Imposition of penalty

Held, that imposition of penalty was within the domain of Inquiry/Authorized officer, who was fully empowered to impose such penalty upon its employee on finding him guilty of commission of misconduct as it considered appropriate and conversion of penalty imposed by Inquiry/Authorized Officer would require strong justifiable reasons for the Tribunal to lessen its gravity

Powers of the Tribunal to modify the punishment imposed by the Inquiry/Authorized Officer were neither unbridled nor unlimited

Penalty of dismissal from service was maintained

Appeal was dismissed, in circumstances.

Classification of goods is a question based on legal and factual determination and so also of interpretation of the HS Code and the Customs Tariff; hence, there can always be difference of opinion for interpreting the same

Such will not always be a case of mens rea and imposition of penalty if the claimed HS Code is not accepted by the department.

Where department had accepted the classification claimed by importer instead of objecting and refusing the assessment or issuing any show cause notice at the time of clearance of goods, High Court observed that merely for the fact that some other HS Code was mentioned would not ipso facto mean that the element of mens rea was present making the importer liable for imposition of penalty.

Appellant was imposed upon a penalty for its failure to file quarterly financial return, to send details of all of its Bank accounts and to provide hard copy of its half yearly accounts

Validity

Appellant had persistently violated the requirements of Financial Reporting System (FRS)

Contention of appellant that there was an error in the FRS was not acceptable because appellant had not provided any written evidence regarding agitation of matter before relevant department

Appellant had neither provided Bank details nor submitted half-yearly accounts to the Commission

Appellant's argument about imposition of penalty not greater than the gain earned or loss avoided, did not hold merit because under S. 150(2)(a) of the Securities Act, 2015, Commissioner (SMD) was empowered to impose penalty up to fifty million rupees

Appeal was dismissed.

Respondent imported a trailer and claimed assessment of goods under HS Code No. 7311.0030, which was disputed by the department, as according to them the trailer was correctly classifiable under HS Code 8716.3190 attracting customs duty at the rate of 15%

Show cause notice was issued and the matter was adjudicated, whereby, fine and penalty was imposed, which in appeal was set aside to the extent of such fine and penalty

Validity

Tribunal had held that since all import related documents including the Free Trade Agreement (FTA) Certificate were showing HS Code 7311.0030, whereas, the description of the goods was correctly mentioned by the respondent, therefore, present was not a case of any intentional mis-declaration and element of mens rea was missing

Appellate Tribunal had also accepted the plea of the respondent that if any mis-declaration could have been made it was the description, which could have been changed; however, admittedly correct description of goods was declared on the Goods Declaration

Tribunal's findings were correct in law and it was not that in each and every case wherein upon scrutiny of the Goods Declaration if HS Code is changed attracted a higher rate of customs duty, that fine and penalty had to be imposed mandatorily, as it is always dependent upon facts and circumstances of the case as well

One had to see the intention in doing so as well as presence of element of mens rea

Reference application was dismissed.

Appeal filed by taxpayer before Commissioner Inland Revenue (Appeals) was accepted and that of department before Appellate Tribunal was dismissed

Validity

Appellate Tribunal had recorded findings of facts that due tax amount had already been paid and there was no tax liability, hence, imposition of penalty was not justified

Findings of facts recorded by Appellate Tribunal unless found to be either perverse or contrary to record, could not be interfered with by the High Court, while examining proposed questions of law under Reference Jurisdiction

Scope of reference jurisdiction under the law was restricted only to the extent of examining questions of law arising from order passed by Appellate Tribunal and it did not extend to deciding questions of facts or determination of disputed facts

High Court declined to exercise its advisory jurisdiction

Reference application was decided against the applicant department.

Appellant, being a non-banking finance company, was compulsorily registered under S.24B of the Sindh Sales Tax on Services Act, 2011

Validity

Tariff heading No. 9813.8100 was a sub-heading under Tariff Heading No. 98.13 for taxing the services provided by the institutions mentioned therein and non-banking financial institution was one of the listed institutions

Appellant was rendering taxable services in the Province and since it had failed to get itself voluntarily registered, therefore, it was compulsorily registered under S.24B of the Sindh Sales Tax on Services Act, 2011

Assessing Officer, while imposing penalty, had not discussed as to why the maximum penalty was imposed instead of minimum penalty

Appellate Tribunal observed that where two types of penalties were provided, the Assessing Officer was duty bound to justify the imposition of maximum penalty

Appellate Tribunal partly allowed the appeal and reduced the penalty.

Nature of penal provisions being quasi criminal, existence of mens rea is an essential and mandatory condition for levying penalty

Department must establish mens rea before levying penalty.

Officer of Inland Revenue, during audit, came to know that appellant had claimed inadmissible input tax on account of fake/flying invoices issued by fraudsters (blacklisted persons)

Deputy Commissioner Inland Revenue, after issuance of show-cause notice, directed appellant to pay the input tax, it had claimed along with default surcharge and a penalty equal to 100 percent of the amount involved

Appeal filed by appellant before Commissioner Inland Revenue (Appeals) was dismissed

Validity

Appellant had duly complied with S. 73 of Sales Tax Act, 1990 for it had made payments through Bank

Input tax credit claimed against invoices issued by blacklisted persons could not be denied

Input tax was to be allowed if payments were made through Banking channel irrespective of the fact that the supplier's units were subsequently blacklisted or their registration was suspended

Second supplier of appellant was blacklisted on 3-7-2013 while the purchases were made in December 2010 and January 2011

Said business unit was active and operative at the time of purchases and registration was not suspended

Appellant could not be penalized if the supplier unit had committed tax fraud

Imposition of 100 percent penalty and default surcharge without first establishing that the appellant committed anything wrong or contravened any provision of law, knowingly and dishonestly, was declared to be patently illegal, harsh, unjustified and without any logic

Orders passed by the authorities below were annulled.

Where the evasion of duty was not wilful, the imposition of penalty was not warranted.

Appellants were licensed broadcasting Media houses and Pakistan Electronic Media Regulatory Authority imposed penalty for airing a fake news of bomb blast

Validity

Powers delegated to Personal Hearing Committee were to see whether any provisions of Electronic Media (Programs and Advertisements) Code of Conduct, 2015, were violated for imposition of fine or penalty

Such was within the domain and parameters of S. 13 of Pakistan Electronic Media Regulatory Authority Ordinance, 2002

Personal Hearing Committee after hearing all satellite channels, local and national, recommended its views which could have formed a decision by the Authority

Recommendations could or could not be correct but delegation of power was lawful

Those who aired news in simple words as a 'blast' could find a rescue in terms of R. 3(1)(i) of Electronic Media (Programs and Advertisements) Code of Conduct, 2015, and recommendation of Personal Hearing Committee was not appropriate in general but for those who linked the news of blast with the first one by showing / airing it to be a 'second blast' or 'another blast' or 'as well' had definite intention to present it for viewers as if it was in continuity with earlier one

Said news presented it in continuity of earlier one to be within the parameters and clutches of cl. 3(1)(i) of Electronic Media (Programs and Advertisements) Code of Conduct, 2015, and did not find any reason for their escape under any mitigating circumstance

High Court declined to interfere in decision of the Authority for all those appellants who acted in violation of Cl. 3 (1)(i) of Electronic Media (Programs and Advertisements) Code of Conduct, 2015

High Court set aside the fine imposed upon those appellants who only aired the news as 'blast' could not be roped in Electronic Media (Programs and Advertisements) Code of Conduct, 2015, for imposition of fine as they had only aired a news of 'blast' not linking it with earlier blast, as the news was a fact as a blast had occurred

High Court defined parameters to be set to regulate balance in imposition of fine so that question of discrimination be not exercised

Appeal was allowed accord-ingly.

Appellant e-filed its returns for income on 27-09-2016, 11-10-2017 and 25-12-2017 for the tax years 2014 to 2016 respectively

Deputy Commissioner after issuance of show-cause notice imposed penalty under S. 182, Income Tax Ordinance, 2001 for delay in filing returns

Appeal filed before Commissioner (Appeals) was dismissed

Validity

Section 182, Income Tax Ordinance, 2001 was by no means a charging provision and the intention of legislature was not to generate tax or revenue income and the purpose of the penal provision was not the source of mobilization

Section 182 was only a mode of ensuring collection of taxes and compliance thereof

Revenue department could not be allowed to use provision of S. 182 as substitute of normal assessment or new source of revenue/tax originating provisions

No loss of revenue was evident in the present case

Impression of department that the penalty had to be universally imposed, if there was default, was incorrect

Authorities were required to act fairly and honestly in penalty proceedings

Appellate Tribunal imposed token penalty instead of penalty calculated per day default for the tax year 2004 and deleted penalty imposed for the tax years 2015 and 2016 as the appellant had already revised its return voluntarily and fulfilled the actual liability

Appeals filed by taxpayer were allowed.

Registered person claimed input tax adjustment for the tax periods July 2005 to February 2011 which was found inadmissible

Commissioner Inland Revenue ordered recovery of principal amount of tax and imposed 100% penalty

Commissioner Inland Revenue (Appeals) upheld the charge of tax fraud as well as recovery of principal amount of tax but reduced the penalty from 100% to 25%

Registered person contended that it had assailed the order of Commissioner Inland Revenue (Appeals) before Appellate Tribunal in second appeal which was allowed and that department had filed a Reference before the High Court against the order of Appellate Tribunal which was pending adjudication, therefore, no further deliberation was required

Validity

Appellate Tribunal had already deleted the penalty and default surcharge

Department had filed a Reference against the order of Appellate Tribunal, matter was sub-judice before the High Court

Appeal filed by department having become infructuous, appeal was rejected.

Taxpayer was alleged to have adjusted inadmissible input tax and failed to give plausible reason of his purchases shown to have been made from alleged supplier

Taxpayer before issuance of show-cause notice deposited the principal amount of sales tax but taxation officer imposed hundred percent penalty along with default surcharge

Commissioner (Appeals) reduced the penalty to twenty five percent along with default surcharge

Plea of taxpayer was that his case was covered under amnesty SRO No. 606(I)/2012, dated 1-06-2012

Department refused to extend the benefit of SRO No. 606(I)/2012, dated 1-06-2012 on the ground that taxpayer had deposited sales tax during November 2011, December 2011 and April 2012

Validity

SRO No. 606(I)/2012, dated 1-06-2012 extended benefit to such taxpayers against whom there was an outstanding amount of sales tax and the said amount was required to be paid by 25th June, 2012

Notification in question did not manifestly or otherwise bar such a person, who had paid the principal amount of sales tax before the date of its issuance, to avail benefit of SRO No. 606(I)/2012, dated: 1-06-2012

Said notification conferred a benefit, therefore, it did operate retrospectively

Taxpayer having paid the principal amount of sales tax even before issuance of show-cause notice was clearly entitled to the benefit of amnesty contemplated in SRO No. 606(I)/2012, dated: 1-06-2012

Show-cause notice and orders passed by authorities below were set aside

Appeal filed by taxpayer was accepted while appeal of department was dismissed.

Departmental representative regretted the recovery by stating that such incident had never occurred before and assured that, same would not happen again

Explanation given by Assessing Officer was nothing but a lame excuse

Assessing Officer stated that alleged recovery was not yet effected and department had already withdrawn the recovery notice under S.140 of the Income Tax Ordinance, 2001

Recovery process, in fact, had not been stopped, even after receipt of the stay order

Assessing Officer tried to mislead the Tribunal by giving impression that the recovery proceedings had been stopped after receipt of order

Orders of the Appellate Tribunal were binding on all field formations in letter and spirit

Any violation of the Tribunals order would seriously damage the dispute resolution infrastructure

Appellate Tribunal ordered that disputed amount should be immediately refunded to the taxpayer, under intimation to the Tribunal within seven days of receipt of order

Penalty of Rs.50,000, was also imposed upon Assessing Officer, which should be paid from his own pocket and deposited with Deputy Registrar of the Tribunal with direction that a suitable action against the concerned Officer for violation of orders of the Tribunal might be taken

Order accordingly.

Adjudicating authority, ordered recovery of amount on account of fake sales declared to blacklisted buyer to avoid payment of further tax against supplies made to unregistered person

Appeal against order of adjudicating authority was rejected by appellate authority below

Validity

Charge of fake sales declared to blacklisted buyer to avoid payment of further tax chargeable against sales made to unregistered person was totally based upon assumption and hypothesis

Appellant had supplied the alleged goods to registered buyer only under the coverage of proper sales tax invoices issued in terms of S.23 of Sales Tax Act, 1990 and due tax was also deposited by the appellant in the monthly sales tax returns

All payments had also been received through banking channel as required under S.73 of the Sales Tax Act, 1990

Liability to pay penalty and default surcharges was not a necessary consequence or corollary of every 'non-payment' of tax within stipulated period, but was subject to proof that non-payment of tax was knowingly or fraudulently with mala fide intention not to pay or evade the tax

Mere non-deposit of tax or failure to pay tax without element of mens rea, could not entail penalty on default surcharge

Neither any charge of wilful default nor charge to defraud the Government had been levelled against the appellant

In absence of any allegation in respect of the deliberate or wilful default, imposition of penalty and default surcharge was not only unjustified, but also illegal

Charge of inadmissible input tax adjustment against invoices of suspended/blacklisted units was also baseless; because appellant did hold valid sales tax invoices duly incorporated in suppliers' sales tax returns and summary statements for relevant tax period

Appellant had transacted all payments to the suppliers through Banking Channel by complying with the mandatory provisions of S.73 of the Sales Tax Act, 1990

Subsequent blacklisting of unit would not disentitle the buyer from his lawful right of input tax in respect of invoice issued when the suppliers were registered and active person unless the invoices were specifically declared fake through speaking order and had direct nexus with suspension/blacklisting of the alleged suppliers

Recovery of sales tax, in circumstances, was illegal and unlawful

Impugned show-cause notice and consequent orders of both the authorities below being devoid of legal substance were set aside and appeal filed by appellant/registered person was accepted as prayed for.

Adjudicating authority on charge of mis-declaration confiscated goods with option to the importers to redeem goods on payment of fine equal to 35% of assessed value in addition to payment of duty and taxes leviable thereon

Different penalties were also imposed upon clearing agents due to mis-declaration on their part

Validity

Contention of importers was that the pitch of fine fixed for mis-declaration vide clauses of SRO 499(I)/2009, dated 13-6-2009, no more held the field in view of amendment of S.15 of the Customs Act, 1969 (vide Finance Act, 2011)

After said amendment the pitch of fine fixed by the Board for the contravention of S.32 vide cls. (a) to (g) under Serial-1 of the Table of SRO 499(I)/2009, dated 13-6-2009, had become redundant and no redemption fine could be imposed on basis thereof by the adjudicating authority

Correct declaration was made by the importers

Goods were examined and assessed to duty and taxes which were paid and no loss to revenue was caused in that regard; as such S.32 of the Customs Act, 1969, was not attracted

Impugned orders passed by adjudicating authority, were set aside being devoid of any merits.

Complainant had alleged that the appellant, in order to promote and market its new and enhanced performance products, started its marketing with new brands claiming that its use, both in new and old vehicles, would result in more milage, smooth running; that as a result of that advertising campaign, the complainant and other consumers started using that brand as a preferred choice; that the appellant abruptly and discreetly discontinued the use of those additives, giving a deceptive understanding to consumer and was liable to be proceeded for deceptive marketing practices

Matter was referred to the inquiry committee and on basis of inquiry report, Competition Commission after issuing show-cause notice, found appellant guilty of deceptive marketing practices and ordered to pay a fine of Rs.150 million, with direction to make appropriate changes in the branding insignia

Validity

Competition Commission could initiate proceedings on the basis of a complaint to be made by an undertaking or registered association of consumers; whereas the complainant, in the present case, was neither an undertaking nor a registered association of consumers

Complainant, in circumstances, was not competent to lodge complaint against the appellant

Except news report, there was no other evidence to support the complaint

Competition Commission, in circumstances, had violated the mandatory provisions of law by initiating proceedings against the appellant on basis of wrong, illegal and no evidence

Important and material points agitated by the appellants were neither inquired into nor any opinion was expressed thereon by the Inquiry committee

Inquiry report was the outcome of one-sided aspect of the case based on mere allegations in complaint without any evidence as well as, without covering or answering the pleas taken by the appellant

Complainant had neither appeared before Competition Commission to depose an affidavit in support of the complaint nor had recorded the statement of any other consumer or undertakings in support of the complaint

Points involved in the case were disputed questions of facts, which could not be resolved without recording pro and contra evidence

No evidence at all having been recorded by the Commission, judgment rendered by Commission was based on no evidence

Nothing on record existed that on account of discontinuance of additives any harm was inflicted to consumers or other competitors

No market data had been collected to show that on account of discontinuance of additives, the appellant had obtained monetary gains through increase of market share or profit or competition had decreased

Complaint was not only wrong, illegal and unjustified, but also devoid of merits which was dismissed, in circumstances.

Complaint against appellants was that they were using the registered Trade Mark 'TAIZGAAM' of the complainant without any permission and legal justification

Complaint was inquired into under S.37(2) of the Competition Act, 2010

Competition Commission on the basis of inquiry report awarded penalty of Rs.300,000 to each of the appellants

No evidence was available to the effect that appellants had deliberately used the trade mark "TAIZGAAM" to harm the business interest of the complainant

Appellants were using said trade mark since long, even prior to its registration

Appellants, after getting knowledge of its registration had undertaken not to use the same

Reformatory and regulatory object of avoiding deceptive marketing practices had been achieved through undertaking given by the appellants

Appellate Tribunal observed that appellants, if failed to comply with the undertaking given, would be liable to pay a penalty of Rs.100,000 per day from the date of impugned order till actual compliance and initiation of criminal proceedings under S. 38(5) of the Competition Act, 2010

Appeal was partly allowed and order of Competition Commission regarding penalty was set aside, while maintaining the remaining order of the Commission.

Appellant was alleged to be involved in deceptive marketing practices as prohibited under S. 10 of Competition Act, 2010

Competition Commission initiated proceedings against the appellant and vide impugned order held the appellant as having acted in violation of S. 10 of the Competition Act, 2010 and imposed penalty of Rs.10 million

Appellant while challenging the constitution of the Competition Commission had stated that in terms of S.14 of the Competition Act, 2010, Commission would consist of not less than five and not more than seven Members and quorum of meeting was to be three members; whereas while passing the impugned order Commission was consisting of two Members therefore, impugned order was nullity in the eyes of law

Validity

Appellant, could not place any proof before the Appellate Tribunal with regard to the said deficiency of members

Counsel for Competition Commission, had placed on record the copies of the notifications about appointment of the Chairman as well as members of the Commission along with other material, which had clearly shown that during the relevant period the positions were occupied by the incumbent; there was no problem of quorum at all

Quorum of three members was required for the meetings of the Commission, and S.14(7) of the Competition Act, 2010 had provided that no act or proceedings of the Commission would be invalid by reason of absence of a member or existence of any vacancy among its members or defect in constitution thereof

Even to hear an appeal against an order made by any member or authorized Officer of the Commission, S.41(2) of Competition Act, 2010, had provided that the Commission would constitute Appellate Bench, comprising not less than two members to hear such appeal

Two member Bench under the Competition Act, 2010, in circumstances, was competent to hear any matter or appeal for order and such order would be considered a valid order, passed by the competent forum in the eyes of law

Order accordingly.

Appellant/registered person, who was required to claim input tax adjustment at ninety percent of output tax, had adjusted hundred percent input tax

Registered person under subsection (2) of S.8-B of the Sales Tax Act, 1990, was allowed to adjust or claim refund of remaining ten percent subject to some conditions

Said 10 percent tax, which was the property of the registered person, would ultimately be adjusted after the end of the financial year

Registered person, though had not fulfilled the requirement of adjustment of input tax as provided under subsection (1) of S.8-B, but that was a procedural lapse on part of the registered person

No loss having been caused to the Revenue for excess adjustment of input tax, department could not demand default surcharge from registered person under S.34 of the Sales Tax Act, 1990 and the registered person was not liable to pay additional tax

Default, committed by the registered person did not fall within the definition of 'evasion', as there was no mala fide intention of the registered person to defraud the department and only allegation being procedural lapse same could be condoned

Demand of default surcharge after the stipulated time, was patently illegal and unjustified

Registered person, however, was liable to penal action as it had not fulfilled the procedure as laid down in subsection (1) of S.8-B of the Sales Tax Act, 1990

If the registered person, would not be penalized for said procedural lapse, the provision as contained in S.8-B of the Sales Tax Act, 1990, would become redundant

Appellate authority below had rightly ordered imposition of penalty as provided under subsection (5) of S.33 of the Sales Tax Act, 1990

Said order was maintained, in circumstances.

In order to invoke S.32 of Customs Act, 1969 it had to be seen that whether mens-rea which is essential element for the purpose of S.32(1) had been proved and whether a demand for short recovery can be made under S.32(2) of the Act, without proving any guilty intention, knowledge or mens-rea on part of the maker of statement.

Appellant/Chartered Accountant, had audited the annual accounts of the company, and had given a positive review report to the members of the company, or statement of compliance prepared by the Board of Directors of the company

Auditors authenticated the statement of compliance and the annual accounts which were to be laid before the members in the general meeting

Statement of compliance contained the information that, the appellant had satisfactory rating under the quality control review (QCR)

Record showed that the Quality Assurance Board of 'ICAP' had removed the name of the Auditors from the list of practicing firms having satisfactory 'QCR'

Auditors, not only authenticated the statement of compliance containing false information, but also accepted their reappointment as auditors of the company in the Annual General Meetings (AGM)

Auditors, while in possession of such material information regarding 'QCR' had provided wrong confirmation to the Board of Directors of the company; and had given positive report to the members on the statement of the compliance which carried a misstatement

Commission issued a show-cause notice to appellant under Ss.260 & 476 of the Companies Ordinance, 1984 to the Auditors

Commission being dissatisfied with the response of the Auditors imposed a fine of Rupees Fifty thousands for contravening S.260 of the Companies Ordinance, 1984

Mala fide intention of the Auditors, was evident from the fact that during the review of the statement of compliance, they failed to correct the record with respect to "QCR" status

Auditors had also failed to produce any order of the court, which barred the Appellate Bench to proceed with the matter

Auditors had not come with clean hands to seek the remedy under S.33 of Securities and Exchange Commission of Pakistan Act, 1997

Previously, Auditors were charged with the same violation, wherein penalty of Rs.100,000 under S. 260(1) of the Companies Ordinance, 1984 was imposed

Impugned order was passed with due care keeping in view the principles of legal reasoning necessary to establish the guilt and violation on the part of Auditors

No reason existed to interfere with the impugned order passed by the Commission, in circumstances.

Taxpayer who was engaged in providing/rendering taxable services chargeable to Sales Tax was alleged to have failed to pay said tax

Assessing officer vide order-in-original ordered the taxpayer to pay sales tax, default surcharge and penalty

Appellate Authority maintained order to the extent of amount of tax and payment of default surcharge and allowed the appeal to the extent of penalty

Validity

Serial No.3 of S.43 of Sindh Sales Tax on Services Act, 2011, dealt with the penalty for failing to deposit the tax within time or in the manner laid down under the Act, while Serial No.6(d) of the said section dealt with for penalty for knowingly or fraudulently failing to pay, recover or deposit the actual amount of tax claimed inadmissible tax credit or adjustment or deduction or refund

In the present case, Assessing Officer imposed penalty for non-payment of tax under said two provisions of S.43 of Sindh Sales Tax on Services Act, 2011 relating to non-payment of tax

Both the provisions catered two different situations and could not be invoked simultaneously

If a taxpayer would fail to deposit the tax amount due or any part thereof in the manner laid down under the Act or Rules made thereunder, subject to presence of mens rea, penalty could be imposed under Serial No.3 of S.43 of the Sindh Sales Tax on Services Act, 2011

If the same offence was committed knowingly or fraudulently subject to presence of mens rea, penalty could be imposed under Serial No.6(d) of S.43 of the Act

Word "knowingly", would mean with knowledge; whereas word "fraudulently" would mean an intention to deceive or defraud

Taxpayer, in the present case, was penalized twice for committing same offence of non-payment of tax

Liability to pay penalty was not a necessary consequence or corollary of every non-payment of tax within stipulated period, but was subject to prove that the non-payment of tax was knowingly or fraudulently with mala fide intention not to pay or evade the tax

Penalty could only be imposed when the department would establish a case indicating dishonest motives of a taxpayer

Department had failed to establish the necessary ingredients of imposing penalties under said two provisions of S.43

Mere non-deposit of tax or failure to pay tax without element of mens rea and mala fide, could not entail penalty

Order of appellate authority was upheld.

Deputy Commissioner, finding that the taxpayer had failed to file the monthly statement electronically, issued show-cause notices, whereas the taxpayer filed affidavit regarding non-receipts of said show-cause notices

Show-cause notices were served through courier service

Deputy Commissioner, imposed penalties on the taxpayer for the default of non-filing of statement under S.165 of the Income Tax Ordinance, 2001, electronically

Appellate authority vide impugned order deleted the amounts of penalty imposed by authority below

Validity

Appellate Authority, had rightly deleted the penalty order passed by authority below; as taxpayer being a withholding agent as per provision of S.153(7) of the Income Tax Ordinance, 2001, had regularly been filing monthly statement manually instead of filing electronically

Order passed by Appellate Authority, being legal and with lawful authority, was maintained, in circumstances.

Taxpayer, having not filed income tax return/statement under S.115(4) of Income Tax Ordinance, 2001 within due time, adjudicating authority imposed penalty on taxpayer under S.182(1) of Income Tax Ordinance, 2001

On filing appeal by taxpayer against order of imposing penalty, Appellate Authority below deleted said penalty and Revenue had assailed order of Appellate Authority below before Appellate Tribunal

Order of Appellate Authority was self-contradictory, as on the one hand he had observed that by filing requisite return, taxpayer had discharged his liability legally, but on the other hand he had advised the taxpayer to be careful in future about his legal obligations

Default was committed by the taxpayer as Income Tax Return filed by the taxpayer manually, was not a valid return as envisaged under S.115(4) of the Income Tax Ordinance, 2001

Observation of Appellate Authority that there was no loss of revenue due to manual filing of return was misconceived, since data of such returns, was not entered in the system

Such being invalid returns in terms of S.115(4) of Income Tax Ordinance, 2001, read with R.73(2-D) & (2-E) of Income Tax Rules, 2002, would escape selection for audit

In such cases imposition of penalty would remain the only deterrence

Order of Appellate Authority was vacated, and that of Adjudicating Authority, restored.

Record available with State Bank of Pakistan, having shown, that appellant/Insurance company had Nil balance against the statutory deposit, show-cause notice was issued to the appellant under Ss.11(1)(b), 29, 63 & 157 of Insurance Ordinance, 2000, calling upon the appellant to show-cause as to why action should not be initiated against appellant for violation of said sections

Contention of appellant was that Executive Director (Insurance) of the Commission, had failed to take into account that upon fulfilment of all statutory requirements the appellant accrued a vested right to be granted exemption from the requirement of maintaining minimum statutory deposit under S.29 of Insurance Ordinance, 2000; as it was incumbent upon Executive Director (Insurance) of Commission, to set the minimum requirement as zero

When application for granting exemption was made, Executive Director (Insurance) of the Commission, should have responded the request of appellant and if such request was to be refused, reasons should have been communicated to the appellant

Contention of the appellant that, their application requesting exemption from minimum statutory deposit under S.29 of the Insurance Ordinance, 2000, should have been properly dealt with by the authorities, was accepted

Executive Director (Insurance) of the Commission must exercise his discretion to grant exemption to the appellant, when criterion for minimum solvency as well as maintenance of a statutory deposit had been fulfilled

Impugned order, was set aside

Authorities were directed to review the matter and appropriate amendments in law were desired to be made, so that in future same issue was not faced by other Insurance Companies.

Company had notified the appointment of Auditor, who was not qualified person as per information available in Form 'A' and Form 29

Show-cause notice was issued to the Auditor for violation of S. 254(6) of Companies Ordinance, 1984, as he had been notified as Auditor of the company since its incorporation

No reply having been received from the appellant, Commission imposed a penalty of Rs.10,000 on the appellant

Form A and Form 29 of the company, were filed and signed by appellant himself

Appellant, in circumstances, had clearly violated S.254(6) of the Companies Ordinance, 1984, wilfully and deliberately

Commission had already taken a lenient view

In absence of any ground to interfere with impugned order, appeal was dismissed, in circumstances.

Appellant was member of the Investment Committee of the company by virtue of being Head of the Finance Department and was an insider, who disclosed the inside information relating to the financial result of the company to the Funds

Appellant, in circumstances, was liable for penalty as defined under S.15-E(3) of Securities and Exchange Ordinance, 1969

Penalty of Rs.500,000 was imposed

Validity

Investment proposal was sent to the Board of Trustees of the appellant for approval by the Chief Accountant of the company; and not the Secretary of the Fund

No action was taken against the appellant, which raised further questions about allegations of insider trading and transparency within the Fund

Case was remanded to the Commission for review, and to further investigate allegations of insider trading by the appellant.

Appellant/Chartered Accountant, allegedly issued unqualified audit report to the members of the company, although, the company had failed to comply with certain disclosure requirements of Accounting and Financial Reporting Standards for small and medium sized entities issued by "ICAP"

Auditor submitted cash flow statement of changes in equity, and revised notes to the accounts

Commission issued show-cause notice to the Auditor under Ss.255, 260 & 476 of the Companies Ordinance, 1984 and being dissatisfied with his response to show-cause notice, found that the provisions of S.255 of the Companies Ordinance, 1984 had been violated

Commission taking lenient view, imposed maximum fine; a penalty of Rs.40,000 under S.260 of the Companies Ordinance, 1984

Auditor had failed to discharge its duty in accordance with S.255 of the Companies Ordinance, 1984 by issuing unqualified opinion on accounts, which did not include cash flow statement and statement of changes in equity as required by "MSE's" reporting standards

Company had admitted the fact that cash flow statement and statement of changes in equity as required by 'MSE's' reporting standards had not been included in the accounts and the same would be complied in future

Auditor had violated S. 255 of the Companies Ordinance, 1984; and the Commission had rightly imposed penalty

No case of appeal having had been made out interference was declined in appeal.

Stance of the appellant having been found to be unsatisfactory, penalty of fine Rs.25,000 on each of the Directors of the appellant company was imposed

Validity

Section 10 of Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, had provided that no Modaraba would be a business against Islamic Injunctions; and the Religious Board had to certify in writing that the Modaraba was not a business opposed to Injunctions of 'Islam before Registrar could permit the floatation of such Modaraba

Issuance of guarantees, was also a business, which had not been allowed by the Religious Board

Appellants, in the present case, had undertaken ultra vires business by allowing said guarantees in violation of S.496 of the Companies Ordinance, 1984

Since the issuance of guarantees, was not specifically allowed through the prospectus, it could not be deemed to have been allowed; and express approval from the Registrar in terms of'S.10 of Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, was required

Penalty was rightly imposed on the appellants; and no reason existed to interfere with the impugned order.

Commissioner Inland Revenue/Appellate Authority, on the same cause delivered contradictory findings vide two orders, both passed on the same date

Even notices issued to the taxpayer, were the same

Said notices as alleged by the taxpayer had not been issued to him

Taxpayer applied for certified copies but no certified copy of notices issued, were received by the taxpayer, though he paid the fee for the same

Authorities below, seemed to have not applied their judicious mind, rather they proceeded to pass the orders in arbitrary and whimsical manners; which were not maintainable in the eyes of law

No order, particularly, a penal action, could be taken in vacuum, without any proof and such orders were nullity in the eyes of law

Nobody should suffer due to any act, omission or mistake of the department the authorities

Order whereby penalty of Rs.25000 was imposed on taxpayer, was vacated while the other order was upheld.

Department had wrong impression that the penalty had to be universally imposed without any exception whatsoever, if there was a default

Major prerequisite for imposition of penalty, had always been a default committed; onus to prove lay on the department

All Officers of Inland Revenue, were to be judicious in imposition of penalty

Authorities, in penalty proceedings must act fairly and honestly

Section 182 of the Income Tax Ordinance, 2001, by no means was charging provision and the intention of legislature was not to generate tax or revenue income; and the purpose and intention of the penal provision, was not the source of resources mobilition

Provision was only for ensuring collection of taxes and compliance thereof

Department, could not be allowed to use provisions of S.182 of the Income Tax Ordinance, 2001, as substitute of normal assessment or new source of revenue/tax originating provisions

Order accordingly.

Deputy Commissioner after issuing a show-cause notice to the taxpayer, imposed a penalty of Rs.50,000 under S.182(1)(1A) of Income Tax Ordinance, 2001, on account of non-filing of statement under S.165 of Income Tax Ordinance, 2001

Commissioner Inland Revenue/ Appellate Authority vide impugned order had reduced the penalty amount to Rs.10,000

Validity

Penalty under subsection (1A) of S.182(1) of the Income Tax Ordinance, 2001, was imposed where a person would fail to furnish a statement as required under Ss.115, 165 or 165-A of the Income Tax Ordinance, 2001, within the due date

Deputy Commissioner had failed to appreciate that taxpayer was not required to file statement under S.165(5) of Income Tax Ordinance, 2001

Deputy Commissioner had also failed to appreciate that taxpayer was not "prescribed person" as defined under S.153(7) of Income Tax Ordinance, 2001, as such he was not required to file statement under S.165 of the Income Tax Ordinance, 2001

No revenue loss had occurred to the National Exchequer, as the penalty was imposed without appreciation of intent to S.182 of the Income Tax Ordinance, 2001

Officer of Inland Officer, was not justified to impose penalty of Rs.50,000 under S.182(1)(1A) of Income Tax Ordinance, 2001

Appellate Authority, had rightly reduced the penalty amount to Rs.10,000

Impugned order passed by Appellate Authority, being legal, lawful and in accordance with law, no interference was required, in circumstances.

Appellant was penalized by Securities and Exchange Commission of Pakistan for having made unauthorized investment in its associated companies

Validity

Securities and Exchange Commission of Pakistan was a regulatory authority and it was within its powers and jurisdiction to impose such penalties as it could deem appropriate in facts and circumstances of each case

Default was admitted and a lenient view had already been taken by Appellate Bench of Securities and Exchange Commission of Pakistan

High Court declined to waive the penalty and censure or reprimand the appellants

Discretion exercised by Appellate Bench of Securities and Exchange Commission of Pakistan was neither arbitrary nor fanciful and the same was exercised in accordance with law

Penalty imposed was not disproportionate to the violation of mandatory provisions made by appellant

Appellant failed to point out any legal infirmity so as to require any interference and no question of law was raised

High Court declined to interfere in the penalty imposed by Securities and Exchange Commission of Pakistan

Appeal was dismissed in circumstances.

Appellants were licensed customs house agents falling under the provisions of S.207 of the Customs Act, 1969 and were mainly engaged in the clearance of goods relating to Afghan Clients, who imported their cargo through customs port at 'Port Qasim'

Appellants filed goods declaration (GDS) on the basis of documents supplied by the importers

After completion of customs formalities by the concerned Collectorate of Customs, imported cargo was lifted by National Logistic Corporation (NLC), whose operations were governed and controlled by the Army officials

After loading the goods, the containers were checked by Customs Authorities, who sealed the containers and goods were transported to their destination

Allegation was that dutiable goods were pilfred enroute under the garb of transit cargo

Responsibility of the appellants, was restricted to the extent of "Port Qasim" and not for later stage

In show cause notice NLC (National Logistic Corporation) who lifted the cargo had been exclusively held responsible for said act of pilferage

No role in the alleged pilferage, had been assigned in the charging part of the show-cause notice, except associating the appellants with importer, the NLC and the border agent on the basis of a generalized statement

Show-cause notice finally brought out contravention of different sections of the Customs Act, 1969, which were not attracted against the appellant

Despite that Adjudicating Authority imposed a penalty of Rs.250,000 on the appellants

Sole responsibility of carrier companies and others involved in the safe transportation/transit of the goods across the country, which also included to get receipt from the competent authorities as to the safe and sound arrival of the goods at the destination along with cross-border certificate

Stereo-type notices cyclostyled by the Port Qasim Authority were served upon the appellants

No specific allegation was levelled against appellants in the show-cause notices, except that the appellants were Clearing Agents

Under the relevant law, Clearing Agent's job would end with the filing of Goods Declaration, their processing and loading on the containers; and it was the sole responsibility of carrier to safely transit the goods across the country through designated destination

No evidence was available on record that appellants actively participated in the misappropriation/pilfering or smuggling of imported goods

Departmental Representative, representing various Directorates, could not point out that the goods from the containers were pilfered, smuggled or misappropriated by the appellants (Clearing Agents) or was done with their connivance

Appeals to the extent of appellants, were accepted and impugned orders, were set aside, in circumstances.

Directorate General of Post Clearance Audit, reported that importers, imported consignments and got cleared from customs vide Goods Declaration at a very low value, as compared to the value of similar/identical goods imported by other importers from same source and that importers had caused substantial loss to the Government revenue and national Exchequer, which was a violation of the provisions of S.32(3-A) of the Customs Act, 1969, punishable under provisions of S.156(1) of the Customs Act, 1969

Adjudicating Authority vide order-in-original found that importers had tried to mis-declare the actual value of the goods; and ordered payment of short-levied amount of taxes under S.32(3-A) of Customs Act, 1969

Appellate Authority having dismissed appeal of importers against order of Adjudicating Authority

Consignment was out of charge, when department issued show-cause notice and invoked the provisions of S.32(3-A) of Customs Act, 1969

Departmental Representative could not produce evidence to establish the charges levelled against importers in the show-cause notice

Law did not authorize any Authority to initiate proceedings against any person on the basis of presumption

Section 32(1)(2) of Customs Act, 1969, would not attract, where no allegation had been made that any forged document had been filed, or the goods were released illegally after joining hands with the customs authorities

Where case was neither of a forgery nor of fraud, same would fall within the ambit of S.32(3) of Customs Act, 1969

Provisions of said section were mandatory in nature

In the present case, the show-cause notice was issued after lapse of about 4 years

Such delay in issuance of show-cause notice was exceptional, inordinate and unexplained

Impugned orders were set aside and show-cause notice was vacated, in circumstances.

Chief Executive and Directors of the company, were issued show-cause notice calling upon them to show as to why penalty as provided under Ss.63(1) & 156 of the Insurance Ordinance, 2000 should not be imposed on them

Counsel for the company accepted that the company had been unable to fulfil the minimum solvency requirement

Vide impugned order penalty of Rs.300,000 was imposed on the company and Rs.100,000 on each of eight Directors, was imposed, total penalty aggregating to amount of Rs.1,100,000

Directors were also directed to take immediate steps to meet the shortfall in their solvency requirement

Sections 11(1)(e) and 36 of Insurance Ordinance, 2000, clearly required insurers to comply with the minimum solvency requirements at all times

Directors of the company were required to act proactively for compliance with the legal requirements

Argument that non-compliance with Ss.36 & 11(1)(e) of the Insurance Ordinance, 2000, was "unintentional and involuntary", was unacceptable; requirements of said section, could not be waved on the basis of proposed business plan

Requirements of minimum solvency level was one of the basic requirement for the registered insurer and the appellant company, ought to ensure its compliance

Authority had already taken a lenient view by not issuing a direction to the company to cease entering into new contract of insurance

Company having failed to comply with the minimum solvency requirement despite clear direction to that effect, impugned order could not be interfered with.

Both authorities below, had erred in law and on facts of the case in imposing/upholding 100% penalty on appellant company

Penalty proceedings under the fiscal laws were independent proceedings and had nothing to do with the criminal proceedings, that could be pending anywhere else; particularly when no evidence relating to such proceedings was ever provided to the appellant during the original or appeal proceedings

Appellate authority, in the present caes, had confirmed 100% penalty under S.33(3) of the Sales Tax Act, 1990, as according to said authority act of alleged unlawful adjustment would come within the ambit of "tax fraud" defined in S.2(37) of the Sales Tax Act, 1990

Appellant was a duly registered person, by levelling allegation of tax fraud by the department would not make out a case to subject the appellant to penalty equal to the amount of alleged inadmissible adjustment

Imposition of 100% penalty, without first establishing that appellant had committed anything wrong or contravened any provisions of law knowingly, and dishonestly, was patently illegal, harsh, unjustified and without any logic

Imposition of 100% penalty on appellant, was void ab initio and without any justification

No penalty could be imposed without first establishing the mens rea

Order-in-original passed by Adjudicating Authority, being illegal and void ab initio, order of Appellate Authority, was vacated; and order passed by Adjudicating Authority, was annulled, in circumstances.

Exporter, who exported consignments, filed duty drawback claim under Notification S.R.O. No.212(I)/2009 dated 5th March, 2009

On scrutiny, it was found that net weight of the exported goods (gloves made of PVC with Knit wrest), came to 5 to 6 grams/pair, which was quite irrational being not in conformity with the normal/routine practice

Show-cause notice was issued to the exporter as to why your duty drawback claim should not be rejected being inadmissible

Adjudicating Authority did not agree with the reply of the exporter, on the ground that value of goods and the duty drawback/rebate amount, filed or claimed against the Goods Declaration, differed abnormally

Adjudicating Authority in view of undue rebates claimed on the basis of alleged untrue facts and declaration, penalty was imposed on the exporter under clause 14 of S.156(1) of Customs Act, 1969

Appeal filed by the exporter against order of Adjudicating Authority having been dismissed by Appellate Authority below, the exporter had filed appeal before Appellate Tribunal

Contention of the exporter was that value of exported goods and admissibility of duty drawback was on "per pair" basis and not 'weight basis' and that whole exercise of creation of impugned order, was flawed and not based on legal footings

Exporter had produced documentary evidence in support of his contentions

Validity

Federal Board of Revenue vide letter dated 29-3-2013, categorically explained that the duty drawback rates notified in S.R.O. No. 212(1)/77009 dated 5-3-2009, were on "per pair" basis without any size, weight and grammage

Both forums below travelled beyond the allegations levelled in show-cause notice, which being unacceptable in the eye of law, was riot warranted

Representative of the department also did not deny that exporter had obtained raw material from the local market

Allegation levelled in the show-cause notice against the exporter lacked appropriate basis and were not maintainable

Both orders of authorities blow were set aside, and show-cause notice issued to the exporter was vacated, in circumstances.

Commission, while examining the annual audited accounts of the appellant company for relevant financial year, observed that an amount was shown against micro credit receivables on account of security deposits

Securities and Exchange Commission, vide letter advised the company to furnish evidence of compliance with the provisions of S.226 of the Companies Ordinance, 1984, whereby the company could not utilize any money received as security or deposit

Commission after hearing authorised representative of the company and reviewing the written submission of the company, found that company had failed to provide any information/document evidencing compliance with provisions of S.226 of the Companies Ordinance, 1984 and imposed penalty on the company

Appeal had been filed by the company against impugned order

Record had shown that company did not receive any money as security and deposit from the borrowers as envisaged in S.226 of the Companies Ordinance, 1984

In fact 10% of the microcredit loan disbursed to each borrower was withheld and used for settlements against last installment

No obligation was or pledge given by the borrower "by furnishing the creditor (lender) with a resource to be used in case of failure in the principal obligation", which at the best could be treated as a 'margin' and in no way could be deemed to be a security or deposit

Title of account as security deposit used in the company's account had created the misimpression that it was a security deposit in terms of S.226 of Companies Ordinance, 1984 and was to be placed in a separate account

Company had removed the ambiguity in the annual accounts and corrected the head of account of "Amount withheld for settlement against last installments"

Impugned order was set aside, in circumstances.

Requirement for depositing upto 20% of sale proceed can be imposed by Banking Court after making necessary investigation on objection petition and not as a pre-requisite condition to consider the petition.

Appellant along with two other Executive Engineers, was proceeded against on the charge of inefficiency, misconduct and corruption arising out of committing financial/codal irregularities, under provision of Punjab Removal from Service (Special Powers) Ordinance, 2000

All three persons, after completion of inquiry were recommended by the Inquiry Officer for dismissal from service as well as recovery of 1/4th of financial loss

Competent authority on receipt of inquiry report and after affording opportunity of hearing through final show-cause notice imposed penalty of withholding of promotion for a period of three years along with recovery of 1/4th of loss upon the appellant

Through a separate order, despite holding other two persons guilty of the charges of negligence and loose administrative control etc., imposed penalty of stoppage of two annual increments only upon them

No special reason or justification was given for imposing different penalties upon the appellant as well as on said two persons of the same status

Appellant was extended discriminatory treatment by the authorities in the matter of punishment which was violation of Arts.4 & 25 of the Constitution

Counsel for the appellant had successfully made out a case of discrimination in the matter of punishment

Penalty of recovery of amount imposed on the appellant being without evidence, same was set aside, whereas in line with the order of competent Authority imposing penalty as stoppage of annual increment for two years as corrected by Chief Secretary, being appellate authority in his order, the penalty of withholding of promotion for three years, as imposed on the appellant, was converted into penalty of withholding of increment for two years, without cumulative effect.

Eleven appellants, serving as 'Sub-Engineers' along with another, were proceeded against under Punjab Removal from Service (Special Powers) Ordinance, 2000, on the charge of inefficiency, misconduct and corruption arising out of committing financial/codal irregularities

Appellants, after completion of inquiry, were recommended by the Inquiry Officer for imposition of penalty of dismissal from service as well as recovery of 1/4th of the financial loss

Competent Authority on receipt of said report and after affording opportunity of hearing to the appellants, through final show-cause notice imposed various penalties upon said eleven appellants, but through separate orders, despite holding one appellant equally guilty of the charges, imposed penalty of stoppage of two annual increments only upon him

Neither any special reason, nor justification was given by the competent Authority to have imposed different penalties upon the appellant as well as on the other one, after holding them equally guilty of negligence etc.

Appellants, in circumstances, were extended discriminatory treatment by the competent Authority in the matter of punishment, which was in violation of Arts.4 and 25 of the Constitution

No evidence was on record to attribute the charge of causing financial loss to the public exchequer, except the statement prepared by Executive Engineer who neither appeared in the court nor was subjected to cross-examination

Penalty of causing financial loss was also imposed in discriminatory manner and without considering the length of posting of each appellant, during the disputed period

Appellants having succeeded to make out a case of discrimination, in the matter of punishment, as penalty of recovery of amount imposed on the appellant was without evidence, was set aside; while in line with the order of competent Authority imposing penalty of stoppage of annual increments for two years as corrected by the Chief Secretary, being Appellate Authority, penalty of withholding of promotion/reduction to initial stage, imposed on appellants, was converted into penalty of withholding of increments for two years without cumulative effect.

Contention of the applicant was that impugned order-in-original, was passed by Adjudicating Authority after about eight months of issuance of show-cause notice, whereas under Ss.11(4) & 36(3) of Sales Tax Act, 1990, Authority was bound to pass order-in-original within forty five days of the issuance of show-cause notice; that if due to any reason, Authority had failed to pass the order within forty-five days then it was legally bound to obtain extension for further period, which would not in any case exceed ninety days; that such extension must be in writing and the reasons for delay must be incorporated in it that order-in-original in the case was passed beyond the prescribed time limit of forty-five days, but Adjudicating Authority, had neither got fixed any extended period nor recorded any reasons for passing the order after forty-five days and that taxpayer had been penalized by resorting to provisions of S.33 of Sales Tax Act, 1990, but he was never confronted as per contents of show-cause notice

Held, penalty imposed on the taxpayer under S.33 of Sales Tax Act, 1990, being not sustainable under the law, was deleted

Impugned order was set aside by Appellate Tribunal, in circumstances.

Customs Officials could not escape their responsibilities to ensure that the goods were not removed illegally from the bonded warehouse

Where the goods were removed from the warehouse unlawfully, the Customs Department could not escape its responsibilities to see that the goods were not removed unlawfully and without the payment of the duties and taxes

Heavy penalty was not justifiable in such cases

Customs Act, 1969 did not provide to impose in all circumstances the penalty, as double or thrice the Customs value of the goods, but to secure the payment of the duty and taxes in case of violation

Provisions of penalty were criminal in nature and that "mens rea" or intention of the party was relevant

Heavy penalties even in cases of absolute liability were deprecated

Order imposing penalty for failure to carry out a statutory obligation, was the result of a quasi criminal proceeding and penalty would not ordinarily be imposed, unless the party either acted deliberately in defiance of the law or was guilty of contumacious or dishonest conduct, or acted in conscious disregard of its obligation

Penalty would not also be imposed merely because it was lawful to do so

Whether penalty should be imposed for failure to perform a statutory obligation was a matter of discretion of the Authority to be exercised judicially and on consideration of all the relevant circumstances

Even if a minimum penalty was prescribed, the Authority competent to impose the penalty would be justified in refusing to impose the penalty, when there was technical or venial breach of the provisions of the Customs Act, 1969 or where the breach flows from a bona fide belief, that the offender was not liable to act in the manner prescribed in the statute

Wrong citation of the section, could not deprive the Customs Authorities of their jurisdiction, to impose the penalty and to recover the same as they possessed the plenary powers in that behalf

Importer would have no cause of action for seeking the intervention of the higher forums, in cases, where no prejudice was shown to have been caused on account of the citation of a wrong section

Case of illegal removal of impugned goods by the importer from the bona fide warehouse, having been established, it was directed by the Tribunal that the leviable duty and taxes on the assessed customs value be recovered from the importer

Imposition of heavy penalty was not justifiable which was reduced to 30% of the assessed customs value of the impugned goods

Impugned orders were modified to that extent, accordingly.

Importer had imported old and used Double Cabin Pick up and got cleared the same under PCT Heading 8704.2190 through clearing agent

Post clearance audit revealed that importer had short paid duty and taxes in respect of said vehicle

Penalty of Rs.200,000 was imposed on the importer

Basic charge against the importer was that he had evaded duty and taxes in clearance of vehicle in question by way of mis-declaring the actual customs value of the vehicle

Importer had been found guilty of suppressing the fact while making declaration of the imported vehicle as to its description, brand, capacity and make

Assessing Officer after due consideration, had allowed clearance of vehicle on the basis of another identical vehicle

Assessing Officer after due consideration and application of mind, therefore, had allowed the clearance of vehicle under S.80 of Customs Act, 1969

In case of uncertainty and doubt, clearance could have been allowed under S.81 of Customs Act, 1969 which was not done in the case

Element of mala fide and mens rea of fact of the importer did not surface

Merits of the case had been deliberated exhaustively in the orders of the Collector (Appeals)

Collector Customs, who was aggrieved of the decision of Collector (Appeals), had not pleaded the matter in appeal before the Appellate Tribunal

No reason was available to interfere in the orders passed by Collector (Appeals), which was correct in law.

It was alleged that declaration of the importer was not in accordance with goods recovered from the consignment having different PCT heading and higher rate of customs duty

Appellant company in its proprietary account sold and purchased shares and said trade was executed by the company without having any pre-existing interest in the shares, which was 'short sale'

'Short sale' as per Regln. 2(J) of the Short Selling Under Ready Market Regulations, 2002, was a sale by a member or a client, who at the time of sale did not have a pre-existing interest in the securities

Short sale was permissible, as long as the member or a client had a contractual borrowing arrangement to ensure that the delivery requirements were met on the settlement dates

Company, in the present case, had not entered into a borrowing arrangement to ensure that the delivery requirements would be met

Penalty of Rs.2.5 million had been imposed on the company as company despite issuance of order under S.22 of the Securities and Exchange Ordinance, 1969 and several warnings thereafter had failed to comply with the requirements of law

Contention that S.22 of the Securities and Exchange Ordinance, 1969 could not be invoked as provisions of Brokers and Agents Registration Rules, 2001 were self-contained and penal provisions had already been provided therein, was misconceived

Said Rules were secondary or subordinate legislation made under S.43(b) of Securities and Exchange Commission of Pakistan Act, 1997, read with S.5-A of Securities and Exchange Ordinance, 1969

Rules were made to implement the requirements of the Ordinance (1969) which would prevail

Penalty, in circumstances was rightly imposed on the appellant company under S.22 of Securities and Exchange Ordinance, 1969.

Trading data of Karachi Automated Trading System (KATS) of Karachi Stock Exchange and Unified Trading System (UTS) of Lahore Stock Exchange, showed that appellant/company repeatedly bought and sold shares in such a manner that orders for buying and selling matched each other; and did not result in any change in the beneficial ownership of shares

Said transactions, in circumstances, fell within the meaning and ambit of the term "wash trades"

Show-cause notice was issued to the appellant company under S.22 of Securities and Exchange Ordinance, 1969 for contravention of the Code of Conduct prescribed in the Third Schedule of Brokers and Agents Registration Rules, 2001

Reply submitted by the appellant company to the show-cause notice being unsatisfactory, a penalty of Rs.50,000 was imposed on the appellant company

Execution of 'wash trades', even due to arbitrage business was not acceptable as it was the violation of the regulatory framework

Appellant company had no justification to carry out 'wash trades' on the pretext of arbitrage business

Unfair trade practices like 'wash trades' were harmful for the development of market

Execution of such trades had shown that appellant had failed to exercise due care, skill and diligence in conduct of the business

Securities and Exchange Commission was bound to protect the interest of investors and in doing so it was empowered to deal with elements which would affect smooth and fair functioning of the Stock Exchange

Appellant company by creating false transactions induced other investors into buying the shares and had indirectly caused loss to many investors

Commission could have suspended the licence of the appellant company as broker, but as it was the first time that such non-compliance was observed, commission took lenient view and rightly imposed a penalty of Rs.50,000

Appellant was directed to ensure compliance of all the rules, regulations and directives of the Commission in future for avoiding any serious punitive action under the law.