and Muhammad Ather Saeed, JJ

Messrs Z&J HYGIENIC PRODUCTS (PVT.) LTD.

Versus

COMMISSIONER INLAND REVENUE, SALES TAX GUJRANWALA and others

Civil Petitions Nos. 33-L to 35-L of2011,decidedon19thJune,2013.

Sales Tax Act (VII of 1990)---

----Ss. 40-A, 40 & 38---Constitution of Pakistan, Art. 185(3)---Alleged evasion of sales tax---Raid/search conducted by tax authorities without obtaining warrant from Magistrate---Legality---Confiscation of record and documents of tax-evader during raid---Tax authorities conducted a raid on premises of petitioner-company and took away manual as well as computer record and then issued a show cause notice for recovery of alleged evaded sales tax---Constitutional petitions filed before the High Court by petitioner-company and tax authorities were disposed of with the direction that superior courts were not the forum to adjudicate upon questions of fact by making thorough investigation and both the parties might contest their grievance before the adjudicating officer---Plea of petitioner-company that raid under S. 40 of Sales Tax Act, 1990 should be made after obtaining warrants from the Magistrate, and if raid was made under S. 40A of Sales Tax Act, 1990 reasons should be given by Tax Authorities as to why it apprehended that record would be removed; that no such reasons had been given by Tax Authorities in the notice given in the present case---Validity---Without mentioning reasons and plea of emergency for entry in the premises, raid by concerned authorities without taking permission from the Magistrate was illegal---Supreme Court granted leave to appeal to consider whether raids conductedunderSs. 38 & 40A of Sales Tax Act, 1990werewithinthe parameters specified by theSupremeCourtinthejudgmentsof(i) Collector of Sales Tax and Central Excise (Enforcement) and another v. Messrs Mega Tech (Pvt.) Ltd. 2005 PTD1933, (ii) Collector of Sales Tax etc. v. Messrs Food Consults (Pvt.) Ltd. and Messrs Diplex Beauty Clinic 2007 PTD 2356, and (iii) Federation of Pakistan through Ministry of Finance Islamabad v. Master Enterprises (Pvt.) Ltd., and others 2003 PTD 1034; and whether documents seized during an illegal raid could be used against the alleged tax-evader in any manner to his disadvantage.

Collector of Sales Tax and Central Excise (Enforcement) andanother v. Messrs Mega Tech (Pvt.) Ltd. 2005 PTD 1933; Collector of Sales Tax and others v. Messrs Food Consults (Pvt.) Ltd. and Messrs Diplex Beauty Clinic 2007 PTD 2356 and Federation of Pakistan through Ministry of Finance Islamabad v. Master Enterprises (Pvt.) Ltd., and others 2003 PTD 1034 ref.

Mian Abdul Ghaffar Advocate Supreme Court and Mahmudul Islam, Advocate-on-Record for Petitioners.

Mian Yousaf Omer, Advocate Supreme Courtfor Respondent No.1.

Date of hearing: 19th June, 2013.

ORDER

MUHAMMAD ATHER SAEED, J.---These Civil Petitions for Leave to Appeal have been filed against the common judgment of the learned Lahore High Court, Lahore, dated 11-11-2010 in Writ Petitions Nos. 8453 and 12191 of 2003 and 38 of 2004 whereby learned High Court had disposed of the writ petitions with direction that the parties may contest their grievance before the Adjudicating Officer.

2.Brief facts of these cases are that the respondent had conducted a raid on the premises of the petitioner and had carried away the manual as well as computer record and then issued show-cause notice for recovery of alleged evaded sales tax. The learned High Court held that the very fact that huge demand has been raised on the basis of the seized record shows that the apprehension of the respondent while raiding the premises cannot be said to be without any reasonable belief and apprehension. The learned High Court has also held that superior Courts are not the forum to adjudicate upon the questions of facts by making thorough investigation and the parties may contest their grievance before Adjudicating Officer.

3.We have heard Mian Abdul Ghaffar, learned Advocate Supreme Courtcounsel for the petitioner and Mian Yousaf Omer, learned Advocate Supreme Courtfor respondent.

4.The learned Advocate Supreme Courtfor the petitioner argued that the raid should be made under section 40 of the Sales Tax Act, 1990 after obtaining warrants from the Magistrate and if it is made under section 40-A of the Sales Tax Act then the reasons should have been given as to why the respondent apprehends that record will be removed. He in this connection relied upon the judgments of this Court in the cases of (1) Collector of Sales Tax and Central Excise (Enforcement) andanother v. Messrs Mega Tech (Pvt.) Ltd. reported in 2005 PTD 1933, (2) Collector of Sales Tax and others v. Messrs Food Consults (Pvt.) Ltd. and Messrs Diplex Beauty Clinic reported in 2007 PTD 2356 and (3) Federation of Pakistan through Ministry of Finance Islamabad v. Master Enterprises (Pvt.) Ltd., and others reported in 2003 PTD 1034 and argued that in these cases, this Court had held that the raid under section 40-A of the Sales Tax Act can only be conducted after giving cogent reasons for the formation of plea by the respondent that the relevant record may be removed if they waited for warrants from the Magistrate. He drew our attention to notice under sections 38 and 40-A of the Sales Tax Act and pointed out that no such reasons have been mentioned in this notice.

5.After perusing the judgments of this Court, we have seen that this Court has held that without mentioning reasons and plea of emergency, for entry in the premises, the raid by the concerned authorities without taking permission from the Magistrate is illegal. In view of the above judgments of this Court, we are inclined to grant leave to appeal, inter alia, to consider the following points:--

(1)Whether the raids conducted under sections 38 and 40-A of the Sales Tax Act were within the parameters specified by this Court in the above judgments; and

(2)Whether the documents seized during the illegal raid can be used against the petitioner in any manner to his disadvantage.

MWA/Z-3/SCLeave granted.