2008 (4) TMI 491 - SC - VAT and Sales Tax

Whether the notice of hearing has been received by the respondent? Whether he had been heard or not? As to why was it necessary to retain the seized records for examination for another year although the said record had already been in the custody of the appellants for a period of one year? Held that - The Additional Commissioner while granting sanction to retain the seized records has not only recorded reasons therefor but the same were communicated. Thus the condition prescribed by law to record reasons is fulfilled. The order which was received by the assessee a few days later was despatched the same day. The delay in no way has caused any prejudice to the assessee. Moreover we are informed that the books of account/documents were returned to the assessee after the passing of the order by the Tribunal. To that extent the appeal has become infructuous but since the point involved is of recurring nature we thought it appropriate to record a finding regarding the correctness or otherwise of the view taken by the High Court on merits. In case the investigation or assessment is not complete then the respondent whose books of account have been returned may not be asked to re-deposit the books of account with the assessing officer but as and when he is called upon to produce the books of account/documents which were returned to the assessee the assessee shall be under an obligation to produce the documents before the authorities as and when asked to do so.

Summary

Issues involved:
1. Validity of the order passed by the Additional Commissioner granting sanction to retain seized records.
2. Compliance with the provisions of section 66 of the West Bengal Sales Tax Act, 1994 regarding the extension of time for retaining seized records.
3. Communication of reasons and orders to the concerned party within the prescribed period.
4. Interpretation of the legal requirements for extending the period of retention of seized records.
5. Applicability of judicial precedents in similar cases.

Detailed Analysis:
1. The judgment pertains to an appeal filed by the State of West Bengal against the High Court's decision dismissing a writ application challenging the order of the Tribunal. The Tribunal had directed the release of seized records, citing non-communication within the prescribed period. The High Court upheld this decision, emphasizing the denial of an opportunity to be heard and procedural lapses in the order granting retention of seized records.

2. The case involves the seizure of records from a re-seller for suspected tax evasion under the West Bengal Sales Tax Act, 1994. The dispute arose when the Additional Commissioner granted sanction to retain the seized records beyond the initial one-year period without proper communication and opportunity for the respondent to be heard. The Tribunal and High Court found procedural irregularities in the extension of the retention period.

3. The legal provisions under section 66 of the Act require recording of reasons and obtaining written sanction for extending the retention period of seized records. The failure to communicate such reasons and orders within the stipulated time frame was a crucial point of contention in the case, leading to the Tribunal's decision in favor of the respondent.

4. The judgment delves into the interpretation of the statutory requirements for extending the period of retention of seized records. It highlights the necessity of fulfilling conditions such as recording reasons in writing and obtaining approval from the appropriate authority. The court emphasizes that non-compliance with these conditions renders the extension unlawful and necessitates the immediate return of the records.

5. Judicial precedents, particularly the case of Commissioner of Income-tax v. Oriental Rubber Works, were cited to support the argument that communication of reasons and orders to the concerned party is essential for the validity of decisions regarding the retention of seized records. The court clarified the communication requirements and distinguished the provisions of the Income-tax Act from those of the West Bengal Sales Tax Act in the present case.

In conclusion, the Supreme Court set aside the High Court's order, noting that the Additional Commissioner had fulfilled the legal requirements by recording reasons and communicating the order to retain the seized records. The appeal was deemed infructuous as the records had already been returned to the respondent, but a finding was recorded on the correctness of the High Court's decision. The court directed the respondent to produce the documents if required in the future and disposed of the appeal without costs.