KARACHI: A single-member bench of The Sindh High Court comprising Justice Adnan Iqbal Chaudhry has disposed of suit filed by Reliance Petrochemical Industries Pvt. Ltd against Chairman FBR, Commissioner Inland Revenue Zone-II, Karachi & others challenging impugned order under section 40B of the Sales Tax Act, 1990. A detailed judgment was released on March 3, 2021.
By suit the Plaintiff challenged order dated 07-05-2018 issued by the Commissioner Inland Revenue to post Officers of Inland Revenue at the premises of the Plaintiff to monitor production or sale of taxable goods and the stocks position, impugned order was issued by the Commissioner Inland Revenue in exercise of powers under the proviso to section 40B of the Sales Tax Act, 1990. At the time the suit was filed on 08-05-2018, section 40B of the Sales Tax Act, 1990.
On 2 March 2021, during the hearing, Owais Ali Shah, learned counsel for the Plaintiff submitted that after the omission of the power of the Commissioner to pass an order under section 40B of the Sales Tax Act, 1990, the impugned order ceases to exist. Without prejudice to that he added that the impugned order was unlawful to begin with as it has been held by the Supreme Court of Pakistan in Commissioner Inland Revenue Karachi v. Pakistan Beverages Ltd. (2018 SCMR 1544) that under the proviso to section 40B of the Sales Tax Act, 1990, the Commissioner could only act where he suspected evasion of sales tax or a tax fraud; and further that an order passed under section 40B cannot be indefinite has to be time-bound.
On the other hand, Muhammad Aqeel Qureshi, learned counsel for the department submitted that the omission of the proviso to section 40B of the Sales Tax Act, 1990 brought about by the Finance Act, 2018 would not have the effect of doing away with the impugned order which had been issued prior to the Finance Act, 2018; and that the impugned order was within the parameters of section 40B of the Sales Tax Act, 1990
After the hearing, court observes in its order that “The impugned order passed by the Commissioner under the proviso to section 40B of the Sales Tax Act, 1990 did not determine any rights or obligations, but was an order to deploy Officers of Inland Revenue at the premises of the Plaintiff so as to monitor production or sale of taxable goods and the stocks position ‘. In other words, at the time of repeal of the proviso to section 40B, the Officers of Inland Revenue were on a monitoring assignment from the Commissioner.
The repeal/omission of the proviso to section 40B of the Sales Tax Act, 1990 by the Finance Act, 2018 manifests that the legislature intended to take away the power of the Commissioner to post/deploy Officers of Inland Revenue to the premises of a registered person and to put an end to such postings made by him. Given that intent, it would be absurd to suggest that notwithstanding said repeal the legislature intended for Officers of Inland Revenue to continue the monitoring assignment tasked by the Commissioner.
Thus, the saving consequences of repeal provided under section 6 of the General Clauses Act, 1897 are not triggered, and the impugned order does not survive the repeal of the proviso to section 40B of the Sales Tax Act, 1990. Since issue No.(i) is answered in the negative, the other issues become redundant. Suit is disposed of as infructuous”.
