1994 (7) TMI 311 - HC - VAT and Sales Tax

Issues Involved:
1. Legality of the notice under section 31(1) of the Assam Finance (Sales Tax) Act, 1956.
2. Legality of the search and seizure without a search warrant.
3. Constitutionality of section 31(3) of the Assam Finance (Sales Tax) Act.
4. Reopening of completed assessments.
5. Violation of fundamental rights due to seizure of books of account.

Issue-wise Detailed Analysis:

1. Legality of the Notice under Section 31(1):
The petitioner argued that section 31(1) does not empower the taxing authority to direct a dealer to produce books of account at the business premises and does not allow for a general notice requiring the production of all books of account. The court noted that section 31(1) allows the Commissioner to require any dealer to produce accounts, registers, etc., but this power is not arbitrary and must be exercised with due regard to not disturbing the dealer's business unnecessarily. The court found the notice issued under section 31(1) to be illegal as it amounted to reopening completed assessments without fulfilling the conditions under section 11 of the Act. The court held that such an omnibus notice is not contemplated by law and may lead to fishing and roving enquiries, which are impermissible.

2. Legality of the Search and Seizure Without a Search Warrant:
The petitioner contended that the search and seizure conducted without a search warrant violated section 31(4) of the Act. The court observed that no reasons were recorded in writing by the Commissioner, and no search warrant was issued by a Magistrate, as required under section 31(3) and (4). The court referenced decisions from the Karnataka and Mysore High Courts, which emphasized the importance of procedural safeguards in searches and seizures. The court concluded that the search and seizure conducted on September 19, 1989, was illegal and liable to be quashed.

3. Constitutionality of Section 31(3):
The petitioner argued that section 31(3) confers uncontrolled, arbitrary, and unreasonable powers on the taxing authority, violating article 19(1)(g) of the Constitution. However, the court noted that no arguments were advanced on this point during the hearing, and thus, it did not discuss this aspect of the matter.

4. Reopening of Completed Assessments:
The petitioner asserted that the assessment for the period ending September 30, 1986, had already been completed, and the Inspector of Taxes was not justified in directing the production of books of account from April 1, 1985, to September 19, 1989. The court agreed, stating that section 31(1) cannot override the mandatory provisions of section 11 and that reopening completed assessments without fulfilling the conditions prescribed under section 11 is not permissible.

5. Violation of Fundamental Rights:
The petitioner claimed that the seizure of books of account without complying with the provisions of the Act violated their fundamental rights. The court held that the search and seizure were not conducted in accordance with the law, thereby violating the petitioner's rights. The court ordered that all books of account seized from the petitioner be returned within 15 days.

Conclusion:
The writ petition was allowed, and the search and seizure conducted on September 19, 1989, were declared illegal and quashed. The petitioner was entitled to the return of all books of account seized. The court did not address the constitutionality of section 31(3) due to the lack of arguments on that point. Each party was ordered to bear their own costs.

← Previous Next →