2016 PLP 2619 (PTD)

5. The deptt has denied the allegation of demanding tax without assessment being absolutely frivolous, totally baseless and utterly unfounded. The Deptt. pleaded that the Complainant has intentionally tried to mislead the FTO which attracts the contempt proceedings under section 16(1)(c) of the FTO Ordinance.

6. Contradictory the above position, the AR contended that constitution of the raiding party was illegal and void for the following reasons: a) The authorization under section 38 of the Act is merely enabling provision and nothing to do with the regular search and seizure which can be conducted under subsection (2) of section 40 of the Act. b) The search must be in accordance with the Criminal Procedure Code Act, 1898. Section 103 of Cr.P.C. makes it mandatory the presence of two or more witnesses from respectable inhabitants of the locality near the place of search. The witnesses claimed to have been present were staff members namely Mr. Waqar Ahmad and Mr. Arshad Ali which were not reliable and authenticated. c) The substituted service of notices where refused must be affixed at the conspicuous outer door of the business premises in the presence of two independent witnesses from the vicinity of the site of the search. d) Search under section 40(2) of the Act can be made with prior approval of the Magistrate which was not obtained in the instant case. e) The general provisions of Section 38 are subject to the guarantee of dignity of an individual ensured under Article 14(1) of the Constitution of Pakistan.

7. In view of the above, it was argued that the record impounded from the site without following the prescribed procedure cannot be used against the taxpayer (the Complainant).

8. The AR further alleged that 20 officials of the Deptt. entered the business premises unauthorizedly, created harassment under threat of gun fire, whereas, authorization was required to be issued to a single officer and not to the multiple persons. Even, the letter of authorization and list of record was provided at a later date on request. According to him, the authorization letter was prepared after conducting the raid and so was void ab initio. The order sheet on the file is silent about reasonable cause which is essential for issuance of authority under section 38 of the Act.

9. The manner in which the premises/site raided was also in violation of the aforementioned Article of the Constitution which provides that "the dignity of man and, subject to law, the privacy of home, shall be inviolable .... No person shall be subjected to torture for the purpose of extracting the evidence". In support of aforementioned contention, the AR relied on the following judgments of the superior courts "2005 SCMR 1166 = 2005 PTD 1933 (Supreme Court of Pakistan), 2003 PTD 2037 (Lahore High Court), 2004 PTD 2952 (Sindh High Court), 2009 PTD 1083 (Lahore High Court), 2009 PTD 690 (Sindh High Court), PLD 1991 SC Pak 630 (Supreme Court of Pakistan), PTCL 2003 CL 338(sic.), 2003 PTD 1034 (Supreme Court of Pakistan), 2004 PTD 1731 (Lahore High Court), 2005 and 164/LHR/ST(07)/281/2010 (FTO)"

10. The DR reiterated the written comments. According to him, no maladministration was involved in the case. He pleaded that Section 38 of the Act does not require warrants if the action is to be carried on at the declared business premises as held by the Lahore High Court in Writ Petition No.6363 of 2015 [M/s Firdous Textile Mills (Pvt.) Ltd. v. Federation of Pakistan]. Section 38 of the Act allows free access to the declared premises which has been carefully exercised by the officers/officials authorized by the competent authority. The allegations of harassment, gun fire, breaking the locks frivolous, baseless and without any supportive evidence. The Complainant was found involved in the tax evasion and so lawful raid was conducted after obtaining information on the subject and authorization from the competent authority.

11. The AR's contention that only one officer can be authorized under section 38 of the Act, is misconceived. Section 13 of the General Clauses Act 1897 provides that "in all (Central Act) and Regulations, unless there is anything repugnant in the subject or context - Words importing the masculine gender shall be taken to include females, and words in the singular shall include the plural, and vice versa".

12. According to the DR, provisions of section 103 can be invoked where the proceedings are initiated under section 40 of the Act, whereas, in the instant case the Deptt. proceeded under section

38. The main aim and object of enacting section 103 of Cr.P.C. was to ensure that search and recovery was conducted honestly and fairly and to exclude any possibility of concoction and transgression as held in a case cited as "1993 SCMR 785".

13. Both parties heard and record perused. In this case Complainant is contending that unit was closed since 31.05.2013 and departmental officers have raided it on 09.06.2016 by using force in the form of breaking lock etc. without search warrants under section 40 of the Act. It has also been alleged that officers even had no departmental authorization from competent authority under section 38 of the Act and the same was allegedly prepared after raid. The deptt's view is that the unit was visited after proper authorization by Director I&I Faisalabad vide letter No.DIR/I&I-IR/FSD/3122 dated 09.06.2016. Deptt. has also contended that the unit was not closed as record resumed during visit on 09.06.2016 showed that it had received raw materials during 2014, 2015 and 2016. Moreover it had renewed financial arrangement with Pak-Qatar Family Takaful on 17.12.2015.

14. The above position shows that apparently the Complainant's unit was operational after 2013 (contrary to Complainant's contention) and departmental officers had visited it on 09.06.2016 after valid authorization from competent authority. Thus apparently no case of maladministration is made out against the department. The request of the Complainant for declaring action of the deptt. as null, void and illegal also appears pre-mature particularly when so far deptt. has not taken any coercive or legal action against him.

15. It would be pertinent to mention that if deptt. subsequently decides to lodge an FIR or make out a contravention case against the Complainant, their fate would be decided on the basis of following guidelines about applicability of provisions of section 38 of the Act given by Sindh High Court in its judgment cited as 2009 PTD 1083:- The visit by deptt. officials under section 38 of the Act would be confined to inspecting the record and documents that are in plain sight or those that are voluntarily made available for inspection by the person(s) present at the premises on request. Consequently, custody within the meaning of section 38 can only be taken of such record and documents that are in plain sight or those that have voluntarily been made available for inspection on request. The record and documents taken into custody must be against a receipt signed by the officer. The officers have no powers under section 38 to compel the production of any record or document that is not in plain sight or that has not been voluntarily made available as above. Any record or document taken into custody under compulsion cannot be used for any purpose whatsoever by the department against the person from whose custody the record or document has been taken into possession by an officer. Any action that is in contravention of the foregoing would be an action that falls short of the requirements to act fairly, justly and reasonably and, therefore, wholly illegal and void. Permitting the department to benefit from such actions would be equally illegal.

16. The complaint is disposed of in the above terms. KMZ/100/FTO Order accordingly.