1967 (8) TMI 126 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Constitutionality of Sub-sections (3), (4), and (6) of Section 22 of the Rajasthan Sales Tax Act, 1954.
2. Compliance with the procedural requirements of Sub-sections (3) and (6) of Section 22 by the respondent in seizing the account books and goods.

Detailed Analysis:

1. Constitutionality of Sub-sections (3), (4), and (6) of Section 22 of the Rajasthan Sales Tax Act, 1954:

Article 19(1)(f) and (g) Analysis:
- The court examined whether the provisions impose reasonable restrictions on the fundamental rights guaranteed under Article 19 of the Constitution. The provisions aim to prevent tax evasion, which is in the general public interest.
- The court noted that the temporary deprivation of account books due to seizure is a reasonable restriction. The account books are to be retained only as long as necessary for examination, inquiry, or prosecution.
- The requirement to record reasons in writing before seizure is a safeguard against arbitrariness and allows for scrutiny by higher authorities, such as the Board of Revenue.
- The court found that the provisions are not disproportionate to the evil sought to be remedied, i.e., tax evasion, and thus do not violate Article 19(1)(f) and (g).

Article 14 Analysis:
- The powers under Section 22 are to be exercised for the purposes of the Act, guided by the policy of collecting tax and preventing evasion.
- Sub-section (3) requires the authority to have "reason to suspect" and to record reasons in writing before seizure, providing safeguards against arbitrary action.
- Sub-section (6) allows for the seizure and confiscation of unaccounted goods, with provisions for a hearing and inquiry as per Rule 51-A.
- The court held that these provisions are not uncanalised or arbitrary and do not violate Article 14.

2. Compliance with Procedural Requirements of Sub-sections (3) and (6) of Section 22:

Preliminary Objections:
- The court dismissed the preliminary objections regarding the alternative remedy under Section 14 and alleged suppression of material facts. The petitioner challenged the vires of the Act, a matter beyond the revisional authority's scope.
- The court found no deliberate suppression of material facts by the petitioner.

Compliance with Sub-section (3):
- The notice Ex. P/5 indicated that the officer had information suggesting tax evasion, satisfying the "reason to suspect" requirement.
- However, the notice failed to record reasons for the seizure, a separate requirement under Sub-section (3). The court emphasized that merely stating suspicion does not fulfill the statutory requirement to record reasons for seizure.

Compliance with Sub-section (6):
- The subsequent notices Ex. P/6 and Ex. P/7 were found deficient. Notice Ex. P/6 did not specify the tax amount, making it impossible for the dealer to understand the demand for four times the tax.
- Notice Ex. P/7 reiterated the demand without clarifying the tax amount, indicating a lack of proper inquiry and determination of tax.
- The court found these notices to be issued in haste, failing to comply with the procedural requirements of Sub-section (6).

Conclusion:
- The court quashed notices Ex. P/5, Ex. P/6, and Ex. P/7 due to non-compliance with statutory requirements.
- The court directed the respondents to return the goods seized on 19-9-66 and allowed for fresh proceedings to be initiated in accordance with the law.

Costs:
- The petitioner was awarded the costs of the petition.