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TMI Blog1983 (7) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... f have been mentioned in paragraph 3 of the petition. It was their specific case that the sales were and are almost exclusively confined to the State Electricity Boards as mentioned in the said paragraph 3. It was also the case of the petitioners that their accounting year ends on the day of Marwari Dewali i.e., on the 15th day of Kartick Bodi of each Sambot year, and their assessment for the year ending Kartick Bodi 15, 2029, was already completed at the time of obtaining the Rule. It has been stated that from the beginning of Sambot year 3032 which was corresponding to November, 1975, the petitioners were experiencing acute financial crisis and taxes to the tune of over Rs. 4 lakhs fell due and payable by them under the said Central Act and their assessments for the periods of four quarters ending Kartick Bodi 15, 2026, and Kartick Bodi 15, 2027, have also been completed by the Commercial Tax Officer, Shyambazar Charge, on 11th May, 1973, and 6th May, 1974, respectively. The petitioners have further stated that the period of 6 years from the end of the assessment periods relating to four quarters ending Kartick Bodi 15, 2026 and four quarters ending Kartick Bodi 15, 2027, expir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... keep or maintain books required under the several statutes relating to the employees. That apart, it has been stated that the said Shri Daw is also carrying on a private business of his own and out of sympathy, the petitioners have allowed him sometime to keep his books of account in the factory premises of petitioner No. 1 as mentioned above. It was also the case of the petitioners that petitioner No. 1 had also some small commercial dealings with the said Shri Daw, respondent No. 5. It has been alleged that when the seizure of the books were made, the petitioners through their representatives repeatedly requested the Commercial Tax Officer concerned, respondent No. 3, and the other Inspectors assisting him, that the books belonging to the said Shri Mahadeb Daw which were item serial Nos. 6 and 7 of the seizure receipt, must not be seized and they also objected to any seizure to be made by Shri Mitra and his officers on the ground that they had no materials in their possession, wherefrom they could have reason to believe or reasons to suspect that petitioner No. 1 had evaded tax or was evading the same. It has further been alleged that after such seizure, respondent No. 3 as men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said Act, which was dated 2nd March, 1977, requested the petitioners to appear before him on 24th March, 1977, with all books of account and connected documents relating to their business for the period from 2025-26 Dewali till date of production except those records which were already in his custody, for his examination. A further direction was given by the said officer, to explain the books/records as seized, on 21st February, 1977. Section 14 deals with production and inspection of accounts and documents and search of premises and sub-section (1) thereunder provides that the Commissioner may, subject to the conditions as may be prescribed, require any dealer (a) to produce before him any accounts, registers or documents, (b) to furnish any information, relating to the stock of goods of, or purchases, sales or deliveries of goods by, the dealer or relating to any other matter, as may be deemed necessary for the purpose of the said Act. Compliance to such demand as made by the officer concerned, was admittedly delayed by the petitioners for one reason or the other as the petitioners asked for repeated adjournments whereupon on 16th July, 1977, the officer concerned, respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the petitioners served the respondents concerned with a copy of an application under article 226 of the Constitution together with a notice of motion informing them that such application would be moved on 2nd August, 1977. It has been stated now that as the said application could not be moved effectively on the date as mentioned above, on 4th August, 1977, petitioner No. 1 through his learned Advocate prayed for further adjournment of the hearing of the case which was fixed on 4th August, 1977. From the above conduct of the petitioners it would be clear and apparent and that is to the effect that the petitioners were trying to gain time for moving the court and such act or action was claimed by the respondents to be not bona fide. The petitioners have stated that section 14 of the said Act empowers the Commissioner to inspect, search and seize of the books of account and documents of any dealer subject to such condition as prescribed under the said Rules and such power of inspection of books of account and documents of the dealer and detention thereof, are prayed for in section 14(3A)(1) of the said Act. It has also been stated by them that rule 17A of the said Rules provides t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o claimed to be improper and without any basis or in compliance with the Rules as mentioned above. In any event, it was claimed that there was no material in existence, wherefrom the authorities concerned could reasonably hold the suspicion or form such view that the petitioners had evaded or were attempting to evade taxes. Such being the position, it has been claimed that there was no material basis for the formation of opinion in the instant case which according to the petitioners was necessary. That apart, it has been claimed that while conducting the search and seizure, the safeguard under section 165 of the Code of Criminal Procedure, viz., that the authorities should have reasonable ground for believing that anything necessary for the purpose of recovery of tax might be found and that there should be opinion that those things could not be otherwise got without undue delay, was not validly complied with. Such and above being the position and there having been, according to the petitioners, admitted violations of statutory provisions, it has further been claimed that the actions as taken have contravened the guarantees as provided for under articles 14 and 19(1)(f) and (g) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng at the head office as mentioned above. It has further been stated by the deponent that prior to this, the authorities concerned had no knowledge about the existence of the petitioners' city office at 4, Shakespear Sarani, Calcutta and they came to know of such place, on being disclosed by the petitioners' men, while examining the records brought from the factory. It was the categorical case of the deponent that search was conducted only at the places where the records were available and found. He has denied that the name of Mahadeb Daw, respondent No. 5, was written as owner of the diary as mentioned above. According to him, it appeared that entries in the diary represented transactions relating to petitioner No. 1 kept by the said respondent No. 5 in the diary. He has further stated that there was no indication that either the diary or the other small book belonged to the said respondent No. 5 and on the contrary, it appeared from the entries that the receipts in respect of suppressed sale of petitioner No. 1, was recorded in the small book. It has further been stated that no seizure was made at the factory premises of the petitioners and the search and seizure at the city ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id list was prepared, after noting all the documents and papers as seized. This seizure list was also claimed to be signed by the said Shri Sinha without any objection. The story of financial crisis as put forward by the petitioners and the validity of the same, has been denied by the deponent and it was his specific case that in order to evade the payment of tax, the petitioners did not pay the admitted amounts of taxes and thus a huge amount of tax became due. The deponent has further narrated the circumstances in which the proceedings, on the prayer of the petitioners, had to be adjourned and how time was consumed by them. He has further stated that a similar application was moved on 2nd August, 1977, before Sudhamoy Basu, J. (as His Lordship then was), and His Lordship, after hearing the matter for some time was pleased to express that he was not satisfied that in the facts and circumstances, "a rule should be issued". It has been stated that on such, the learned Advocate for the petitioners' at that time withdrew the said application. In such circumstances and the more so when no liberty was obtained for moving afresh, it has been claimed that this application must not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... davit-in-opposition, have been categorically denied. The language of section 14(3) the said Act is "reason to suspect". For the purpose of construing the said section reference was made by Mr. Bhattacherjee firstly to the case of Commissioner of Commercial Taxes v. R.S. Jhaver [1967] 20 STC 453 (SC). In that case, it has been observed that it is within the competence of the legislature to make all such incidental and ancillary provisions as may be necessary to effectuate the law; particularly in the case of a taxing statute, it is open to the legislature to enact provisions which would check evation. It has been stated that this power included the provisions has been held to be reasonable restrictions on the fundamental rights. In that case it has also been observed that the provision of the Code of Criminal Procedure (section 165), apply mutatis mutandis to all search and seizure and the safeguards under that section are that the authorities should have reasonable grounds for believing that anything necessary for the purpose of recovery of tax might be found in the place and that, they should be of opinion that such thing should not be otherwise got without undue delay, that g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that apart, it must be found out if such suspicion is formed or entertained reasonably as a reasonable man. The duty to be satisfied would mean and postulate the satisfaction to be duly arrived at and that should be a condition precedent for the exercise of power of seizure under section 14 of the Act and the powers under sections 14 and 14A of the Act are meant for taking steps to prevent evasion of tax and such power, if exercised, is only administrative and is not to be confined in this operation to a pending quasijudicial proceeding, as in the entire section there is no indication that such power would be exercised only when a quasi-judicial proceeding in the shape of assessment, reassessment or the like is pending. Such power is vested on the authorities to get all the required and necessary information regarding the taxable turnover of the dealer. A statement made by a dealer or his agent to an officer at the time of inspection at the place of business would not be an inadmissible document even though the evidentiary value may be in question but such evidence only may not be sufficient to sustain a conviction. The officers concerned are authorised to have inspection at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urprise visit. The necessary tests or the requirements of rule 69, in my view, have also been satisfied in the case. I am also of the view that if a search warrant is issued in respect of a given place and while conducting search at such place, the officers concerned, on the basis of the evidence or materials as available from the documents seized or the information received at the time of such search and seizure, are required to search and seize other connecting and corresponding documents from other or elsewhere places that would be a case of one search or the continuation of the search warrant as issued and not a separate search. Such being the position, the subsequent searches made at the head office and city office of the petitioners, in the circumstances of this case, cannot be said to be unauthorised, without jurisdiction, void and illegal. The cases as cited at the Bar, in my view, will not apply in the facts of this case and they are distinguishable. I further find it difficult to hold in agreement with the submissions of the petitioners that their Mr. Sinha had subscribed his signatures under threat or coercion as alleged and 1 am also of the view that the petitioners b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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