Posting of Inland Revenue tax officers: beverage manufacturer granted stay order

The Appellate Tribunal Inland Revenue, Lahore has granted stay to a beverage manufacturer against posting of Inland Revenue tax officers at its premises to monitor production, sale of taxable goods and the stock position under section 40B of the Sales Tax Act 1990.
In this regard, the Appellate Tribunal Inland Revenue, Lahore has issued an order to grant stay regarding posting of Inland Revenue Officers to monitor production of the beverage unit. The judgement of the Appellate Tribunal Inland Revenue, Lahore is important regarding posting of Inland Revenue tax officers at business premises of registered persons under section 40B of the Sales Tax Act 1990.
As per order, Appellate Tribunal Inland Revenue, Lahore has also barred the regional tax office Faisalabad from taking any coercive measure against the beverage manufacturer and also stopped the RTO from interfering into the business activities of the said registered taxpayer in any manner.
Through the order, the Appellate Tribunal Inland Revenue, Lahore has dispelled the general impression that through an interim order the Tribunal can only grant stay of recovery and not that of stay of proceedings. The Tribunal by its interim order has granted stay of proceedings under section 40B of the Sales Tax Act 1990 through which the Commissioner Inland Revenue with the approval of the Federal Board of Revenue had posted the Officer of Inland Revenue at the premises of a taxpayer to monitor production, sale of taxable goods and the stock position.
The background facts as explained by Shahid Jami, a Lahore based Tax Consultant are that against the order of the Commissioner appeal was directly filed with the Appellate Tribunal in pursuance of section 46(1)(b) of the Act with an application for interim relief of stay of proceedings under section 40B by suspending the posting order. During the course of hearing of application for interim relief the Departmental Representative objected that appeal to the Tribunal is governed under section 46(2) of the Sales Tax Act 1990 read with section 131 and 132 of the Income Tax Ordinance 2001 and therein there is no provision to grant interim relief of suspension of posting order issued under section 40B.
He relied on sub-section (5) of section 131 of the Income Tax Ordinance 2001 which only pertains to stay of recovery as evident from the law. Under the said section of the income tax law, Notwithstanding that an appeal has been filed under this section, tax shall, unless recovery thereof has been stayed by the Appellate Tribunal, be payable in accordance with the assessment made in the case:
Provided that if on filing of application in a particular case, the Appellate Tribunal is of the opinion that the recovery of tax levied under this Ordinance and upheld by the Commissioner (Appeals), shall cause undue hardship to the taxpayer, the Tribunal, after affording opportunity of being heard to the Commissioner, may stay the recovery of such tax for a period not exceeding one hundred and eighty days in aggregate.
Provided further that where recovery of tax has been stayed under this section, such stay order shall cease to have effect on expiration of the said period of 180 days following the date on which the stay order was made and the Commissioner shall proceed to recover the said tax:
Provided further that in computing the aforesaid period of one hundred and eighty days, the period, if any, for which the recovery of tax was stayed by a High Court, shall be excluded. However, the tribunal accepted the arguments of the counsel of the appellant taxpayer holding that any court or tribunal holding jurisdiction to decide a matter can any interim order under its inherent power, Shahid Jami added.