1991 (9) TMI 336 - HC - VAT and Sales Tax

Summary

Issues:
Constitutional validity of provisions on search and seizure under the Haryana General Sales Tax Act, 1973 challenged.

Analysis:
The judgment addressed the constitutional validity of the provisions related to search and seizure under the Haryana General Sales Tax Act, 1973. The provisions in question were sub-sections (3) and (4) of section 36 of the Act. These provisions allowed for the seizure of books, accounts, registers, or documents if there are reasonable grounds to believe that a dealer is attempting to evade tax liability. The seized items must be returned within specific time limits, and if retention is required beyond that, written reasons and approval from the Commissioner are necessary. Additionally, entry and search at a dealer's place of business require certain conditions to be met, including obtaining the sanction of specific authorities for searching a dwelling house.

The primary contention raised was that the provisions granted unguided power of search and seizure, potentially violating articles 14 and 19(1)(f) and (g) of the Constitution. It was argued that the lack of a requirement to record reasons for suspecting tax evasion before conducting a search was problematic. Reference was made to a Supreme Court judgment regarding similar provisions in a different Act, emphasizing the importance of procedural safeguards like those in section 165 of the Code of Criminal Procedure. However, a Full Bench judgment from the High Court of Allahabad was cited to counter these contentions, affirming the constitutionality of similar provisions in the U.P. Sales Tax Act, 1948.

The judgment highlighted that the power of seizure is not unfettered, as specific conditions must be met before exercising the powers under the Act. The court emphasized that the power would only be used when necessary and when obtaining the relevant documents through other means is not feasible to prevent tax evasion. It was also noted that similar powers of search and seizure exist in the Income-tax Act, which have been upheld by the Supreme Court previously, indicating the legality and constitutionality of such provisions.

Ultimately, the court held that sub-sections (3) and (4) of section 36 of the Act were intra vires and valid based on established legal precedents. The matter was remitted to the single Judge for further proceedings on the writ petition.