Law: Sales Tax Act, 1990

Section: 40B

Law: Federal Excise Act, 2005

Section: 45(2), 43

SUMMARY, Power under Section 40B of the Sales Tax Act, 1990 has been granted to monitor the production, sale of taxable goods and stock positions of a registered person or class of such persons, by posting Inland Revenue officers at the relevant premises but the monitoring can only be for some object, ground or purpose that is legitimately and lawfully within the contemplation of the 1990 Act. The proviso to the section itself identifies two such situations, namely sales tax evasion and tax fraud, but this monitoring is not for indefinite period. When the purpose is served it should end. ORDER  Munib Akhtar, J.: The present appeal raises issues as regards the proper interpretation and application of s. 40B of the Sales Tax Act, 1990 (“1990 Act”). The petition (filed by the respondent) was dismissed by the High Court by a short order on 13.08.2015. However, the appellant (the Commissioner Inland Revenue) is aggrieved by certain observations made in relation to s. 40B in the reasons subsequently released (on 28.08.2015) in support of the order (together, “the impugned judgment”). In particular, the learned High Court observed that the power granted by s. 40B could only be exercised within a timeframe to be given by the authority exercising the power. In the leave petition the appellant contended that the section itself did not contain any such requirement, and therefore no such limitation could be read or imported into the provision. Reference was also made, for comparative purposes, to s. 45(2) of the Federal Excise Act, 2005 (“2005 Act”). Leave was granted to consider this point. It will be convenient to set out these provisions at the outset:  “40B. Posting of Inland Revenue Officer.–Subject to such conditions and restrictions, as deemed fit to impose, the Board, or Chief Commissioner may post Officer of Inland Revenue to the premises of registered person or class of such persons to monitor production, sale of taxable goods and the stock position:  Provided that if a Commissioner, on the basis of material evidence, has reason to believe that a registered person is involved in evasion of sales tax…