9911796707
TMI Blog1981 (4) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the period from 1969-70. They were also asked to explain the books of account and records as seized. It is the case of the petitioners that they have been duly and regularly paying sales tax, without any complaint from anybody and as such it has claimed that the said memo dated 7th August, 1973, was absolutely illegal, without jurisdiction, baseless, apart from being unwarranted. The petitioners, of course, gave their reply by their letter dated 27th August, 1973, to the officer concerned, informing thereby that they were deputing their representative, Shri Ram Chandra Sharma, to explain the case. In fact, it has been claimed that the said Shri Sharma appeared before the authorities concerned and made submissions on and explained the books of account. It has been claimed by the petitioners that in the facts of the case, there was no question of evasion of tax and such question would arise only after the assessment is completed and before that the Commercial Tax Officer was not competent to consider any tax return as false, inasmuch as before the assessment is completed, any dealer, can submit revised return in lieu of the return already filed. The petitioners have claimed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des inter alia that if an Inspector or a Commercial Tax Officer seizes any books of account, registers or documents under section 14 of the said Act, he shall not retain them beyond 21 days, without the written sanction of the Assistant Commissioner. It further provides that no Inspecting Officer shall retain such books for more than 42 days without the sanction of the Commissioner. On perusal of such rules and construction of the same, the petitioners have contended that those rules go to show that the Additional Commissioner concerned, being respondent No. 4 in this case, was not the person competent in law to retain the books of account and/or necessary documents for more than 21 days. It has been claimed that when the statute provides for something to be done in a certain manner, the same cannot be done ignoring the statute and if the same is done, such action would be invalid and bad in law. It was the specific case of the petitioners that in the instant case the books of account and/or documents which were seized on 3rd August, 1973, was being wrongfully withheld by the authorities concerned. It has been claimed further that under section 20(3) of the said Act, a person agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or modification thereof. It should also be noted that on 15th September, 1975, after hearing the learned Advocates, the court directed that the respondents will proceed with the assessment proceedings and complete the same on examining the books of account already seized in the presence of the petitioners in the main rule, after due notice to them. It was further directed that the order of assessment may be made, but the same must not be given effect to or a demand should not be raised thereon and no communication of the order should be made to the petitioners. There was the specification and direction that the said proceedings will, however, be subject to the result of the rules, and in case the petitioners succeed in the main rule, all proceedings will be quashed. While making such order the court had further given liberty to the respondents to file affidavit-in-opposition within a stipulated time as mentioned above. Even in spite of such directions no affidavit was filed and the prayer for extension of time for filing such affidavit having been refused by this Court, Mr. S.N. Dutta, appearing for the answering respondents, stated that the statement made in the application for v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed that necessary satisfaction, which should be subjective, or the reasons to believe as was and is required of a reasonable man was not duly formed. In fact, it was claimed that the entire action was taken on caprice and whims, and that too, without the existence of reasons to believe that the petitioners were in default. Rule 71 of the Bengal Sales Tax Rules, 1941, speaks of delegation of the powers of the Commissioner, in appropriate cases, to the authorities as mentioned in column 4 of the concerned list, and on the basis of such list, it was contended that there was no due delegation for steps to be taken or initiated or directions given under section 14 of the said Act, which lays down the powers of the Commissioner to have or direct production and inspection of accounts and documents or to give directions to search a premises. It was specifically contended that such power having been vested with the Commissioner, and there having been no due delegation of such powers, in terms of the rules as mentioned above, to the officers who took or initiated the action, the action as taken or initiated cannot be allowed to be continued. It was then contended that since the time to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner to the Assistant Commissioner to revise an order passed by the Commercial Tax Officer would not become infructuous or non est by the Commissioner vacating the office before the issue by the Assistant Commissioner of the notice to revise the order. In such a case, in the absence of a revocation by the Commissioner, which could be done, the successor-in-office must be deemed to have accepted and approved of the delegation made by the predecessor. All actions taken by the erstwhile Commissioner in his official capacity are valid and continue as if the same are the own acts of his successor-in-office under the authority of law unless revoked or otherwise modified or abrogated and under the Bengal Finance (Sales Tax) Act, 1941, even though there is no express provision for assessing escaped turnover, the power of revision conferred on the Commissioner is of the widest amplitude and such a power cannot be circumscribed or limited so as to exclude assessment of escaped turnover, which will be contrary to the clear and unambiguous provisions of section 20(3), apart from relying on the determinations in the case of Sheonath Prasad v. State of Bihar [1968] 22 STC 488 (SC); AI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions that the notice as issued was valid, Mr. Dutta referred to the determinations of this Court, in the case of Balihari Colliery Co. Ltd. v. Commercial Tax Officer [1957] 8 STC 194, where it has been observed that the Commercial Tax Officer issued a notice under section 11(2) of the Bengal Finance (Sales Tax) Act, 1941, read with section 15 and rule 71, but it was contended that as under section 11 the issue of a notice depended upon the Commissioner's satisfaction which must be based upon information which had come into his possession, there could be no proper delegation of the Commissioner's power under that section, and therefore the notice issued by the Commercial Tax Officer was invalid: Held, that the Commercial Tax Officer derived both power and jurisdiction by virtue of the delegation and that it was he who had to be satisfied and such satisfaction was to be grounded upon information which had come into his possession and therefore the notice issued by the Commercial Tax Officer under section 11(2) was valid. Apart from holding that the proper way of interpreting the Act and the Rules was that the Commissioner had a right to delegate and once he had delegated the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, to all search and seizure. It should be remembered that section 14 of the said Act does not invest the officers concerned with police power or ordinarily with general and indiscriminate powers of entry into and search of all places. Such power of search, as mentioned hereinbefore, is intended to act and operate as an effective deterrent against tax-evaders. The said Act confers wide powers to the sales tax authorities to inspect the account books of the dealers and for that purpose, even to pay surprise visits to his shop, and the dealer concerned is under the legal obligation to allow the authorities to effect such inspection of the account books and other relevant records. The legality of search and seizure would be subject to judicial control. In the case of Commissioner of Income-tax v. Mahabir Prasad Poddar [1974] 93 ITR 215, where the question of approval or sanction to be accorded by a higher authority was in issue, it has been observed that where an order has the effect of depriving a person of his right to property or otherwise affecting him prejudicially, the same to be effective and valid must be communicated to the concerned party. Thus, it appears that until the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orised and as such inoperative also. If the Commercial Tax Officer was to make an assessment based upon the satisfaction of the Commissioner, he would be exercising no power at all on his behalf, but would be carrying out a mechanical duty, an embarassing and anomalous position, in that event, would arise, and that too since or when satisfaction would be of the Commissioner or by him, based on informations communicated to him, when appeal would lie to the Commissioner from the order as made by the Commercial Tax Officer. As such, in the case of Balihari Colliery Co. Ltd. v. Commercial Tax Officer [1957] 8 STC 194, it has been observed that the proper way of interpreting the said Act and the Rules framed thereunder would be that the Commissioner had or has the right to delegate and once he has delegated such power, the name of the delegate should be substituted for that of the Commissioner. Under the scheme of the said Act, the Commissioner is the sole repository of all powers. The statutory provisions and the division of work under the same and the Rules as framed thereunder have been found to be intra vires, and the argument that an appeal against an order deemed to have been pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earched by us. The seizure of some books of account and documents were made from the dealer's place of business, a copy of the seizure list was handed over to Sri Ogarhmull Choudhury, partner, and read over and explained to him in Hindi, and the reasons for seizure, were to the following effect: As we have reasons to suspect that M/s. Ogarhmull Choudhury and Company of 26, Burtolla Street, Calcutta-7 (unregistered), attempted to evade payment of tax under the Bengal Finance (Sales Tax) Act, 1941, we have seized the following accounts and records of the said dealer from Sri Ogarhmull Choudhury, partner, under section 14(3) of the said Act, as these records are considered to be necessary for the purpose of taking action under the provisions of the said Act. 1.. (A B) Two dalali books (signed on first written page of each). 2. (A B) Two diaries containing miscellaneous accounts (signed on inside cover of each). 3. (A to C) One diary and two exercise books containing miscellaneous accounts (signed on inside cover of each). 4. One flat file containing copies of telegrams (signed inside cover). Total 4 (four) items in 8 (eight) pieces only. Sd/P. Ghose Roy 3-8-73 Receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the nature and relevance of the documents sought to be seized, having regard to the object for the seizure and must also refer to the circumstances, for which, it was considered necessary to seize them. In the case of Ogarhmull Choudhury Co. v. Commercial Tax Officer [Civil Rule No. 4186 (W) of 1973 decided on 23rd May, 1978-Calcutta High Court] page 126 infra, the delegation of powers by the Commissioner to the Inspectors concerned was not produced, and as such, it was observed that in the absence of such documents, it would not be safe to hold that there was proper and due delegation. That apart, considering the provisions of the said Act and the Rules as framed thereunder, it was found that the satisfaction of the Commissioner, which should be a personal one, is a prerequisite for the action to be taken and if such action is resorted to, the same would not be reasonable, as it should be the personal satisfaction of the Commissioner, which is required, for necessary initiation and the satisfaction of the Inspector in that case (which incidentally was also the fact in this case) cannot certainly be the satisfaction of the Commissioner. It has also been observed that such sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to the petitioners, apart from the fact that the original of the authorisation was not produced and there is no appropriate legal evidence available in respect of the satisfaction of or by the Commissioner. As such, I find that the present case comes fairly and squarely within the determinations in the case of Ogarhmull Choudhury Co. v. Commercial Tax Officer [Civil Rule No. 4186 (W) of 1973 decided on 23rd May, 1978-Calcutta High Court] page 126 infra, which was made on the basis of the other determinations, as referred to hereinbefore. I further hold, on the facts of this case, that there was no satisfaction duly made before the seizure in question by the Commissioner to the effect that the dealer was attempting to evade payment of tax and the retention of the books in the circumstances, as indicated above, was also improper. As such, the arguments of Mr. Dutta, appearing on behalf of the respondents, fail, so also the rule should succeed and, thus I make the same absolute. There will be no order as to costs. This order will not of course prejudice the respondents now from proceeding further or taking any steps in accordance with law. Rule made absolute. Appendix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be entitled to the reliefs as claimed or to maintain this petition for the prayers as made. Admittedly, there was ex parte assessment by the Commercial Tax Officer, Central Section, against the petitioner, for the periods for the 4 quarters ended Kartik Badi 14, Sambat years 2028 and 2029. Those assessments have been alleged by the said petitioner to be void ab initio, illegal and without jurisdiction apart from the fact that they were in violation of the principles of natural justice and were mala fide too. However, being dissatisfied with the said assessment orders, the said petitioner preferred necessary appeals to the Assistant Commissioner, Commercial Taxes, Central Section, and those appeals have been stated to be pending. The said petitioner has also stated that on or about 7th May, 1973, it made separate applications for stay of realisation of the amounts, which according to it, were wrongfully assessed by the Commercial Tax Officer concerned, until the final disposal of the connected appeals and by the letter of 14th May, 1973, it was informed that by 3 separate orders, all dated 12th May, 1973, the 3 stay petitions, as mentioned hereinbefore, have been rejected. Aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of such fact, it has carried on business without getting itself registered and possessing registration certificate which was required in terms of the provisions of section 7 of the said Act. This action on the part of the said petitioner, the answering respondents have stated, to have been taken with a view to evade the payment of sales tax. The answering respondents have also made it clear that those officers who were and are Inspectors of Commercial Taxes, Bureau of Investigation, then seized the records and documents in question under section 14(3) of the said Act, prepared a list of them and handed over a copy thereof to the said petitioner through the said Sri Ogarhmull Choudhury. It has also been contended by the answering respondents that although the inspection report was written in English by the officers concerned and who were so empowered, the contents of the same were read over and explained by the said officers to the said Sri Ogarhmull Choudhury. The seizure as aforesaid and as made under section 14(3) of the said Act, has been contended by the said petitioner to be invalid, irregular, bad, void and without jurisdiction, apart from that fact that the same was made w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1941, we have seized the following accounts and records of the said dealer from Sri Ogarhmull Choudhury, partner, undersection 14(3) of the said Act, as these records are considered to be necessary for the purpose of taking action under the provisions of the said Act. 1.. (A B) Two dalali books (signed on first written page of each). 2. (A B) Two diaries containing miscellaneous accounts (signed on inside cover of each). 3.. (A to C) One diary and two exercise books containing miscellaneous accounts (signed on inside cover of each). 4.. One flat file containing copies of telegrams (signed inside cover). Total 4 (four) items in 8 (eight) pieces only. Sd/P. Ghose Roy 3-8-73 Received copy. Sd/P.G. Saha 3-8-73 Inspectors of Commercial Taxes-cumInvestigation, Bureau of Investigation, Stephen House, 4th Floor, Calcutta-1. Dt. 3-8-73 Time 5-30 P.M. Signature ................." On a reference to the reasons as recorded, particulars whereof have been incorporated hereinbefore, Mr. R.N. Datta appearing in support of the rule, apart from contending on the illegality and irregularity of the said reasons, and seizure conducted on the basis thereof, submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner has in fact challenged the validity of the search and seizure dated 3rd August, 1973, under section 14(3) of the said Act, contending, inter alia, amongst others that there was no material for formation of the belief that they were attempting to evade payment of any tax. It has been asserted, as stated hereinbefore, that the condition precedent for the seizure was not fulfilled also. It was further submitted by Mr. R.N. Datta that the retention of the books beyond the statutory period was illegal. Mr. Samarendra Nath Datta, appearing for the answering respondents, on reliance to the scheme of the said Act and more particularly sections 7, 11, 12, 15, 20 and rule 71 submitted that the delegation of powers by the Commissioner to the officers concerned or the Commercial Tax Officer, as in the instant case, was possible and permissible. He submitted with reference to the report that the same, on due delegation of powers, was made by the officers concerned on 3rd August, 1973, and the same was duly approved by the Commercial Tax Officer on 6th August, 1973. The fact about the search and seizure by the Inspecting Officers have not been disputed and it has been stated that it a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 14, he shall not retain them beyond twenty-one days without the written sanction of the Assistant Commissioner and no inspecting officer shall retain such books for more than forty-two days without the sanction of the Commissioner. Such sanction has been contended to have been granted duly and in appropriate exercise of power and jurisdiction, apart from on due application of mind. It has also been contended that in granting such sanction, the principles of natural justice, as alleged, have not been violated. It has further been stated by the respondents that the Commercial Tax Officer concerned, at all material times and even on the date of the search and seizure, did not cease to be an officer under the said Act and the contentions as raised on that behalf were categorically denied. These apart, it was submitted by the respondents that the West Bengal Ordinance No. 5 of 1973 or the provisions thereunder were valid legislations and duly empowered the Bureau of Investigation to take actions, as were taken in the instant case. The satisfaction under section 14(3), as observed in the case of Prahlad Ram v. State (Criminal Revision No. 828 of 1960 decided by the Patna H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of documents and records, seized under section 14 of the said Act, beyond the period prescribed for such retention, makes the retention unauthorised, illegal, irregular and void. The approval as and if obtained, must also be made known to the assessee for enabling him to file objections and in the absence of such act, the retention would become void and inoperative. It is also the view of this Court in the case of State of West Bengal v. Oriental Rubber Works [1977] 39 STC 333; 1977 Tax LR (Notes) 5 that: "Seizure under section 14(3) can be made only on an objective consideration, viz., relevance of the documents to suspected case of evasion of payment of tax under the Act and the necessity of seizing them for detection or avoidance of such evasion. Furthermore, the reasons obviously based on such objective considerations are to be recorded. It would be no compliance with the provision to merely quote the language of the sub-section and then seize the documents. Reasons recorded must by themselves indicate that they are so recorded based on objective consideration. They must indicate the nature and relevance of the documents sought to be seized, having regard to the object for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less, apart from the fact that there were no materials for the formation of the belief that the dealer was attempting to evade payment of any tax. The formation of belief is certainly a condition precedent for the exercise of powers under section 14(3). The reasons for the seizure in the instant case, as annexed to the petition, is not a correct one and the correct reasons have been incorporated hereinbefore, from the records as produced. The delegation of powers by the Commissioner in the instant case and to the Inspector as referred to hereinbefore, which he had power to do, has not been produced. In the absence of such document or record, I am of the view that it would not be safe to hold that there was due or proper delegation. These apart, considering the provisions of the said Act and the Rules as mentioned hereinbefore, I am of the view that the satisfaction of the Commissioner, which is a personal one and is a prerequisite for the action to be taken, cannot be delegated. At least such action, if resorted to, would not be reasonable, as it is the personal satisfaction of the Commissioner, which is required for necessary initiation and the satisfaction of the Inspectors, as i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
