KARACHI, Dec 20: Registration of a trader under the Sales Tax Act can be suspended only by a speaking order as provided by Section 24 (A) of the General Clauses Act, a Sindh High Court division bench, comprising Justices Shabbir Ahmed and M. Mujibullah Siddiqui, declared on Friday.
Petitioner Tahir Mahmood submitted through his counsel, Advocate Khalid Jawed Khan, that he was running a business in the name and style of Mashall Creditors. The sales tax collector, however, suspended his registration and blacklisted him in purported exercise of powers conferred on him by Section 21 (4) of the Sales Tax Act without issuing a show-cause notice, assigning any reason or giving any justification. The suspension order only stated that there was a prima facie case of tax fraud/evasion against him and that his registration would remain suspended till further orders. He could not continue his business due to the suspension order.
Representing the sales tax authorities, Advocates Abdul Mujib Pirzada and Raja M. Iqbal argued that the proviso to Section 21 (4) of the Sales Tax Act empowered the collector to suspended registration of any registered person if he was satisfied that he (the registered person) was found to have issued fake invoices, evaded tax or committed tax fraud. The suspension order, they submitted, stated the reason — that there was a prima facie case of tax fraud against the petitioner. The stated reason, they contended, was sufficient and there was no requirement of giving detailed justification. The order was provisional pending a final determination. There was no need for a speaking order at this stage, the counsel maintained.
The bench held that the impugned order was short of the criteria laid down by the legislature in Section 24 (A) of the General Clauses Act. It provides that whenever a power to make any order or give any direction is conferred by an enactment on any authority, “such power shall be exercised reasonably, fairly, justly and for the advancement of the purposes of enactment”. It also requires the authority concerned to, as far as necessary or appropriate, give reasons and provide a copy of the order to the affected person.
Striking down the impugned order, the bench, however, observed that the sales tax department was, if so warranted, free to pass a speaking order to suspend the petitioner’s registration.
