TARIQ SALEEM SHEIKH, J.--- Through this reference application under Section 47 of the Sales Tax Act, 1990 (the "Act"), the Department has framed a number of questions of law which questions of law which arise out of Order dated 06.03.2013 passed by the Appellate Tribunal Inland Revenue (the "Tribunal"). However, all these questions are argumentative except the one noted below which we take up for consideration:--- Whether the learned Appellate Tribunal was justified in holding that the provisions of Section 21 of the Sales Tax Act, 1990 were never adhered to before declaring the unit as fake?
2. Respondent No. I is a registered person. STARR data for the tax period 02/11 to 02/12 showed that it had made taxable supplies amounting to Rs. 16.748 million involving output tax at Rs. 2.603 million but deposited only Rs. 0.237 million in the government treasury. On the analysis of the summaries available on STARR it was noticed that Respondent No. 1 had claimed input tax adjustment of Rs.
26,36,580/- against "invoices of suspended/blacklisted, non-functional units". Further, supply of goods had not taken place in these transactions as envisaged in Section 2(14) of the Act which indicated that it was involved in tax fraud and was causing loss to the national exchequer.
Consequent thereupon, the Petitioner issued a show-cause notice to Respondent No. 1 and eventually blacklisted it vide Order dated 14.09.2012. Aggrieved, Respondent No. 1 preferred an appeal before the Tribunal which was accepted vide Order dated 06.03:2013. The Department has now come up in reference before this Court.
3. The main thrust of the argument of the learned counsel for the Petitioner in this case is that Order dated 14.1.2012 passed by the Petitioner was in consonance with the provisions of Section 21(2) of the Act read with Rule 12 of the Sales Tax Rules, 2006, and STGO 35/2012 and that the Tribunal has erred in law in annulling the same. Since the controversy in this case essentially involves the interpretation of Section 21(2), we reproduce the same hereunder for ease of reference:--- (2)Notwithstanding anything contained in this Act, in cases where the Commissioner is satisfied that a registered person is found to have issued fake invoices or has otherwise committed tax fraud, he may blacklist such person or suspend his registration in accordance with such procedure as the Board may, by notification in the official Gazette, prescribe.
4. A bare reading of the above provision would show that it can be invoked only when the Commissioner is "satisfied" that the registered person has issued fake invoices or has otherwise committed a tax fraud. Thus, the "satisfaction" of the Commissioner is of vital importance.
5. "Satisfaction" is not the same thing as an "opinion" which stands at a lesser pedestal. In "Mohtarma Benazir Bhutto and another v. President of Pakistan and others" (PLD 1998 SC 388), the Hon'ble Supreme Court of Pakistan explained:--- Once can from opinion without of finality as opinion lacks the element of absolution and can always be differentiated from satisfaction which has a touch of finality containing the element of absolutism. In other words, it can be said that opinion has lesser responsibility than satisfaction from the point of view of burden of proof. For satisfaction proof is required but for opinion something lesser than proof is required for opinion, evidence may not be conclusive, definite and overwhelming .
It further held:-- "Satisfaction is the existence of a state mental persuasion much higher than a mere opinion and when used in the context of judicial proceeding, has to be arrived at in compliance with the prescribed statutory provision and other legal requirements. Far from being a subjectively or capriciously arrived at conclusion, it presumes observance of certain well-settled judicial principles and is a firm state of mind admitting of no doubt or indecision or oscillation. To be 'satisfied' with a state of things is to be honestly convinced in one's own mind. Apart from the 'legal satisfaction', which is a term of art and connotes discharge of a claim, debt or legal demand, to satisfy in the ordinary sense is to convince. Satisfactory evidence is sufficient evidence meaning an amount of proof which ordinarily satisfies an unprejudiced mind beyond a reasonable doubt. `Satisfy' is synonymous with, 'convince beyond a reasonable doubt' and 'satisfaction' is a state of mind, which connotes a sense of certainty, and conviction or release from suspense, doubt or uncertainty. `To satisfy' means to furnish with sufficient proof or information or to assure or set free from doubt or uncertainty to convince."
6. One has to consider Section 12(2) of the Act in the light of the legal position stated above. The information downloaded from STARR may help the Commissioner to form an opinion that the sales tax affairs of the registered person are not in order but it is by no means sufficient for his "satisfaction" that blacklisting is warranted. While in certain circumstances suspension of registration may require immediate action, for blacklisting the Commissioner must verify/cross- check the STARR information and identify the units as well as the invoices that are not acceptable.
The registered: person should be duly confronted with this data in the show-Cause notice so that it may have the opportunity to defend itself. This is its fundamental right that is guaranteed to it under Article 10-A of the Constitution of Pakistan, 1973.
7. In the instant case, Respondent No. 1 was blacklisted on the basis of STARR data alone without any further verifications. The Commissioner did not identify the suppliers in respect of which it was alleged that they were suspended, blacklisted or non-functional and Respondent No 1 had illegally claimed input tax against their invoices.
8. In view of the foregoing, we answer the proposed question in the "affirmative", i.e. against the Department, and dismiss this application. Office shall send a copy of this judgment to the Tribunal as required by law.