2022 (5) TMI 559 - HC - VAT and Sales Tax

Search and Seizure - failure in filing regular monthly returns/statements as required to be filed in respect of the consignment of taxable goods transported by it - only ground of the challenge is that the respondent no. 5 was not a member of the vigilance group or wing on the date when the search and seizure was made - HELD THAT - In the present proceedings, the departmental authority, upon information received, proceeded to examine the books of accounts and registers maintained by the petitioner No. 1, who is a transporter. This search was admittedly made in the place of business of the petitioners. Pursuant to the seizure of books of accounts and registers, notices were issued to the petitioner No. 1 to appear before the Assessing Officer and to explain the books of accounts and/or the registers seized - In order to recover the outstanding taxes and penalty due from the petitioner, recovery proceeding had been initiated which, however, was stayed by orders of this court passed in the present proceedings. Under section 44 it is clearly provided that any authority appointed under sub-section (1) of section 3, besides requiring any dealer to produce books of accounts, registers or documents or information relating to any transaction, is authorized, for reasons to be recorded in writing, to seize such books of accounts, registers or documents of any dealer including persons transporting goods or any owner of warehouse/godown. Therefore, it is clear that under the provisions of the Act, an authority prescribed under section 3(1) will be an authority who is empowered to proceed for search and seizure of any records, registers, books of accounts relating to any transaction - In the present case, respondent no. 5 is a Superintendent of Taxes and is one of the officers of the State who is vested with the powers for search and seizure under section 44, by virtue of the powers vested on him under section 3 of the Act. It is not the case of the petitioners that it is only an officer under the enforcement group/wing who is competent to conduct search. Rather, it is petitioners case that the respondent no. 5 misrepresented himself to be a member of the vigilance group or wing and conducted search on the date on which the respondent no. 5 had not been made a member of such group or wing. In view of the mandate of section 3 of the Act of 1993, even if the petitioners contentions are to be accepted that the impugned search was conducted by the respondent no. 5 without actually being a member of the vigilance group or wing on the date when the search was conducted, the respondent no. 5 is admittedly a Superintendent of Taxes and, therefore, an officer authorized to assist the Commissioner of Taxes for carrying out the provisions of the Act as prescribed under section 3 of the Act of 1993. Section 44 of the Act permits search at business premises and seizure of books of accounts, documents, registers etc. - in the absence of any challenge made by the petitioner regarding the powers under section 3 not being available to respondent no. 5, the mere fact that the respondent no. 5 may not have been a member of vigilance wing/group on the date when the search was conducted will not prevent an officer appointed under section 3 of the Act to conduct such search and seizures for reasons to be recorded. There is no bar under the Act that officers in the rank of respondent no. 5 and below are not the competent officers to carry out any search or seizure prescribed under section 44 of the Act of 1993. No such averment is made by the petitioners as well. In the present case, even if this court comes to a finding that the search and/or seizure made against the petitioners is not as per the provisions of law, then the evidence collected and the materials recovered against the petitioners can be used by the department, if otherwise found admissible, in the proceedings provided for under the Act of 1993 - There are statutory provisions available to the petitioners for taking recourse to for statutory remedies in respect of any assessments made pursuant to the search and seizure. Such remedial measures have, however, not been taken recourse to by the petitioners. The sole ground of the challenge made to the entire proceedings is the lack of jurisdiction of the respondent no. 5 in conducting the search and seizure operation. The respondent no. 5 is a competent officer as prescribed under section 3 of the Act and no challenge to the authority or power of the officers empowered under section 3 of the Act have been made by the petitioner. The only ground of the challenge is that the respondent no. 5 was not a member of the vigilance group or wing on the date when the search and seizure was made - the materials recovered during a search, which may not have been conducted as per the provisions of law, are also admissible in evidence and it is permissible to take consequential actions under the provisions of law, as have been done in the present case. There are no merit in the present writ petition and the same is, therefore, dismissed.

Summary

Issues Involved:
1. Jurisdiction of respondent no. 5 to issue notices and conduct search and seizure.
2. Legality of the search and seizure conducted by respondent no. 5.
3. Validity of the assessment proceedings and subsequent recovery of taxes and penalties.
4. Admissibility of evidence obtained through the allegedly unauthorized search.

Detailed Analysis:

1. Jurisdiction of Respondent No. 5:
The petitioners questioned the jurisdiction of respondent no. 5, arguing that he was not a member of the Vigilance Group as required under section 45 of the Assam General Sales Tax Act, 1993 (Act of 1993). The respondents countered that the Central Vigilance Group was constituted by the Commissioner of Taxes and reconstituted later. The court noted that respondent no. 5, as a Superintendent of Taxes, was an officer authorized under section 3 of the Act of 1993 to conduct search and seizure, regardless of his membership in the Vigilance Group.

2. Legality of the Search and Seizure:
The petitioners contended that the search and seizure were illegal as respondent no. 5 misrepresented himself as a member of the Vigilance Group. The court found that even if respondent no. 5 was not a member of the Vigilance Group, he was still empowered under section 3 and section 44 of the Act of 1993 to conduct search and seizure. The court emphasized that the absence of a Vigilance Group membership did not invalidate the search and seizure if the officer was otherwise authorized.

3. Validity of the Assessment Proceedings and Subsequent Recovery:
The petitioners challenged the assessment proceedings and the recovery of taxes and penalties on the grounds of jurisdiction. The court observed that the Act of 1993 provided for appeals and revisions against such assessments. The court held that the petitioners should have utilized these statutory remedies instead of questioning the jurisdiction of the officers in the writ petition. The court upheld the validity of the assessment proceedings and the subsequent recovery actions.

4. Admissibility of Evidence Obtained Through the Allegedly Unauthorized Search:
The court referred to the precedent set by the Supreme Court in Pooran Mal vs. Director of Inspection (Investigation) of Income-Tax, which held that evidence obtained through an illegal search could still be used for assessment purposes. The court concluded that even if the search was unauthorized, the materials recovered could be legally used for tax evaluation and consequential orders under the Act of 1993.

Conclusion:
The court dismissed the writ petition, finding no merit in the petitioners' arguments. It held that respondent no. 5 was a competent officer under section 3 of the Act of 1993 and that the search and seizure, as well as the subsequent assessment and recovery proceedings, were valid. The court also affirmed the admissibility of evidence obtained through the search, even if it was conducted without proper authorization.