1990 (5) TMI 214 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to seizure order under section 28(3) of the Karnataka Sales Tax Act, 1957 based on grounds of not being a dealer, non-compliance with mandatory provisions, and lack of jurisdiction.

Analysis:
The petitioner challenged the seizure order made by the respondent under section 28(3) of the Act, claiming not to be a dealer and therefore not obligated to register as one. The petitioner argued that the respondent had no jurisdiction to invoke the seizure powers under section 28(3) as he was not a dealer. The petitioner contended that the respondent's actions were contrary to the mandatory requirements of section 165 of the Criminal Procedure Code, 1973 (Cr. P.C.).

The respondent justified the seizure order by stating that the petitioner stored a significant quantity of coconuts and used the premises for business purposes. The respondent relied on information gathered during an investigation to assert that the petitioner was a dealer evading tax payment. The key issue was whether the seizure order should be quashed due to non-compliance with the mandatory provisions of section 165, Cr. P.C., and whether the respondent had the authority to conduct the search and seizure given the petitioner's non-dealer status.

The court analyzed the relevant provisions of the Act, emphasizing that registration under section 10 was not a prerequisite for an authorized officer to invoke powers under section 28(3) against a dealer whose turnover exceeded a specified amount. The court rejected the argument that the petitioner was not a dealer and therefore the respondent lacked jurisdiction to search the premises. The court highlighted that the authorized officer could exercise powers of inspection, search, and seizure against any dealer attempting to evade tax payment based on credible information.

The court addressed the petitioner's contention regarding non-compliance with section 165, Cr. P.C., which mandates the authorized officer to form a belief supported by recorded reasons before conducting a search. Citing legal precedents, the court emphasized the necessity of complying with these requirements. As the respondent failed to record reasons for believing the petitioner was evading tax, the court deemed the seizure order illegal and directed the return of seized materials to the petitioner within a specified timeframe.

In conclusion, the court allowed the writ petition, quashed the seizure order, and instructed the respondent to return the seized items to the petitioner.