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TMI Blog1987 (12) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions described in the assessee's account books as stock transfers, for his inspection. On a preliminary inspection of the relevant documents which revealed that the petitioner was regularly supplying consignments of silk fabrics to its show-rooms at New Delhi and other places which were actually meant to be supplied to its customers outside the State, the respondent proceeded to make an order under section 28(3) of the Act seizing the documents referred to in the order (exhibits A1 to A5 and B1). Before making this order of seizure the respondent scrutinised the transactions, styled as stock transfers with reference to two invoices which bore out that the consignments were meant for supply to M/s. K.L.M. Airlines, New Delhi, and in another instance for being supplied to Royal Nepal Airlines, Kathmandu. This fact was disclosed by the indents placed by the two airlines referred to above, which were found in the records. A copy of the seizure order was also served on Sri Sounder Rajan, Financial Accountant of M/s. Binny Limited. This order of seizure is challenged by the petitioner on several grounds. Sri Srinivasan, learned counsel for the petitioner, has contended: (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spection of the documents relating to the said transactions, that all the relevant records produced by the petitioner were seized. The seizure, thus effected, it is argued, was well within his powers conferred by the Act on the respondent and does not suffer from any illegality warranting interference by this Court. On the other hand, it is argued by the petitioner that the seizure was nothing but a search and seizure and the said search was conducted violating the procedure and safeguards which are required to be observed before any seizure could be effected and the plea that it is a case of inspection and not search, should be rejected. Under the scheme of section 28 of the Act, various methods of securing books and information about the business of a dealer are provided, they are: (i) Section 28(1) of the Act empowers any officer authorised by the State Government to require any dealer to produce books of accounts, etc., and to furnish information about his business by issue of a notice in the prescribed form; (ii) under section 28(2)(i), all accounts and registers maintained by dealers in the course of their business, shall be open to inspection by officers authorised i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concerned officer to produce before him, any document or other books of accounts, etc., and to furnish any information relating to his business for the purpose of proceedings under the Act. This is the normal procedure to be adopted in cases where the concerned assessing officer is to determine the total and taxable turnover of a dealer under the Act. It is to be noted that this power is also available to be exercised by any officer attached to the Intelligence Wing of the Department in all cases of investigation. On the arguments advanced on both sides and the pleadings, the question that arises for decision in the present case is: Whether the seizure order made by the respondent under section 28(3) of the Act, was one made after inspection or after search of the petitioner's business premises? Sri Srinivasan, learned counsel for the assessee, has, on the basis of certain observations made by their Lordships in Harikisandas' case [1971] 27 STC 434 (Mys), at page 437, challenged the order of seizure made in the present case. It is, therefore, necessary to refer to the facts in the case of Harikisandas Gulabdas Sons [1971] 27 STC 434 (Mys) relied upon by the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TC 453, a power of seizure need not necessarily imply a power of search, for there may be seizure on production or on inspection. "Search" is used in contradistinction with "inspection" and implies an exploratory examination or probing into or seeking out something which is hidden, concealed, suspected and not open, exposed or demonstrated [see Gianchand v. State of Punjab (1962) 1 SLR 364]. "Search" has received interpretation by this Court in G.M. Agadi Brothers v. Commercial Tax Officer, Belgaum [1973] 32 STC 243. This Court quashed the search and seizure of the petitioner's business premises in that case on the ground that the provisions of the Code of Criminal Procedure were not complied with by the search officer. The relevant portion of the order is reproduced below (see page 244-32 STC): "The short question for decision is whether the account books and documents seized as per annexure A was on a search of the petitioner's premises or was it merely after inspection of the said premises. If the said account books had been seized merely after inspection of the premises as contended on behalf of the respondent, there is no illegality attached to the seizure; but if the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter a search." The Supreme Court had occasion to deal with the provisions of inspection, search and seizure contained in sections 41 and 45 of the Madras General Sales Tax Act in Krishna Chettiar v. State of Madras [1968] 21 STC 258. Dealing with the power of inspection vis-a-vis power to search, under the Madras Act, his Lordship Hidayatullah, J. (as he then was), observed as follows: "Now it is quite true that if the Code of Criminal Procedure governed the search, then as required under section 165, which is applicable, the reasons for the search have to be recorded in writing before the search is carried out. But this condition does not obtain when the officer only wishes to inspect the accounts, registers or other documents under the first and the second sub-sections of section 41. There is no requirement of recording of reasons at that stage, because all that the officer has to do is to go and ask the dealer to produce his account books for his inspection." It is useful to reproduce the observations and analysis of the provisions of section 41(2) of the Madras General Sales Tax Act made by the Supreme Court in Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power to inspect them and to see if they relate to the business. These two powers taken together, in our opinion, mean that the empowered officer has the power to search the office, etc., and inspect accounts, etc., found therein. Though therefore the word 'search' has not been used in sub-section (2) these two powers of entering the offices, etc., for inspection and of inspecting every kind of account maintained by a dealer with respect to his business together amount to giving the officer concerned the powers to enter and search the offices, etc., and if he finds any account in the offices, shops, etc., to inspect them. Otherwise we can see no sense in the legislature giving power to the empowered officer to enter the offices, etc., for the purpose of inspection as the officer concerned would only do so for the purpose of finding out all accounts, etc., maintained by the dealer and if necessary to inspect them for the purposes of the Act. We cannot therefore agree with the High Court that there is no power of search whatsoever in sub-section (2) because the sub-section in terms does not provide for search." The decision of the Patna High Court reported in [1974] 34 STC 9 (Jib N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is my considered view, after very careful study of the decision of the Division Bench of this Court in Harikisandas' case [1971] 27 STC 434, the observations made by the Division Bench in the said case as to the issue of notice under section 28(1) of the Act even when an officer of the Intelligence Wing of the Department embarks upon inspection of the books of accounts of a dealer, is only an obiter and should be confined to the facts of the said case. Learned counsel for the petitioner has also relied upon a series of decisions of this Court wherein this Court held, that the seizure followed by search, if it is done in violation of the mandatory provisions of the Criminal Procedure Code, should be quashed as illegal. The decisions cited are: (1) [1978] 41 STC 296-Kangale and Company v. Commercial Tax Officer (Int.) II, Northern Zone, Belgaum; (2) [1978] 41 STC 298-S.Y. Modagekar Sons v. Commercial Tax Officer (Int.), Northern Zone, Belgaum; (3) [1980] 45 STC 488-S.P. Parasmal and Co. v. Commercial Tax Officer (Int.) III, South Zone, Bangalore-9; (4) [1980] 45 STC 490-Neminath Brothers v. Commercial Tax Officer (Int.) IV, Belgaum; (5) W.P. No. 9462 of 1978-Shree Du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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