KARACHI:- The Director General, Intelligence and Investigations (I&I), Inland Revenue challenged the jurisdiction of the High Court of Sindh (SHC) to entertain civil proceedings in a matter falling under a particular statute providing criminal procedure.

Filing a counter affidavit on Friday before SHC in a suit filed by plaintiff A.Z Agro Industries (Pvt) Ltd, DG I&I submitted that suit is barred under section 9 of the CPC 1908 as the respondents infringed no constitutional or statutory right of the plaintiff.

[the_ad id=”31605″]The plaintiff sought an injunction against proceedings under Section 38 of the Sales Tax Act 1990, which requires of the registered person or company accused of tax evasion to submit record summoned from them by the Sales Tax authorities failing which they are liable to criminal proceedings.

The plaintiff has approached the SHC with the mala fide motive of delaying investigation in a case of “fraudulent tax adjustment and suppression of Sales” stated the counter affidavit.

The bench after hearing Masooda Siraj advocate, counsel for respondent DG I&I adjourned further proceedings until Nov 20.

The plaintiff A.Z Agro Industries filing a suit maintained that they are a solvent extraction company and a member of All Pakistan Solvent Extraction Association. The company extracts crude oil from imported Canola seed, rapeseed and Sunflower seed, which was then supplied to companies like Dalda, IFFCO, Soya Supreme, Habib Oil etc. These companies refine, bleach and de-odorizer the crude oil yielding edible oil. The company maintains that it has been paying all duties, taxes etc and has no liabilities towards taxes but suddenly on 15-10-2015, respondents issued a notice under section 38 of Sales Tax Act 1990. It was also maintained that after serving the notice above, a team of officers of respondent Directorate General of I&I forcibly removed computer (CPU), documents, record, bank statements and invoices thus leaving plaintiff with no record to carry on business.

The plaintiff sought return of the documents and computers seized by the raiding team and a permanent injunction against proceedings under section 38 of the Sales Tax Act 1990. The plaintiff maintains that it paid all duties and taxed on taxable products while “Meal” made from the residual or bye product is exempted from any tax.

The Directorate of I&I however in counter arguments maintained that impugned action was taken on the basis of a credible information that plaintiff is involved in suppression of Federal Excise duty/Sales Tax. It was also found that plaintiff runs a refine oil plant and selling refined edible oil to unregistered broker/distributors without charging Federal Excise Duty (In Tax Mode).

The examination of record and seized computer data it was that in fact oil seed (Sarson/rape seed) was purchased locally but these purchases were not declared in the Sales Tax return and that while the plaintiff declared total taxable supplies in Sales Tax Return during tax period July 2014-June 2015 at rupees 591.895 million. The record retrieved from CPU shows that taxable ‘Sales are at rupees 1.954 billion and a difference of rupees 1.362 billion was established.

The counter affidavit maintains that directors of the plaintiff have connived and abetted for their mutual interest, defrauded the public exchequer by suppressing FED and Sales tax to the tune of millions of rupees, and thus have committed an offence punishable under Section 33 (11) and (12) and Se 19 of the Sales Tax Act 1990 and FED Act.

The chairman FBR, DG I&I and Commissioner Large Tax Payers Unit (LTU) are cited as defendants in the suit which will now be heard on Nov 20 along with an identical suit by the same plaintiff.