MR. JUSTICE TARIQ SALEEM SHEIKH.--( 1). This Intra-Court Appeal under Section 3 of the Law Reforms Ordinance, 1972, is directed against Order dated 12-10-2020 passed by the learned Single Judge in Writ Petition No. 13607/2020.
2. Brief facts giving rise to this appeal are that the Appellant is a private company limited by shares. It is engaged in manufacturing and export of textile produ cts and holds Sales Tax Registration No. 0407520900155. The Federal Board of Revenue (the "Board") selected the Appellant under section 72B of the Sales Tax Act, 1990 (the "Act"), for audit for the tax period July, 2012 to June, 2013 which was done. Thereafter , vide Order No. 3645 dated 14-3-2019.
Respondent No. 4 (Commissioner Inland Revenue), in purported exercise of powers under section 25 of the Act selected the Appellant for audit for the tax period July, 2015 to June, 2016. He made various representations to him for withdrawal of that order alleging that it was without jurisdiction but he refused . In the meanwhile. Respondent No. 6 kept asking the Appellant to produce the sales tax record but it did not cooperate. Eventually Respondent No. 6 issued Audit Report No. 385 dated 21-9-2020 determining its liability at Rs. 94,745,818/- plus default surcharge (to be calculated in terms of Section 34(1) of the Act at the time of deposit) and penalty in the sum of Rs. 65,000/-.
On 10-10-2020 the Appellant filed W.P. No. 13607/2020 in this Court challenging Notice/Order No. 3645 dated 14- 3-2019 and Audit Report No. 385 dated 21-9-2020. The learned Single Judge dismissed the said petition vide Order dated 12-10-2020. Hence, this appeal.
3. Learned counsel for the Appellant contends that the proviso to section 25(2) of the Act mandates that sales tax audit of a registered person can be conducted only once in three years. The Appellant was last audited for the tax period July, 2012 to June, 2013 so it cannot be selected again for the tax perio d July, 2015 to June, 2016. He argues that the learned Single Judge has misconstrued the law while upholding Order No. 3645 dated 14-3-2019 passed by Respondent No. 4. Relies on Faisalabad Electric Supply Company Limited (FESCO) v. The Federation of Pakistan through Secretary Finance, Islamabad and others (PTCL 2019 CL. 467).
4. The learned counsel for Respondent s No 2 to 6 has vehemently opposed this appeal. He contends that Respondent No. 5 has selected the Appellant's case for audit under section 25 of the Act. The previous audit was ordered by the Board in exercise of its powers under section 72B which is an independent provision. Hence, Order No. 3645 is lawful. Even otherwise, it does not violate the three-year restriction imposed by the proviso to section 25(2) of the Act in any sense. He argues that the case-law cited by the learned counsel for the Appellant is not relevant for the decision of this appeal.
5. The learned Assistant Attorney General has adopted the arguments advanced on behalf of Respondents No. 2 to 6.
6. Arguments heard. Record perused.
7. Respondent No. 4 selected the Appellant's case for audit for the tax period July, 2015 to June, 2016 vide order No. 3645 dated 14-3-2019 purportedly in exercise of power under section 25 of the Act which reads as under:
25. Access to record, documents, etc.--(1) A person who is required to maintain any record or documents under this Act [or any other law] shall, as and when required by [Commissioner], produce record or documents which are in his possession or control or in the possession or control of his agent; and where such record or documents have been kept on electronic data, he shall allow access to [the officer of Inlan d Revenue authorized by the Commissioner] and use of any machine on which such data is kept.
(2) The officer of Inland Revenue authorized by the Commissioner , on the basis of the record, obtained under sub- section (1), may , once in a year , conduct audit: Provided that in case the Commissioner has information or sufficient evidence show ing that such registered person is involved in tax fraud or evasion of tax, he may authorize an officer of Inland, Revenue, not below the rank of Assistant Commissioner , to conduct an inquiry or investigation under section 38: Provided further that nothing in this subsection shall bar the officer of Inland Revenue from conducting audit of the records of the registered person if the same were earlier audited by the of fice of the Auditor-General of Pakistan.
Provided also that audit under this section shall be conducted only once in every three years.
(3) After completion of audit under this section or any other provision of this Act, the officer of Inland Revenue may, after obtaining the registered person's explanation on all the issues raised in the audit shall pass an order under section 1 1.
8. Previously the Board selected the Appellant for audit under section 72B of the Act for the tax period July, 2012 to June, 2013. Section 72B stipulates: 72B. Selection for audit by the Board.--( 1) The Board may select persons or class es of persons for audit for tax affairs through computer ballot which may be random or parametric as the Board may deem fit.
(2) Audit of tax affairs of persons select ed under subsection (1) shall be conducted as per procedure given in section 25 and all the provisions of this Act shall apply accordingly .
(3) For the removal of doubt, it is hereby declared that the Board shall be deemed always to have had, the power to select any person or classes of persons for audit of tax af fairs under this section.
9. The question before this Court is wheth er Order No. 3645 is hit by the proviso to section 25(2) which was added through the Finance Act, 2018.
10. A bare perusal of sections-25 and 72B of the Act would show that they are fundamentally different. The Commissioner selects a registered person for audit on his own motion on the basis of record available to him while the Board makes the selection through computer ballot which may be random or parametric. Further , the Board may keep the selection parameters confidential. Hence, sections 25 and 72B are independent of each other and have their own sway . The mutuality between the two provisions is only to the extent that subsection (2) of the section 72B, by reference, adopts the procedure prescribed by section 25 for audit. Sub-section (2) of section 72B cannot be construed in a manner so as to render subsection (1) of section 72B subservient to the proviso to section 25(2) or to limit the Board's power . The expression "audit under this section" used in the proviso to section 25(2) affirms independence of section 72B.1
11. The scope of sections 25 and 72B of the Act has been considered in a number of cases, including Warid Telecom (Pvt.) Ltd. v. Commissioner Inland Revenue and others (PTCL 2013 CL. 331). Laraib Energy Ltd. through Chief Executive Officer vs. Commissioner Inland Revenue (Provincial Taxes, Mirpur , Azad Jammu and Kashmir) and 5 others (PTCL 2015 CL. 547) and Pakistan Telecommunication Company Ltd. vs. Federation of Pakistan (PTCL 2016 CL. 302). Although they were decided before the insertion of the proviso to Section 25(2) by the Finance Act, 2018, they acknowledge their exclusivity.
12. The FESCO 's case relied upon by the learned counsel for the Appellant is distinguishable on facts and is not relevant for this appeal. The issue involved in it was whether the proviso added to section 25(2) of the Act had retrospective application. Importantly , there is no deliberation on the question whether sections 25 and 72B are mutually exclusive or otherwise.
13. The learned counsel for Respondents No. 2 to 6 has rightly pointed out that even it is assumed that the Appellant's interpretation of the proviso to section 25(2) is correct, Order No. 3645 would still survive as it does not violate the three-year restriction. The 'previous audit was for the tax period July, 2012 to June, 2013 while the current selection is for June, 2015 to July , 2016.
14. In view of the foregoing, we find no merit in this appeal and dismiss it. See the discussion of his Lordship Mr. Justice ljaz-ul-Ahsan .1, in Kohinoor Sugar Mills v. Federation of Pakistan and others (2018 PTD 821) on section 177 & 214-C of the Income Tax Ordinance, 2001, which have semblance with sections 25 & 72B of the Sales Tax Act, 1990. Relating to autid