1965 (12) TMI 127 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Constitutionality of Section 17(2A) of the General Sales Tax Act.
2. Whether Section 19(c) of the General Sales Tax Act penalizes obstruction to seizure.

Issue-wise Detailed Analysis:

1. Constitutionality of Section 17(2A) of the General Sales Tax Act:

The primary objection raised by the defense was that Section 17(2A) of the General Sales Tax Act is ultra vires the Constitution, violating Article 19(1)(f) and (g), which protect the right to acquire, hold, and dispose of property, and the right to practice any profession or carry on any occupation, trade, or business. The defense argued that the restrictions imposed by Section 17(2A) are not reasonable because they vest wide and unrestricted powers in the officers without adequate safeguards to control or regulate their actions.

The court examined the reasonableness of the statute by considering the principles laid down by the Supreme Court in The State of Madras v. V.G. Row, which require the test of reasonableness to be applied to each individual statute impugned. Factors such as the nature of the right alleged to have been infringed, the underlying purpose of the restrictions, the extent and urgency of the evil sought to be remedied, and the disproportion of the imposition were considered.

The court found that the temporary deprivation of the right to possess records for ten days, unless required for prosecution, is a reasonable restriction. The underlying purpose of preventing evasion of sales tax is legitimate, and the limitation imposed has a proximate connection with this purpose. The procedural safeguards provided, such as the requirement for the officer to record reasons in writing and grant receipts, were deemed sufficient to ensure that the power is not exercised arbitrarily.

The court also addressed the defense's argument that the restriction is not procedurally reasonable due to the lack of notice to the dealer, absence of an appeal mechanism, and the subjective satisfaction of the officer. The court held that the very purpose of the provision would be defeated if notice were given, and the speed and promptness required justify the subjective satisfaction of the officer. The possibility of the action being scrutinized by superior officers and the potential for acts to be challenged as ultra vires were considered adequate safeguards.

The court concluded that Section 17(2A) does not offend Article 19(1)(f) and (g) of the Constitution, as the restrictions imposed are reasonable and have a rational relation to the object sought to be achieved.

2. Whether Section 19(c) of the General Sales Tax Act penalizes obstruction to seizure:

The defense argued that Section 19(c) of the General Sales Tax Act does not penalize obstruction to seizure, as it only penalizes prevention or obstruction of inspection or entry by the officer. The prosecution's case did not allege obstruction to entry or inspection, but rather obstruction to seizure.

The court agreed with the defense, noting that Section 17(2A) was inserted to authorize the seizure of accounts and registers, but no corresponding change was made in Section 19(c) to penalize obstruction to seizure. The court rejected the State Prosecutor's contention that seizure is implicit in the act of inspection and that obstruction to seizure falls within Section 19(h), which penalizes acts in contravention of the provisions of the Act. The court held that Section 19(c) does not penalize obstruction to seizure under Section 17(2A), and therefore, set aside the conviction and sentence passed on the accused in C.C. No. 3 of 1962.

In conclusion, Criminal R.P. No. 231 was allowed, and the conviction and sentence in C.C. No. 3 of 1962 were set aside. Criminal R.P. No. 230 was dismissed, upholding the constitutionality of Section 17(2A) of the General Sales Tax Act.