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2015 (5) TMI 831 - HC - Indian Laws


Issues Involved:
1. Legality of the search conducted by the Enforcement Wing of the Commercial Tax Department.
2. Jurisdiction and authority to assess and recover tax from the petitioner.
3. Power of inspection and search under the Hyderabad Horse Racing and Betting Tax Regulation of 1358 F.

Issue-wise Analysis:

1. Legality of the search conducted by the Enforcement Wing of the Commercial Tax Department:
The petitioner argued that the search conducted on 07.08.2000 at the residence of one of the partners was illegal and without jurisdiction. The petitioner contended that the Regulations and Rules empower entry only into the Race Course and not into residential premises. The court, however, found this argument unconvincing. Regulation 18(2) allows authorized officers to inspect and take copies of accounts from any place, not just the Race Course, when there are allegations of suppressed turnover or illegal retention of tax monies. Therefore, the search and recovery of documents were deemed legal and within jurisdiction.

2. Jurisdiction and authority to assess and recover tax from the petitioner:
The petitioner claimed that there was no provision for assessment under the Regulations, and thus, the respondent had no authority to initiate proceedings to recover tax. The court agreed with this argument, stating that under the Hyderabad Horse Racing and Betting Tax Regulation of 1358 F. and the Rules, there is no provision for the assessment of tax recoverable from the book-maker. The Regulations only provide for the recovery of monies as public demand but do not empower the respondent to assess and determine the tax payable by the petitioner. Consequently, the respondent's actions to initiate proceedings and issue a show-cause notice were deemed without jurisdiction and authority.

3. Power of inspection and search under the Hyderabad Horse Racing and Betting Tax Regulation of 1358 F.:
The court clarified that under Regulation 18(2), it is obligatory for licensed book-makers to maintain accounts and permit authorized officers to inspect and take copies of such accounts. This power of inspection extends beyond the Race Course to any place where relevant accounts or materials may be found. Thus, the respondent's authority to inspect the premises of licensed book-makers, including places other than the Race Course, was upheld.

Conclusion:
The court held that while the respondent had the authority to inspect the premises of licensed book-makers, it did not have the jurisdiction to proceed with assessment proceedings for alleged suppressed turnover under the current scheme of the Hyderabad Horse Racing and Betting Tax Regulation of 1358 F. The court suggested that the state should consider new legislation to address the lacunae in the Regulations to prevent revenue leakage. The writ petitions were disposed of accordingly, with no order as to costs.

 

 

 

 

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