SHC unfreezes Geo bank accounts
KARACHI: The Sindh High Court has suspended an order of the Collectorate of Sales Tax and Federal Excise (Enforcement) regarding attachment of bank accounts of the Independent Media Corporation and issued notices to the Finance Ministry, the Central Board of Revenue, the Collector of Sales Tax and the Assistant Collector (Recovery Officer) for June 29, 2007.
The interim order came on a petition of the Independent Media Corporation filed by its General Manager Finance Syed Moinuddin against the attachment of its bank accounts by the respondent on June 22, 2007.
The court restrained the respondents from recalling, withdrawing or amending the letter issued by the CBR on February 20, 2007 that allowed the petitioner to deposit outstanding sales tax amount through instalments.
The petitioner submitted that it was a private limited company incorporated in Pakistan under the Companies Ordinance, 1984 and a part of the Jang Group of Companies and “Geo” is the trademark.
It was contended that the impugned action is completely without jurisdiction, illegal, mala fide, in breach of natural justice, patently against the fundamental rights and law, void ab initio and of no legal effect.
The petitioner submitted that there was no default on the part of it, hence the attachment of the its bank accounts was extremely coercive and illegal, adding that the impugned action had brought the petitioner’s business to a complete standstill.
It was submitted that the business of the petitioner could not be operated without an operative bank account and the attachment of the bank accounts would imply closure of its business. The act is a very bad episode of high-handedness of public officials who thrive on meting out unmerited harassment to honest taxpayer and also use arm-twisting strategies to tarnish the freedom of press-a fundamental right guaranteed under the Constitution, it was submitted further.
The consequence of the impugned action, it was mentioned in the petition, will be that the petitioner will be unable to run any programme, which will include news reports and other discussion shows. “The further and most adverse consequence to the public interest will be the inability of the petitioner to disseminate information to the public at large in case the business is closed, which will be if the bank accounts remain under attachment,” it was stated in the petition.
“This will also entail that the general public at large shall be deprived of their fundamental right pertaining to freedom of information and the right to know the correct state of affairs. The special nature of the petitioner’s business is to equip the public at large with “minute-to-minute” news and information, all of which is now under grave jeopardy.”
The petition said the petitioner was neither a broadcaster nor a telecaster to make it liable to pay sales tax under the Sindh Sales Tax Ordinance, 2000 (hereafter: “the 2000 Ordinance”) and the rules thereunder, adding the petitioner received a show-cause notice dated 18.11.2006 whereby the petitioner was called upon to show as to why short levy of sales tax amounting to Rs.193,594,513 along with additional tax and penalty should not be recovered from the petitioner.
That the petitioner vide its reply dated 27.11.2006 contended that it has already made part payment out of Rs.193,594,513. Vide the same letter it was once again requested that due to unavoidable financial constraints faced by the petitioner, it may be allowed to pay the balance of Rs 126,498,028 through instalments.
The petitioner maintained that before the issuance of the show-cause notice dated 18.11.2006, the petitioner vide its letter dated 4.9.2006 requested the department to allow the petitioner to clear its liability through monthly instalments as due to some financial constraints it was/is not in position to pay the entire outstanding amount in lump sum. The request was allowed.
While the petitioner’s request dated 4.9.2006 was pending, in a completely mala fide and illegal manner Order in Original No 122/2006 dated 4.1.2007 was passed whereby an amount of Rs 12,64,98,796 along with additional tax and penalty @ 100 per cent of tax due was ordered to be recoverable from the petitioner, said the petioner.
Aggrieved against the order-in-original the petitioner preferred first appeal before the Collector Sales Tax (Appeals) who after protracted hearing and arguments was pleased to pass order in appeal No 310/2007 dated 15.5.2007 whereby it was, inter alia, held: “The petitioner did not come within the ambit of the 2000 Ordinance. “In other words, the present law did not make the activities of the petitioner exigible to sales tax under the 2000 Ordinance; in coming to such conclusion the learned Collector of Sales Tax (Appeals) was of the view that the incidence of sales tax as spelt out u/s 3 of the 2000 Ordinance read with rule 67(1) of the Sales Tax Special Procedure Rules 2006 was on ‘broadcasting’ or ‘telecasting’. On a simple interpretation of the agreements marked as Annex B and B-1 above the learned Collector of Sales Tax (Appeals) came to the conclusion that the Petitioner was not in any manner engaged in broadcasting or telecasting any programmes or advertisements. Hence it was held that no sales tax was leviable upon the Petitioner.”
It was contended that there had been no default on the part of the petitioner, which could be appreciated from the facts that for the sales tax liability as on December 31, 2006 and before, the Central Board of Revenue through its letter on February 20, 2007 has been pleased to grant the petitioner instalments to facilitate outstanding payment.
As per such schedule permitting instalments, the petitioner has made the required payments on or before February 28, 2007, March 31, 2007, April 30, 2007 and May 31, 2007 of amounts of Rs 9,904,278 for each instalment, which cumulatively comes to Rs 39,617,112 and there is no dispute regarding this.
However, by way of abundant caution the petitioner along with his counsel’s letter on June 23, 2007 had filed proof of payment amounting to Rs 39,617,112 just in case the respondents wished to unmeritedly dispute the same.
It was submitted that as regards the next instalment for the liability as on December 31, 2006 and before, in view of the letter dated 20.2.2007, the same will only become due on 30.6.2007, which is a date yet to materialise, adding that in view of instalments that have been granted by the CBR to the petitioner vide letter dated 20.2.2007, the petitioner has already made its business feasibilities and commitments.
The petition said it has now been learnt through reliable sources that the collector of the Sales Tax Collectorate is bent upon recalling the instalments granted to the petitioner. It stated such an action will be completely illegal since the order of granting instalments to the petitioner has already taken legal effect and in fact been acted upon by the petitioner, adding that on strength of such letter the petitioner had arranged all his business feasibilities, commitments, cash flows and transactions.
It said any recall of such letter regarding granting of instalments would be highly unreasonable, illegal and unconstitutional considering that no sales tax was leviable in the first place upon the petitioner.
It was submitted any levy of penalty, additional tax or default surcharge would also be completely illegal since instalments have been granted by CBR, the matter concerns bona fide interpretation of the provisions of law, agreements, there are no mala fides on the part of the petitioner, adding that no dues are adjudged against the petitioner.
It was contended under the rules, attachment of accounts by the respondent is completely without jurisdiction and entire action is in breach of natural justice and illegal. “The action on the part of the respondents is against the fundamental rights of freedom of press and business guaranteed under the Constitution,” the petition said, adding that there was no adjudication which might become the subject matter of or relatable to the impugned demand.
The petition said mala fides of the respondents can also be appreciated from the fact that while no show-cause notice was issued before attaching the bank accounts of the petitioner. The assistant collector (recovery officer) had issued a letter on June 15, 2007 giving seven days time to make the payment, however, the notice dated 15.6.2007 was sent to the petitioner’s office on June 19.
It was submitted that threat to withdraw, cancel or amend the letter dated 20.2.2007 issued by the respondent is completely without jurisdiction, mala fide, illegal, and against the vested rights acquired by the petitioner.
It said till date the respondent has not preferred any appeal against the above-referred order of the collector of Sales Tax (Appeals) before the learned Customs, Federal Excise and Sales Tax Appellate Tribunal.
However, in a manner completely without jurisdiction and mala fide the respondent has attached the bank accounts of the petitioner maintained with the Standard Chartered Bank and the United Bank Limited without any show-cause notice and without even bothering to ascertain the correct state of affairs.
It added that a notice was issued to the Standard Chartered Bank at first and thereafter the petitioner was given a copy of the said notice. As regards the United Bank, the petitioner was verbally informed about the attachment.
The Independent Media Corporation, in response to the illegal and mala fide act of attachment of its bank accounts, as there is no default, let alone wilful or deliberate on the part of the petitioner, issued latter through its counsel’s letter on June 23 requested the respondents to de-attach the bank accounts.
On behalf of the petitioner, Zaheer-ud-Din Khan, Chief Operating Officer of the petitioner and Syed Moinuddin, the General Manager Finance, reached the office of the Sales Tax at 9:00 am on June 23 and had to wait till 10:30 am since there was no officer or PA to even receive the petitioner counsel’s letter or be spoken to.
The assistant collector (recovery officer) was not available all the day and the petitioner’s representatives then met the collector of sales tax, who then directed them to meet the deputy collector. However, the entire team of the collector of sales tax informed the petitioner that the action has been taken at the behest of the high-ups in view of the political situation.
The respondents then also informed the petitioner’s representative that the matter had to be resolved by the high-ups and they could not do anything.
The court was prayed to declare all letters/notices issued or to be issued by the respondents attaching the petitioner’s bank accounts and attempts to recover sales tax under the Sindh Sales Tax Ordinance, 2000 from the petitioner, in particular letter C No 121/E&R-II /ST/07/ dated 22.6.2007 as also all similar letters/notices and the entire recovery drive to be completely mala fide, without jurisdiction, unconstitutional, void ab initio and of no legal effect.
The petitioner also sought injunction, permanently and pending disposal, of the main petition for suspension the operation of all letters/notices issued by the respondents attaching the petitioner’s bank accounts and attempts to recover sales tax under the Sindh Sales Tax Ordinance, 2000 from the petitioner, in particular letter C No 121/E&R-II /ST/07/ dated 22.6.2007 as also all similar letters/notices, while further restraining the respondents, their officers and agents from effecting any recoveries of sales tax under the Sindh Sales Tax Ordinance, 2000 from the petitioner along with additional tax, penalty or default surcharge in any manner whatsoever. Besides, till disposal of the main petition, restrain the respondents their officers or agents, from recalling, withdrawing or amending letter C No 1(2) STM/2004-Pt dated 20.2.2007.
An SHC division bench, comprising Justice Muhammad Athar Saeed and Justice Mrs Qaiser Iqbal, after preliminary hearing of the petition suspended the respondent’s order for the attachment of the petitioner bank accounts and issued notices to the respondents for June 29.
Dr Farogh Naseem advocate appeared for the petitioner.
Source: The News
Date:6/27/2007
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