MUHAMMAD SAJID MEHMOOD SETHI, J.---Through instant appeal, appellant has assailed vires of order dated 13.06.2017, passed by learned Single Judge, whereby appellant's constitutional petition challenging notice issued under Sections 37 and 38 of the Sales Tax Act, 1990 ("the Act of 1990"), by Directorate of Intelligence and Investigation Inland Revenue, Faisalabad, was dismissed.
2. Learned counsel for appellant submits that respondent No.6 / Additional Director , Directorate of Intelligence and Investigation, FBR, Faisalabad along with other staff illegally and unauthorizedly raided and searched the premises of appellant's business place, without any notice and search warrant as contemplated in Section 40 of the Act of 1990. He adds that entire action of search and seizure of record of appellant, without recourse to aforesaid provisions of law and relevant provisions of the Code of Criminal Procedure, 1898, is illegal and without lawful authority . He further submits that docum ents and record obtained through illegal search cannot be used against appellant under the garb of notice under Sections 37 and 38 of the Act of 1990. He argues that Section 38 only authorizes an officer of the department to have access to premises, stocks, accounts and records and does not permit search without warrant. He contends that learned Single Judge has not rightly interpreted the provisions of Sections 38 and 40 of the Act of 1990, hence, impugned order is unsustainable in the eye of law. He has referred to Messrs Food Consults (Pvt) Ltd., Lahore and others v. Collector (Central Excise and Sales Tax), Lahore and 2 others (2004 PTD 1731 ) and Collector of Sales Tax and others Messrs Food Consults (Pvt.) Ltd. and another (2007 PTD 2356 )
3. Conversely , learned Legal Adviser for respondent-FBR defends the impugned order and submits that notice under Sections 37 and 38 merely sought to solicit certain information from appellant and did not even constitute a show-cause notice to proceed under a specific provision of the Act of 1990. He adds that Section 37 confers the power to summon persons to give evidence and produce documents in inquiries under the Act of 1990, whereas Section 38 empowers to have access to premises, stocks, accounts and records and collect record for the purpose of any inquiry or investigation.
4. Arguments heard. Available record perused.
5. Admittedly , as per Resumption Memo / Receipt dated 30.05.2012, available on record, a team of Directorate of Intelligence and Investigation Inland Revenue, Faisalabad, headed by Inland Revenue Audit Officer, entered the appellant's business premises and took into possession record / documents, which were 29 in number including different ledger books, bill books, utility bills, inventory register , bank statement, acknowledgement receipts etc. On the basis of said retrieved record, notice under Sections 37 and 38 of the Act of 1990, with the allegation of tax fraud, was issued to appellant requiring to produce further record / evidence detailed in the said notice. It is the stance of appellant that aforesaid raid, search and seizure of record was without notice and search warrant as contemplated in Section 40 of the Act of 1990; that appellant was not aware about the detail of record / documents taken into custody by the raiding team and even personal documents of appellant were taken into custody in an unlawful manner; and that notice in terms of Sections 37 and 38 of the Act of 1990 is an attempt to legitimize the aforesaid illegal search and seizure. The precise version of respondent-FBR is that the team acted in accordance with the spirit of Section 38 of the Act of 1990, which not only empowers to have access to premises, stocks, accounts and records but can also take into custody such records, statements, documents etc. Now, the moot points before us to unravel are: (i) the object and scope of Sections 38 and 40 of the Act of 1990; (ii) the powers of authorized officer under aforementioned provisions of law; and (iii) the situations where these provisions would apply . To answer these queries, it would be expedient to reproduce Sections 38 and 40 of the Act of 1990, which read as under:- "38. Authorized officers to have access to premises, stocks, accounts and records. ---(1) Any officer authorized in this behalf by the Board or the Commissioner shall have free access to business or manufacturing premises, registered office or any other place where any stocks, business records or documents required under this Act are kept or maintained belonging to any registered person or a person liable for registration or whose business activities are covered under this Act or who may be required for any inquiry or investigation in any tax fraud committed by him or his agent or any other person; and such officer may, at any time, inspect the goods, stocks, records, data, documents, correspondence, accounts and statements, utility bills, bank statements, information regarding nature and sources of funds or assets with which his business is financed, and any other records or documents, including those which are required under any of the Federal, Provincial or local laws maintained in any form or mode and may take into his custody such records, state ments, diskettes, documents or any part thereof, in original or copies thereof in such form as the authorized officer may deem fit against a signed receipt.
(2) The registered person, his agent or any other person specified in subsection (1) shall be bound to answer any question or furnish such information or explanation as may be asked by the authorized of ficer.
(3) The department of direct and indirect taxes or any other Government department, local bodies, autonomous bodies, corporations or such other institutions shall supply requisite information and render necessary assistance to the authorized of ficer in the course of inquiry or investigation under this section."
"40. Searches under warrant .---(1) Where any officer of Inland Revenue has reason to believe that any documents or things which in his opinion, may be useful for, or relevant to, any proceedings under this Act are kept in any place, he may after obtaining a warrant from the magistrate, enter that place and cause a search to be made at any time.
(2) The search made under subsection (1) shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (V of 1898)."
6. Section 38 of the Act of 1990, inter alia, empowers an officer authorized by the Federal Board of Revenue or the Commissioner Inland Revenue to have free access to business or manufacturing premises, stocks, business records and documents etc. at any time and the registered person, his agent or any person specified in subsection
(1) shall be bound to answer any quest ion or furnish such information or explanation as may be asked by the authorized officer. However , it is notable that before embarking on visit to any premises, the department must have reasonable cause to believe that such a visit is warranted and must be recorded in writing, rather to initiate such a move oh mere presumption or suspicion . The purpose of visit in terms of Section 38 is to see whether proper records under the Act of 1990 and the Rules and Regulations made thereunder are maintained or not. The officer must be authorized in this regard and must produce a copy of the authorization before commencing the inspection.
The visit must be confined to inspecting the record and documents that are in plain sight or voluntarily made available for inspection by the person present at the premises on request, consequently , only such record can be taken into custody within the meaning of Section 38. The officer has no power 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 by an officer into his possession. Any action, in contravention of the foregoing, will be an action that falls short of the requirement to act fairly, justly and reasonably and, therefore, wholly illegal and void. Permitting the department to benefit from such actions would be equally illegal. Reference can be made to A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd.v . Federation of Pakistan and 2 others (2009 PTD 1083 ),Messrs Igbal and Sons through Authorized Representative v. Federation of Pakistan through Secretary and 3 others (2017 PTD 590), Messrs Apple Paper Products (Pvt.) Ltd. through Director Chief Executive Officer v. Federation of Pakistan through Chairman and 2 others (2019 PTD 787 ).
7. General provisions of Section 38 of the Act of 1990 could not be made to circumvent or override constitutional guarantees of an individual provided in the Constitution of the Islamic Republic of Pakistan, 1973. Section 40 specifically provides procedure of search and, as such, controls the Section 38 empowering access to record. It is a cardinal principle of interpretation of statutes that a specific provision shall control the general provision.
Free access to any property of citizen would not mean search and seizure for purpose of collecting evidence against him. Section 38 is merely enabling provision and has nothing to do with regular search and seizure which can only be done in accordance with the provisions of Section 40. It is trite law that where general and a specific provision on a particular subject are available then resort to general provision cannot be made to do or sustain the act. If the stance of respondent-FBR vis-a-vis Section 38 is accepted then Section 40 would become redundant.
The correct approach, therefore, would be to make an accumulative and conjunctive reading of Sections 38 and 40, and when it is so done, one would reach a possible and practical conclusion that provisions of Section 38 are not by itself search and seizure provisions and these, therefore, must give way to specific provisions of Section 40, otherwise provisions of Section 40 requiri ng all searches to be made in accordance with the provisions of Code of Criminal Procedure would also become redundant. Reference can be made to Federation of Pakistan through Secretary , Ministry of Finance, Federal Secretariat, Islamabad and 4 others v. Messrs Master Enterprises (Pvt.) Ltd. through Managing Director (2003 PTD 1034 ), Collector of Sales Tax and Central Excise (Enforcement) and another v. Messrs Mega Tech (Pvt.) Ltd. (2005 PTD 1933 ), Messrs Food Consults (Pvt.)
Ltd. 's case supra, Messrs Ihsan Yousaf Textile Mills (Pvt.) Ltd., Faisalabad v. Federation of Pakistan through Ministry of Finance, Islamabad and 4 others (2003 PTD 2037 ) and Agha Steel Industries Ltd. through Authorized Company Secret ary and another v. Directorate of Intelligence and Investigation through Director and 2 others (2019 PTD 21 19).
The words "any place" used in Section 40 connotes wider meaning and is not restricted to the business or manufacturing premises of the registered person or registered office or any other place belonging to registered person against whom any enquiry is pending but also includes any third party's place, which also reflects efficacy of Section 40 in respect of matters of search. Reference can be made to Messrs Stylo Shoes and another v.
Deputy Director and others (2013 PTD 1780 ).
8. No doubt, tax officials are empowered under the law and are duty bound to check the evasion of tax but, it is always to be kept in mind that the evasion of taxes and duties is a contravention of law, which cannot be eradicated by commission of another illegality and contravention of law. An illegality can be checked by adherence to the dictates and requirements of law only. Reference can be made to Messrs N. P. Water Proof Textile Mills (Pvt.)
Ltd., Karachi v . Federation of Pakistan and another (2004 PTD 2952 ).
9. Needless to say that provisions of Section 40 of the Act of 1990 are in pari materia with provisions of Section 162 of the Customs Act, 1969 ("the Act of 1969 "). The Hon'ble apex Court has held that search carried out in terms of Section 163 of the Act of 1969, without recourse to the mandatory provisions of Section 162 of the Act of 1969, is illegal and any case made out on the basis of goods seized on the basis of such search cannot be used against the person from whose premises the same have been obtained. Reference, in this regard, is made to Collector of Customs (Preventive) and 2 others v. Muhammad Mahfooz (PLD 1991 Supre me Court 630 = PTCL 1992 CL 155).
10. In view of the above, instant appeal is allowed in the terms that respondents shall return the documents / record, retrieved from the premises of appellant and reflecting in Resump tion Memo dated 30.05.2012.
Consequently; notice issued under Sections 37 and 38 of the Act of 1990 shall stand vacated and proceedings, if any, stood abated. However , the respondents are at liberty to proceed against appellant in accordance with law .