M.K. STEEL MILLS vs COLLECTOR OF CUSTOMS, MCC CUSTOMS HOUSE, PESHAWAR Ss

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M.K. STEEL MILLS VS COLLECTOR OF CUSTOMS, MCC CUSTOMS HOUSE, PESHAWAR Ss. 2(37), 11, 37-a & Sixth Schedule, Entry No.151---Criminal proceedings---Tax fraud---Scope---Tax refund---Security instrument---Encashment---Petitioners / importers were aggrieved of registration of FIR against them by authorities for not providing consumption certificates in terms of Entry No. 151 in Sixth Schedule to Sales Tax act, 1990---Validity---Prosecution can be launched under S. 37-a of Sales Tax act, 1990 against taxpayer by competent authority who, on the basis of material evidence, has reasons to believe that taxpayer has committed tax fraud or any offence warranting prosecution under Sales Tax act, 1990---Phrase "tax fraud" is defined under S. 2(37) of Sales Tax act, 1990 which means that registered person with dishonest intention falsifies sales tax invoices to avoid payment of duties and taxes to make a false claim of refund---Petitioners / importers under concessionary regime did not provide consumption certificate and authorities were at liberty to retain security instrument i.e. post-dated cheque, which were enforceable only when liability of petitioners / importers, if any, had been determined under S. 11 of Sales Tax act, 1990---Before determination of the liability, in view of dispensation, authorities had illegally and without lawful authority presented security cheques, which were provided by petitioners / importers in terms of Entry No.151 in Sixth Schedule to Sales Tax act, 1990 for presentation to bank---Launching of criminal prosecution on the basis of dishonouring of security cheques was pre-mature and without lawful authority---authorities acted in excess of their authority, therefore, registrations of FIRs, were not sustainable in the eyes of law---Letters/refusal to provide consumption certificates were annulled by appellate Tribunal Inland Revenue in many other cases---High Court quashed the FIRs registered against petitioners / importers, however authorities were at liberty to conduct audit of petitioners / importers in terms of S. 25 of Sales Tax act, 1990---High Court directed the authorities that if any discrepancy was pointed out relating to sale of goods in tariff area, the matter could be adjudicated against petitioners / importers under S. 11 of Sales Tax act, 1990 and relevant provisions of Income Tax Ordinance, 2001---Constitutional petition was allowed accordingly.

M.K. STEEL MILLS vs COLLECTOR OF CUSTOMS, MCC CUSTOMS HOUSE, PESHAWAR Ss — 2025 PTD 914 PESHAWAR-HIGH-COURT

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