2024 PLP 156 (PTD)
Messrs DALDA FOODS LTD. Versus FEDERATION OF PAKISTAN and another
| Citation | 2024 PLP 156 (PTD) |
| Forum / Court | Sindh High Court |
| Bench Members | Adnan Iqbal Chaudhry, J |
| Parties | Messrs DALDA FOODS LTD. Versus FEDERATION OF PAKISTAN and another |
| Primary Law | Sales Tax Act (VII of 1990) |
Q1: What are the key laws and sections cited in 2024 PLP 156 (PTD)?
This judgment primarily cites: Sales Tax Act (VII of 1990) as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2024 PLP 156 (PTD)?
The case was heard and decided by the Sindh High Court bench comprising: Adnan Iqbal Chaudhry, J.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2024 PLP 156 (PTD) (Messrs DALDA FOODS LTD. Versus FEDERATION OF PAKISTAN and another). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Headnotes / Summary
S. 25
Federal Excise Act (VII of 2005), S. 46
Commissioner, powers of
Scope
Plaintiff/taxpayer/company challenged notice issued by the Commissioner Inland Revenue under S.46 of the Federal Excise Act, 2005 and S. 25 of the Sales Tax Act, 1990, whereby the plaintiff was selected for audit
Central issue raised in the suit was whether under said provisions of law, the Commissioner could select a taxpayer for the purpose of conducting audit without assigning any reason
Held, that issue-in-hand had been answered in negative by the judgments of Indus Motors Co. Ltd. v. Federation of Pakistan reported as 2020 PTD 297 as well as Wazir Ali Industries Ltd. v. Federation of Pakistan reported as 2023 PTD 576 by holding that the Commissioner must frame legitimate mindful queries to the knowledge of a taxpayer after going through the returns by which he must be either satisfied after calling the record or otherwise; in case such mindful queries remained unsatisfied, he then was obliged to give reasons under S.25(2) of the Sales Tax Act, 1990 for conducting audit
Plaintiff prayed that present suit might also be decreed in light of the said findings
High Court, while restraining the defendants/FBR from acting upon the impugned audit notice declared that the impugned notice issued by the Commissioner to the plaintiff under S.46 of the Federal Excise Act, 2005 and S.25 of the Sales Tax Act, 1990, selecting the plaintiff for audit was unlawful for failing to disclose reasons and the said notice and also any subsequent follow-up notices were of no legal effect. Indus Motors Co. Ltd. v. Federation of Pakistan 2020 PTD 297 and Wazir Ali Industries Ltd. v. Federation of Pakistan and others 2023 PTD 576 ref. Hanif Faisal Alam for Plaintiff. Bilal Khilji, Assistant Attorney General for Pakistan for Defendant No.1. Muhammad Aqeel Qureshi for Defendant No.2.
Judgment & Decree
ADNAN IQBAL CHAUDHRY, J.
The Plaintiff has challenged notice dated 10-02-2020 issued by the Commissioner Inland Revenue under section 46 of the Federal Excise Act, 2005 read with section 25 of the Sales Tax Act, 1990 whereby the Plaintiff was selected for audit as follows: "
2. This is to inform you that your case has been selected for audit of Federal Excise and Sales Tax affairs by the undersigned in terms of section 46(2) of the Federal Excise Act, 2005 read with section 25 of the Sales Tax Act, 1990.
3. In exercise of powers conferred on undersigned under section 68(1) of the Federal Excise Act, 2005 and section 25(2) of the Sales Tax Act, 1990 your records, documents including books of accounts, maintained under the law are required for audit".
2. The central issue raised by the suit is whether under section 46 of the Federal Excise Act, 2005 and section 25 of the Sales Tax Act, 1990 the Commissioner can select a taxpayer for the purposes of conducting audit without assigning any reasons ? The said issue has been answered in the negative by single Benches of this Court in Indus Motors Co. Ltd. v. Federation of Pakistan (2020 PTD 297) and Dewan Sugar Mills Ltd. v. Federation of Pakistan (Suit No. 850/2020 and others), and more recently also by learned Division Bench of this Court in the case of Wazir Ali Industries Ltd. v. Federation of Pakistan and others (2023 PTD 576) as under: "
36. Thus, insofar as Section 25 is concerned, we would conclude that for purposes of Section 25(1) Commissioner must frame legitimate mindful queries to the knowledge of a taxpayer after going through the returns which must be either be satisfied after calling the record or otherwise. In case such mindful queries remained unsatisfied, he then was obliged to give reasons under subsection (2) of Section 25 for conducting audit". Learned counsel for the Plaintiff prays that this suit may also be decreed in light of the findings above. Learned counsel for the Defendants do not contest.
3. Therefore, in view of the case-law noticed above, the suit is decreed as follows: (i) It is declared that the impugned notice dated 10-02-2020 issued by the Commissioner Inland Revenue to the Plaintiff under section 46 of the Federal Excise Act, 2005 and section 25 of the Sales Tax Act, 1990, selecting the Plaintiff for audit is unlawful for failing to disclose reasons. The said notice, so also any subsequent follow-up notices are of no legal effect. (ii) The Defendants are restrained from acting upon the impugned audit notice dated 10-02-2020. MQ/D-7/Sindh Suit decreed.