1973 (8) TMI 130 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the constitution of the Bureau of Investigation.
2. Legality of the power of search and seizure exercised by the officers of the Bureau.
3. Competence and jurisdiction of the officers of the Bureau to exercise powers under the Bengal Finance (Sales Tax) Act, 1941.
4. Legality of the retention of seized books of accounts beyond the statutory period.

Detailed Analysis:

1. Validity of the Constitution of the Bureau of Investigation
The constitution of the Bureau of Investigation (hereinafter referred to as the Bureau) was challenged on the grounds that it was not authorized by any statutory provision and was constituted merely by a notification issued by the Governor. The court held that the Bureau was set up by the Governor in his executive capacity and not under the Act or any other statutory provision. It was stated that the State Government, in the exercise of its executive power under Article 162 of the Constitution, which is coextensive with its legislative power, can set up a Bureau to deal with matters within the competence of the State Legislature to legislate. Hence, the constitution of the Bureau by the State Government is not invalid.

2. Legality of the Power of Search and Seizure Exercised by the Officers of the Bureau
The petitioner contended that the officers of the Bureau, having been deputed from the Commercial Tax Directorate, ceased to function as officers under the Act and therefore lacked the competence to exercise powers of search and seizure. The court examined the relevant notifications and found that the Bureau was constituted for the investigation of sales tax evasion and malpractices. The officers of the Bureau, although drawn from the Commercial Tax Directorate, were appointed to new posts within the Bureau and were not under the administrative control of the Commissioner of Commercial Taxes. Consequently, they could not exercise statutory powers and duties under the Act.

3. Competence and Jurisdiction of the Officers of the Bureau to Exercise Powers under the Bengal Finance (Sales Tax) Act, 1941
The court analyzed the provisions of the Act, which require that officers appointed to assist the Commissioner must be under his statutory control and assist him in the performance of duties conferred by the Act. The officers of the Bureau, having been released from their posts in the Commercial Tax Directorate and appointed to new posts within the Bureau, ceased to be officers under the Act. Therefore, they were incompetent to exercise any powers or perform any duties under the Act. The seizure of the books of account by an officer of the Bureau was deemed illegal and without jurisdiction.

4. Legality of the Retention of Seized Books of Accounts Beyond the Statutory Period
The petitioner argued that the retention of the seized books of accounts beyond 21 days without the written sanction of the Assistant Commissioner was illegal. The court noted that under Rule 70 of the Bengal Sales Tax Rules, an Inspector or Commercial Tax Officer cannot retain seized books beyond 21 days without written sanction and beyond 42 days without the sanction of the Commissioner. The court found that the sanction for retention of the books was not communicated to the petitioner, rendering it ineffective. It was held that an order of sanction must be communicated to the affected party to be valid and effective. Since the sanction was not communicated, the retention of the books after 21 days was illegal and without jurisdiction.

Conclusion
The court concluded that:
1. The constitution of the Bureau by the State Government is valid.
2. The officers of the Bureau, having been appointed to new posts within the Bureau, ceased to be officers under the Act and were incompetent to exercise statutory powers and duties.
3. The seizure of the books of account by an officer of the Bureau was illegal and without jurisdiction.
4. The retention of the books of accounts beyond 21 days without a valid order of sanction communicated to the petitioner was illegal and without jurisdiction.

The rule was made absolute, and a writ of mandamus was issued commanding the respondents to return the seized books of accounts and records to the petitioner. The petition was allowed without any order as to costs.

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