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TMI Blog1985 (1) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... ain books of account, documents, etc., were seized by the 1st respondent as per seizure order annexure G. The petitioner has challenged the said seizure on several grounds and has prayed for issue of a certiorari quashing the said seizure order dated 9th August, 1984 and for other consequential reliefs. The petitioners have also sought for a writ of prohibition against the respondents not to make use of the information obtained from the seized documents in the above proceedings by the K.S.T. and C.S.T. Acts. They have also prayed for issue of a direction to the respondents to return all the books of account, documents and papers, etc., so seized from their respective business premises. Facts relating to the institution of first batch of writ petitions are these: The business premises of the petitioners located at No. 237, Rajamahal Vilas Extension, Bangalore, was searched on 28th October, 1983 and the respondent seized the books of account, documents, correspondence, receipts, vouchers, cheques and other negotiable instruments, etc., as per the seizure orders annexures D and E. It is the petitioners' contention that the said search and seizure was conducted in a high-handed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners forthwith. The question that arises for our consideration is: "Whether the retention of the books under the provisions of section 28(3) of the K.S.T. Act is rendered unlawful on account of the non-communication to the assessee, the order of the next higher authority approving such retention beyond 60 days?" Section 28 of the K.S.T. Act confers powers on any officer empowered by the State Government in this behalf: (i) to demand production of the books of account from any dealer and to furnish any other information relating to his business; (ii) right of inspecting all the accounts and registers maintained by dealers; and (iii) to seize such accounts, registers, etc., if he has reason to suspect that any dealer is attempting to evade the payment of any tax, fee or other amount due from him under the Act. Section 28(3) which is relevant for these cases is reproduced below: "If any such officer has reason to suspect that any dealer is attempting to evade the payment of any tax, fee or other amount due from him under this Act, he may, for reasons to be recorded in writing, seize such accounts, registers, records or other documents of the dealer as he may conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner, a Division Bench dismissed the appeal affirming the directions given by the learned single Judge. Being aggrieved by the said order, an appeal was preferred before the Supreme Court. As regards the contention regarding non-communication of the approval given by the Commissioner, the Supreme Court examined the provisions of sub-sections (8), (10) and (12) of section 132 of the I.T. Act and came to the conclusion that the authorities under the Act were under a statutory obligation to communicate to the person concerned, not merely the Commissioner's approval but the recorded reasons on which the same had been obtained and further held that in default of such expeditious communication, any retention of the seized books or documents would become invalid or unlawful. They held: "In our view the scheme of sub-sections (8), (10) and (12) of S. 132 makes it amply clear that there is a statutory obligation on the Revenue to communicate to the person concerned not merely the Commissioner's approval but the recorded reasons on which the same has been obtained and that such communication must be made as expeditiously as possible after the passing of the order of approval by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for retaining the same are recorded by him in writing and the approval of the Commissioner for such retention is obtained: Provided that the Commissioner shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed. * * * (10) If a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-section (1A) objects for any reason to the approval given by the Commissioner under sub-section (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents. * * * (12) On receipt of the application under sub-section (10) the Board, or on receipt of the application under sub-section (11) the notified authority, may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit." Under section 132(8), there is a prohibition imposed on the officer to retain the books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the ratio in the ruling of the Supreme Court in Oriental Rubber Works' case [1984] 145 ITR 477 (SC) is equally applicable to cases arising under section 28(3) of the K.S.T. Act. It is submitted by Sri S. Rajendra Babu that the ratio of the decision of the Supreme Court should not be made applicable to the case of "search and seizure" effected under the K.S.T. Act, the provisions of which, according to him, are not in pari materia. We find it difficult to make out any discernible difference between the two provisions as regards the retention of the books beyond the period allowed under the statute and also on the aspect of non-communication of the approval of the higher authority for the further retention of the books. We, therefore, reject this contention on behalf of the State. In the view we have taken on the necessity to communicate the orders of the next higher authorities for retention beyond the initial period of 60 days or thereafter, from time to time, the view expressed by one of us (Puttaswamy, J.) in Hastimal Kothari v. Commercial Tax Officer (Int.), Bangalore [1984] 55 STC 225 is no longer good law. We, therefore, declare the retention of books of account and doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dras High Court in joint Commercial Tax Officer v. Purushotham Rungta [1977] 39 STC 39, Veeraswamy, C.J., held, explaining the implications of the ruling of the Supreme Court, as follows: "It is clear from this decision that where the party from whom the documents were illegally seized sought for a prohibition against the department from making use of the information taken out from those documents, the prohibition was refused, the ground being that the department had, in any case, the power to summon evidence and make use of it and that there is nothing in the Constitution or in the Evidence Act to inhibit user of such evidence in incometax proceedings. We can see no sensible distinction between information taken from documents and copies thereof as to their user in revenue assessment proceedings." Thus holding, their Lordships permitted the photostat copies of the documents to be returned to the Revenue for making use of the same. We are in respectful agreement with these views. On the above discussion, we hold that the petitioners are not entitled for the return of copies, notes, if any, already made by the authorities and they are free to make use of them in completing the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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