1974 (2) TMI 61 - HC - VAT and Sales Tax

Summary

Issues: Violation of search and seizure procedures under the Bengal Finance (Sales Tax) Act, 1941; Legality of notice under section 14(1) of the Act demanding production of books of account since inception of business.

Analysis:

The petitioner, a partnership-firm engaged in manufacturing rubber goods and waterproofing, challenged the search and seizure conducted by tax inspectors at its office and factory premises. The petitioner contended that the search lacked proper justification as required under section 14(3) of the Bengal Finance (Sales Tax) Act, 1941, which mandates the recording of reasons before seizing any documents. The petitioner argued that the search conducted by multiple inspectors raised doubts about the collective formation of suspicion. The court emphasized the necessity of forming a genuine suspicion before exercising search powers to prevent arbitrary actions that could infringe on fundamental rights.

Furthermore, the petitioner challenged a notice issued under section 14(1) of the Act by a Commercial Tax Officer demanding the production of all books of account since the inception of the business. The petitioner alleged that this notice exceeded the officer's authority and was issued in bad faith. The court referenced a previous case to highlight that such notices must specify the necessary documents relevant to the Act, and an omnibus request without proper consideration is invalid. The court agreed that the impugned notice lacked specificity and was beyond the powers granted under the Act.

In response to the arguments presented, the respondents conceded that the omnibus notice was not defensible. Consequently, the court made the rule absolute, directing the return of seized documents to the petitioner within seven days and quashing the notice dated June 11, 1973. The respondents were given the option to initiate lawful proceedings against the petitioner. The judgment upheld the importance of following due process and respecting the limits of authority to safeguard against arbitrary exercises of power, ensuring the protection of fundamental rights.