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TMI Blog1994 (7) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... e first ground is concerned, in para 23 of the writ petition, it has been averred by the petitioner that under section 13(3) of the U.P. Sales Tax Act, unless there are reasonable grounds for believing that any dealer is trying to evade the liability to tax or other dues under the U.P. Sales Tax Act, no officer has any power to seize any account books, documents or registers, as there was no material whatsoever, on the basis of which such a belief, much less a reasonable belief, would have been formed that the petitioners were seeking to evade their liabilities to tax. In para 40 of the counter-affidavit, it has been averred by the respondents that there were sufficient grounds for forming the belief that the petitioners were trying to evade the liabilities to pay tax, which gave necessary jurisdiction to the deponent of the counter-affidavit, who is an officer, authorised by the State Government in that behalf, under section 13(1) of the Act to inspect, search and seize any incriminating documents and material accounts found at the premises. In para 5 of the counter it has been averred/submitted that the petitioner No. 1, M/s. Mahalakshmi Poly Plast Pvt. Ltd., Muzaffarnagar, car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigation into his liability may be found in any account, register or documents. Reasonable grounds for believing both these things should co-exist prior to the making of search and seizure. Reasonable grounds should exist objectively and can be tested in a court. Where the court finds that they did not exist, the search and seizure will be illegal." The aforesaid observations of the Full Bench were based 'upon the decision of the Supreme Court in the case of Emperor v. Vimlabai Deshpande AIR 1946 PC 123, Barium Chemicals Ltd. v. Company Law Board [1966] 36 Comp Cas 39; AIR 1967 SC 295 and Rohtas Industries Ltd. v. S.D. Agarwal [1969] 39 Comp Cas 781; [1969] 3 SCR 108. It was further indicated by the Full Bench that that the law does not oblige the authorised officer to record reasonable grounds for his belief, is a weakness of meagre weight. In the case of Mohinder Singh Gill v. Chief Election Commissioner AIR 1978 SC 851, honourable Mr. Justice V.R. Krishna Iyer (as he then was), speaking for the Bench, indicated in para 8 of the Report as under: "The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erala also intervened, honourable the Chief Justice K.N. Wanchoo (as he then was) speaking on behalf of the Constitution Bench, indicated at page 468 of the Report as under: "....... We are therefore of opinion that safeguards provided in section 165 also apply to searches made under sub-section (2). These safeguards are (i) the empowered officer must have reasonable grounds for believing that anything necessary for the purpose of recovery of tax may be found in any place within his jurisdiction, (ii) he must be of the opinion that such thing cannot be otherwise got without undue delay, (iii) he, must record in writing the grounds of his belief, and (iv) he must specify in such writing so far as possible the thing for which search is to be made. After he has done these things, he can make the search. " Section 13(7) of the State Sales Tax Act provides that the provisions of sections 100 and 165 of the Code of Criminal Procedure, would mutatis mutandis, apply in relation to an entry, search or inspection under section 13 of the Act. It was averred that inasmuch as the provisions of sections 100 and 165 of the Code of Criminal Procedure have not been complied with, hence the entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) The occupant of the place searched, or some person in his behalf, shall, in every instance, be permitted to attend during the search, and a copy of the list prepared under this section, signed by the said witnesses, shall be delivered to such occupant or person. (7) When any person is searched under sub-section (3), a list of all things taken possession of shall be prepared, and a copy thereof shall be delivered to such person. (8) Any person who, without reasonable cause, refuses or neglects to attend and witness a search under this section, when called upon to do so by an order in writing delivered or tendered to him, shall be deemed to have committed an offence under section 187 of the Indian Penal Code (45 of 1860)." "165. Search by police officer.-(1) Whenever an officer in-charge of a police station or a police officer making an investigation has reasonable grounds for believing that anything necessary for the purposes of an investigation into any offence which he is authorised to investigate may be found in any place within the limits of the police station of which he is in-charge, or to which he is attached, and that such thing cannot in his opinion be otherwise o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed with costs." In the case of Partap Singh v. Director of Enforcement, Foreign Exchange Regulation Act, honourable Mr. Justice D.A. Desai, on his behalf as well as on behalf of honourable Mr. Justice V. Balakrishna Eradi, reported in [1985] 155 ITR 166 (SC); (1985) 3 SCC 72, indicated in paragraphs 12 and 15 of the Report (pages 173 and 174 of ITR) as under: "12. Section 37(2) provides that the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under section 37(1)'. Reading the two sub-sections together, it merely means that the methodology prescribed for carrying out a search provided in section 165 has to be generally followed. The expression 'so far as may be' has always been construed to mean that those provisions may be generally followed to the extent possible. The submission that section 165(1) has been incorporated by pen and ink in section 37(2) has to be negatived in view of the positive language employed in the section that the provisions relating to searches shall so far as may be apply to searches under section 37(1). If section 165(1) was to be incorporated by pen and ink as sub-section (2) of section 37, the legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the weight of judicial opinion on the subject and does not commend to us. In fact this decision should not detain us at all because virtually for all practical purposes, it can be said to have been overruled by the decision of the Constitution Bench in Pooran Mal v. Director of Inspection (Investigation), Income-tax [1974] 93 ITR 505 (SC); AIR 1974 SC 348. This Court held that 'courts in India and even in England have consistently refused to exclude relevant evidence merely on the ground that it is obtained by illegal search or seizure'. If, therefore, the view of the learned single Judge of the Calcutta High Court were to be accepted, meaning thereby that if the search is shown to be illegal, anything seized during such illegal search will have to be returned to the person from whose premises the same was seized, it would be tantamount to saying that evidence collected during illegal search must be excluded on that ground alone. This was in terms negatived by the Constitution Bench. It has been often held that the illegality in the method, manner or initiation of a search does not necessarily mean that anything seized during the search has to be returned. After all, in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out in the manner prescribed in section 165 of the Code by the officer to be set out in this section. In case the provision of section 165 was not followed or the officer making a search deviates from it, the honourable Supreme Court ruled that such deviation is permissible but would be subject to judicial scrutiny of the court. (Emphasis* ours) In Partap Singh's case [1985] 155 ITR 166 (SC); [1985] 3 SCC 72, the honourable Supreme Court disagreed with the view, which was taken by the learned single Judge of the Calcutta High Court in the New Central Jute Mills Co. Ltd. AIR 1976 Cal 178 that once the authorisation for carrying out the search is found to be illegal on account of the absence of recording of reasons in the formation of a reasonable belief, the officer who has seized documents during such search, must return the documents seized as a result of illegal search, is against the weight of judicial opinion on the subject and does not commend to us. Later on, the Supreme Court said that Calcutta's case mentioned above, was overruled by the decision of the Supreme Court in the case of Pooran Mal v. Director of Inspection [1974] 93 ITR 505; [1974] 2 SCR 704. Probably, the at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the search is concerned, it is sufficient to say that even assuming that the search was illegal, the seizure of the articles is not vitiated. It may be that where the provisions of sections 100 and 165, Code of Criminal Procedure are contravened, the search could be resisted by the persons whose premises are sought to be searched. It may also be that because of the illegality of the search, the court may be inclined to examine carefully the evidence regarding the seizure but beyond these two consequences no further consequence ensues. It is really surprising that from the side of the respondents, the relevant records have not been produced before this Court. Although in para 5 of the counter-affidavit, it was averred that the petitioner No. 1 was evading tax by manufacturing bags whereas he was declaring sale of fabrics and all the petitioners were making sales on challans without raising proper bills in respect of the same and thereby, suppressing the sale and on the basis of the above information, the sales tax authorities formed a belief that the petitioners were trying to evade liability of the tax, but the relevant record pertaining to the information received, formati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nourable Supreme Court in the case of Dr. Partap Singh v. Director of Enforcement [1985] 155 ITR 166; [1985] 3 SCC 72, was delivered by two honourable Judges of the Supreme Court. The decision of a larger Bench even pronounced earlier in comparison of a decision of a Bench consisting of two honourable Judges, would prevail. This view of ours, is fortified by the decision of the honourable Supreme Court in the cases of Pooran Mal v. Director of Inspection reported in [1974] 93 ITR 505; [1974] 2 SCR 704; AIR 1974 SC 348, Radha Kishan v. State of Uttar Pradesh [1963] Supp 1 SCR 408; AIR 1963 SC 822 and State of U.P. v. Ram Chandra Trivedi AIR 1976 SC 2547. The learned Standing Counsel wanted us to delve into certain facts and nature of the documents, which according to him, reflect the character of the petitioners in evading the taxes. Such events and the material which have been referred and relied upon, have no nexus with the formation of a reasonable opinion prior to making the search. Hence it is not relevant for the purpose of this case. The validity of action must be judged by the reasons indicated prior to inspection, search and seizure and cannot be supplemented by fresh rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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