1985 (5) TMI 211 - HC - VAT and Sales Tax

Issues Involved:
1. Legality of the search conducted by the sales tax department.
2. Legality of the seizure of books and documents.
3. Demand for security under section 7(4a)(i) of the Bengal Finance (Sales Tax) Act, 1941.
4. Petitioner's failure to adopt statutory remedies.

Detailed Analysis:

1. Legality of the Search Conducted by the Sales Tax Department:
The petitioner argued that the search was unlawful because section 14(3) of the Bengal Finance (Sales Tax) Act, 1941, did not permit the Commissioner or any authorised official to search the business premises. The power of search is found in section 14(4), which requires information from an external source and a reason to believe that the petitioner was keeping any accounts, registers, or documents or stock of goods for sale. The court held that the power to inspect given in sub-section (3) cannot be limited only to the inspection of such books as the dealer may choose to produce. The power must include the inspection of other books and documents which are in the business premises but which were not being produced by the dealer. The court cited the Supreme Court's decision in Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver, emphasizing that the power to inspect inherently includes the power to search if necessary. Thus, the search conducted by the sales tax department was lawful.

2. Legality of the Seizure of Books and Documents:
The petitioner contended that since the search was unlawful, the seizure of the books and documents was also unlawful. The court noted that section 14(3) allows the Commissioner to seize such accounts, registers, or documents if there is reason to suspect that any dealer is attempting to evade payment of any tax under the Act. The court found that the authorized officials had lawfully entered the business premises and requested the production of accounts, which were not produced. The officials found 178 account slips containing various transactions that could not be explained by anyone present. The court concluded that the seizure was lawful as it was based on a reasonable suspicion that the petitioner was attempting to evade payment of sales tax.

3. Demand for Security under Section 7(4a)(i) of the Bengal Finance (Sales Tax) Act, 1941:
The petitioner argued that the demand for security was unlawful. The court noted that the Assistant Commissioner of Commercial Taxes had ordered the furnishing of security after detecting cases of tax evasion by the petitioner. It was estimated that the petitioner had suppressed sales of more than a crore in one year and more than three crores in another year. A security of Rs. 5,00,000 was demanded after giving notice and considering the petitioner's written submission. The court upheld the demand for security, noting that it was based on good and sufficient reasons and was not entirely unlawful.

4. Petitioner's Failure to Adopt Statutory Remedies:
The petitioner filed the writ petition on 2nd July 1984, challenging the search and seizure conducted on 24th March 1983. The court noted that the petitioner had not provided any explanation for the delay in filing the writ petition. The court also observed that the petitioner had not availed of the statutory remedy of applying for revision if it was not satisfied with the order of security. The court held that the writ petition failed as it was not a case of inherent lack of jurisdiction, and the petitioner had not adopted the statutory remedy available.

Conclusion:
The court dismissed the writ petition, vacated the interim order, and held that the search and seizure conducted by the sales tax department were lawful. The demand for security was also upheld, and the petitioner's failure to adopt statutory remedies was noted. The court emphasized that the power to inspect inherently includes the power to search, and the authorized officials had acted within their legal rights.

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