1978 (3) TMI 207 - HC - VAT and Sales Tax

Summary

Issues: Challenge of seizure order under section 28(3) of the Karnataka Sales Tax Act.

Analysis:
The petitioner, a registered dealer under the Karnataka Sales Tax Act, challenged the seizure order of books of account and documents by the Commercial Tax Officer under section 28(3) of the Act. The impugned order was issued during a routine inspection of the dealer's premises, suspecting tax evasion. The petitioner contended that the seizure was illegal as the procedure under section 28(2) was not followed and no reasons were provided for the seizure.

Regarding the first contention raised by the petitioner, the respondent argued that the seizure was part of an inspection and not a search, hence section 28(2) was not applicable. However, the court deemed it unnecessary to decide this issue as the petitioner succeeded on the second contention.

In response to the second contention, the court noted that section 28(3) allows seizure if there is a suspicion of tax evasion, but it requires the officer to record reasons in writing for such suspicion. The impugned order lacked any specific reasons for suspecting tax evasion beyond a preliminary scrutiny of the documents. The court emphasized that suspicion must be based on recorded reasons, as per legal precedent. Therefore, the order made without proper reasons was deemed illegal and quashed, with a direction to return all seized items to the petitioner within two weeks.

In conclusion, the court quashed the seizure order under section 28(3) of the Karnataka Sales Tax Act due to the lack of proper reasons recorded for suspecting tax evasion, emphasizing the necessity of complying with legal procedures and providing detailed justifications for such actions.