1974 (1) TMI 97 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the condition precedent to exercise of power under section 37(3) of the Bihar Sales Tax Act, 1959, was fulfilled.
2. Whether a search or seizure list was prepared.
3. Whether a receipt of the documents seized was issued as required by section 37(3).

Issue-wise Detailed Analysis:

1. Condition Precedent to Exercise of Power under Section 37(3):
The petitioners argued that the condition precedent for the exercise of power under section 37(3) was not fulfilled. According to section 37(3), the authority must have "reason to suspect" that the dealer is attempting to evade tax, and these reasons must be recorded in writing. The court found that the reasons were recorded in writing, as evidenced by annexure A, which stated: "I have reason to suspect that you are maintaining your accounts with a view to conceal the true transactions in order to evade payment of tax due from you." The court held that the suspicion was justified, especially given the discovery of 382 loose account sheets, which could indicate an attempt to evade tax. Therefore, the first requirement of section 37(3) was met.

2. Preparation of Search or Seizure List:
The petitioners claimed that no search or seizure list was prepared. The court noted that annexure A detailed the items seized, including various account books and 382 loose sheets. Although the petitioners contested the authenticity of annexure A, the court found it credible, especially since the original document was produced for inspection. The court concluded that a seizure list was indeed prepared, fulfilling this requirement.

3. Issuance of Receipt for Seized Documents:
The petitioners asserted that no receipt was issued for the seized documents, which is a mandatory requirement under section 37(3). The court found that the respondents did not grant any receipt at the time of seizure. The court acknowledged that this was a violation of section 37(3) but determined that it did not invalidate the entire seizure. The court reasoned that the petitioners did not challenge the correctness of the list of seized items and that significant discrepancies were found in the seized documents. Therefore, while the failure to issue a receipt was a procedural lapse, it did not warrant quashing the entire action.

Conclusion:
The court concluded that the exercise of power under section 37(3) was justified and that the seizure was lawful, except for the procedural lapse of not issuing a receipt. Therefore, the court partially allowed the writ application, directing respondent No. 2 to send a formal receipt to the petitioners, which could be in the form of a true copy of annexure A, including the date. The petitioners were not entitled to any other relief, and no order as to costs was made.

Separate Judgments:
N.P. Singh, J. concurred with the judgment, and the petition was partly allowed.