1989 (8) TMI 336 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the retention order dated January 30, 1989.
2. Communication of reasons for retention.
3. Opportunity of being heard before retention.
4. Adequacy of the period for examination of the seized books.
5. Request for retention of xerox copies of the seized books.

Detailed Analysis:

1. Validity of the Retention Order Dated January 30, 1989:
The applicant contended that the retention order dated January 30, 1989, passed after the expiry of one year from the date of seizure, is void and without jurisdiction. The respondents argued that the initial retention was sanctioned till January 31, 1989, and the subsequent order was within time. The Tribunal found that the retention order must be quashed due to non-communication of reasons for retention, rendering it void.

2. Communication of Reasons for Retention:
The applicant argued that the order is bad for want of communication of the reasons stated in writing by the Commercial Tax Officer for obtaining sanction for retention. The Tribunal agreed, stating that non-communication of reasons violates the rules of natural justice and renders the order arbitrary and unreasonable. The Tribunal emphasized that reasons must be communicated to comply with the scheme of section 14(3A) of the BFST Act, 1941, and cited the ratio from [1984] 145 ITR 477 (SC) (Commissioner of Income-tax v. Oriental Rubber Works).

3. Opportunity of Being Heard Before Retention:
The applicant contended that the order is vitiated for not giving any prior opportunity of being heard. The respondents countered that section 14(3A) does not require a prior hearing as it is a purely administrative order. The Tribunal did not need to decide on this point as the order was already quashed for non-communication of reasons.

4. Adequacy of the Period for Examination of the Seized Books:
The applicant argued that the period of two years was adequate for examination and non-cooperation cannot justify further retention. The respondents claimed that the examination could not be completed due to the applicant's failure to provide necessary assistance. The Tribunal did not address this issue directly, as the retention order was quashed on other grounds.

5. Request for Retention of Xerox Copies of the Seized Books:
The State Representative requested permission to retain xerox copies of the seized books. The applicant had no objection to this request. The Tribunal allowed the respondents to prepare and retain xerox copies at their own cost, certified by the applicant-firm, before returning the original documents.

Conclusion:
The application succeeded in part. The Tribunal quashed the retention order dated January 30, 1989, and directed the respondents to return the seized books of account and documents to the applicant-firm within a fortnight. The respondents were allowed to retain xerox copies of the documents, certified by the applicant-firm, and continue their investigation in accordance with the law. Other prayers of the applicants were refused, and interim orders were vacated.

Separate Judgments:
- B.C. CHAKRABARTI (Chairman): Agreed.
- P.C. BANERJI (Technical Member): Agreed.

Application partly allowed.