KARACHI: Two-member bench of the Sindh High Court (SHC) has set aside impugned notice under section 37 of the Sales Tax Act 1990 issued by customs officials to M/s Aachee Garments (Pvt) Ltd & another, details verdict was released by Muhammad Junaid Ghaffar and Justice Agha Faisal dated March 25, 2021.
Court observed in its judgment that “it is our considered view that the impugned notice appears to be an abuse of process and manifestly unjust / prejudicial towards the petitioner, hence, cannot be sustained. Therefore, this petition is allowed and the Impugned Notice is set aside. However, the respondents shall remain at liberty to seek mitigation of any subsisting grievance in accordance with the law”.
Earlier, counsel for the petitioner argued that “petitioner has assailed summons / notice dated 22.10.2019 (“Impugned Notice”) issued there to under section 37 of the Sales Tax Act 1990 (“Act”) predicated inter alia on the grounds that the same was patently an abuse of process and manifestly unjust / prejudicial towards the petitioner.
He briefly stated, the Impugned Notice was served upon the petitioner requiring personal appearance and submission of its comprehensive record. for the preceding five years, within seven days; failing which it would be deemed that the petitioner was involved in tax fraud. It is manifest from the Impugned Notice that no reference was made to any identified inquiry being conducted by the officer issuing the same.
Per petitioner’s learned counsel, the Impugned Notice was untenable in law, inter alia, having been issued other than in conformity with the provision where under it was issued; amounted to a fishing / roving exercise couched to conduct an unmerited audit of the petitioner; and alleged / presumed / insinuated tax fraud, yet without recourse to the relevant provision of the Act. Comprising commercial invoices, bank debit advice, details of bank accounts, bank statements, inventory record, sales tax returns, utility bills, receipts of fuel charges and sources of funds / investments. Permissible through recourse to section 25 of the Act.
The department’s counsel supported the Impugned Notice; bulwarked upon his contention that the same was predicated upon an alleged misuse of an SRO.
Learned counsel admitted that while there was no specific inquiry mentioned in the Impugned Notice, and / or in the comments filed on behalf of the department, however, mere provision of the requisite documentation / information would take the matter to its logical conclusion; hence, there was no occasion for the Impugned Notice to merit interference herein.
The learned Deputy Attorney General submitted that section 37 of the Act empowered an officer of Inland Revenue and that no cavil could be articulated to the Impugned Notice having been issued by such an officer.
It was argued that while there was no specified inquiry / case pending before the relevant officer as of date, however, such proceedings could materialize post compliance of the Impugned Notice by the petitioner. Per learned DAG, the notice impugned merely sought information, however, the threat of penal consequence, cited therein, was unwarranted.
In view of the reasoning and rationale herein contained, it is our considered view that the Impugned Notice appears to be an abuse of process and manifestly unjust / prejudicial towards the petitioner, hence, cannot be sustained. Therefore, this petition is allowed and the Impugned Notice is set aside. However, the respondents shall remain at liberty to seek mitigation of any subsisting grievance in accordance with the law.
