1991 (8) TMI 295 - AT - VAT and Sales Tax

Issues Involved:
1. Legality of search and seizure conducted on January 24, 1990.
2. Issuance of road permits and declaration forms.
3. Legality of garnishee notices and demand for security.
4. Retention and return of seized books and documents.
5. Prohibition on the use of seized materials for assessment.

Issue-wise Detailed Analysis:

1. Legality of Search and Seizure:
The applicants challenged the search and seizure conducted on January 24, 1990, as illegal, invalid, and without authority. The respondents justified the search and seizure, citing discrepancies between the sales returns and the actual sales records. The Tribunal found that the search and seizure were conducted in accordance with sections 14(3) and 14(4) of the Bengal Finance (Sales Tax) Act, 1941. It was noted that the respondents had reasons to suspect tax evasion based on the discrepancies observed during their visits on January 17 and January 22, 1990. The Tribunal concluded that the search and seizure were not violative of the Act and were justified.

2. Issuance of Road Permits and Declaration Forms:
The applicants sought directions for the issuance of road permits and declaration forms. The Tribunal noted that interim orders had already been passed, directing the respondents to issue road permits and declaration forms within specified timeframes. Since no arguments were advanced regarding non-compliance with these interim orders, the Tribunal found no need for further directions on this issue.

3. Legality of Garnishee Notices and Demand for Security:
The applicants challenged the garnishee notices issued on January 25, 1990, and the demand for security under section 7(4a)(i) of the Act. The Tribunal quashed the garnishee notices as the learned State Representative did not oppose their setting aside. However, the Tribunal upheld the demand for security, stating that the applicants were given an opportunity to be heard before the amount of security was fixed. The demand for security was deemed necessary for safeguarding State revenue and ensuring proper payment of tax.

4. Retention and Return of Seized Books and Documents:
The Tribunal held that the retention of seized books and documents beyond the statutory period without proper sanction and communication of such sanction to the applicants was improper and unauthorized. It was noted that the orders for extended retention were not communicated to the applicants within the prescribed period. Consequently, the Tribunal directed the respondents to return the seized books and documents to the applicants forthwith.

5. Prohibition on the Use of Seized Materials for Assessment:
The applicants sought an order prohibiting the respondents from using the seized materials for assessment purposes. The Tribunal referred to the Supreme Court's decisions in Pooran Mal v. Director of Inspection and Partap Singh v. Director of Enforcement, which held that the illegality of a search does not vitiate the evidence collected during the search. The Tribunal concluded that even if the searches were assumed to be illegal, the materials seized could still be used by the sales tax authorities for assessment purposes. Therefore, the prayer for prohibition on the use of seized materials was rejected.

Conclusion:
The applications were partly allowed. The Tribunal directed the respondents to return the seized books and documents to the applicants. The garnishee notices were quashed, but the demand for security was upheld. No further directions were issued regarding the issuance of road permits and declaration forms. The Tribunal rejected the prayer for prohibition on the use of seized materials for assessment. No order was made as to costs in any of the four cases.

← Previous Next →