LAHORE, June 16: The Lahore High Court on Saturday expressed reservations on the amendment to the Sales Tax Act 1990 which authorized the sales tax department to raid the premises of business and manufacturing concerns and seizing the record without any prior notice.

Justice Nasim Sikander ruled that amendments introduced to Section 38 and the repeal of Section 39 through Finance Act, 1996, under which the department was supposed to serve prior notice on the owner of the concern for searching his premises, had resulted in chaos and conferment of extremely unjustified powers on the tax authorities.

The court gave these observations while accepting the petition of a textile mill challenging the seizure of its documents and other relevant items by the sales tax department and the alleged humiliation of its staff at the hands of the respondent.

“Conferring such unbridled powers on the sales tax department is against the constitutional requirements of separation of judiciary from the executive. The amendments to Section 38 and insertion of Section 40-A has resulted in an unnecessary row between the revenue authorities and the tax payers,” Justice Sikander observed in his judgment.

A copy of the judgment has been forwarded to the ministry of law, justice and parliamentary affairs to make a reference to the cabinet for proposing necessary changes in the relevant law and revival of Section 39 of the Sales Tax, if possible.

While allowing the petitions, the court ordered that the material, documents, accounts and records taken into custody by the tax authorities during the raid should be returned to the petitioner and none of these materials should be used directly or indirectly as evidence against the petitioner.

Earlier, the petitioner’s counsel Ali Sibtain Fazli argued that the sales tax department did not have the authority to raid the premises and seize the record.

The respondent’s counsel, A. Karim Malik, disputed his submissions arguing that the mode and manner in which the raids were conducted was legal and was not prejudicial to the petitioner.