9911796707
TMI Blog1996 (10) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... making payments of sales tax and is not a defaulter, nor any complaint of tax evasion ever made against him, on December 11, 1995 different teams containing the Inspectors of Commercial Taxes, Bureau of Investigation and their associates made two simultaneous raids at his place of business as well as residence. The team visiting the residence at AE 512, Sector I, Bidhannagar made a random and indiscriminate search and ultimately seized some exercise books, diaries and many personal papers like correspondence with various friends and relatives, personal accounts, etc. The other team visiting his place of business also made an indiscriminate search and finally seized all the papers, books of accounts, etc., that were available without examining any of those documents prior to the seizure. Inspite of his requests on the same day and also the following day, respondent No. 2 not only refused to release the books of accounts but also directed him to pay a sum of about Rs. 1.32 lakhs within seven days and to produce the receipted challan before him within ten days under threat of arrest in the event of non-compliance. Only after payment of Rs. 1,32,500 on December 19, 1995, some copies an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales tax by not incorporating purchase and sales in his regular books of accounts, the respondent No. 1 along with other inspectors of the Bureau of Investigation paid a surprise visit both at the business premises and the residence of the petitioner to enquire into his tax status. At the business premises, after the respondent No. 1 disclosed his identity, one, Rajesh Kumar Tiwari, an employee of the applicant, produced all books of accounts and other relevant records and documents except those pertaining to the period 1994-95 which were stated to be lying with their chartered accountant and some other records and documents kept in the drawer and chest of the steel almirah under lock and key, the keys being with the proprietor Shri Sushil Kumar Bahety. On examination of the books of accounts that were produced, certain irregularities in respect of purchases and sales transactions not incorporated in regular books of accounts were detected, details of which are furnished at pages 5-10 of the report drawn by the respondent No. 1 prior to seizure (annexure A ). Shri Sushil Kumar Bahety appeared at about 7.24 pm. and opened the chest of the almirah and drawers and produced all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the books of accounts and other relevant records and documents produced before the respondents, several discrepancies were detected which could not be clarified by the applicant despite being allowed ample opportunities as a result of which the respondents had sufficient reasons to form a bona fide belief that the applicant had been attempting to evade payment of tax. The books and other documents were seized in the presence of witness in each case as per provision of law. Though the provisions of the Criminal Procedure Code require two independent witnesses to a seizure, it cannot be laid down as a hard and fast rule, never to be departed from. The expression as far as possible indicates that, while compliances are desired, it is not mandatory and, therefore, one witness is sufficient in each case. Further, the two witnesses are employees of the applicant s business concern and are very much independent witnesses in this regard, as they were looking after the financial accounts of the applicant. Reliance has been placed in this context on the judgment of this Tribunal dated January 17, 1996 in the matter of Tepcon International (I) Pvt. Ltd. v. Inspectors of Commercial Taxes [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous raid at his place of residence and business and made indiscriminate search and seizure. There was never any attempt on the part of the respondents to test the veracity, genuineness and sufficiency of the information received by them. None of them had applied his mind. There was no formation of belief prior to the search and seizure that the petitioner had been attempting to evade payment of tax or that he had secreted his books of accounts at his residence. 8.. Before proceeding to consider the rival contentions on their merits, it may be worthwhile to note the provisions in the 94 Act and the 95 Rules on the subject. While section 65 of the 94 Act deals with production and inspection of accounts, registers and documents at the place of business of a dealer, section 66 relates to seizure of dealer s accounts and section 67 covers entry and search of place of business or any other place. The relevant portions of sections 65, 66 and 67 read as follows: 65. Production and inspection of accounts, registers and documents.- (1)................... (2) All accounts, registers and documents relating to the stock of goods held, or purchases, sales or deliveries of goods, by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry and searches and not independent, the validity of the entry and searches at the place of business as well as residence of the dealer is first taken up for consideration. 10.. Mr. M.L. Bhattacharjee, the learned Senior Advocate appearing for the applicant contended that, as far as the search at the place of business is concerned, it would appear from annexure A to the affidavit-in-opposition, namely, the report of the Inspector of the Bureau of Investigation who conducted the search and seizure, that he paid a surprise visit to the business premises accompanied by other inspectors to enquire into the dealer s tax status at the direction of Shri Q. Parvez, Assistant Commissioner of Commercial Taxes of the Bureau of Investigation who, in turn, had received the case from the Special Officer of the Bureau of Investigation who was acting on a tip off about alleged evasion of payment of sales tax by the applicant. However, no reasons have been recorded in writing to show that there was any reason to suspect that the dealer is attempting to evade payment of any tax. As for the search at the residence of the applicant, there has been non-compliance with section 67(1)(b) which enjoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67(1)(a) relating to search at the place of business of a dealer. As for the search at the residence, Mr. Mukhopadhyay submitted that in terms of section 62(2), every dealer is required to keep at his place of business all his books of accounts and he has no authority to keep the same at his residence. Further, annexure B indicates that only on receipt of an information from a secret source that the applicant has been attempting to evade payment of sales tax by not incorporating all of his transactions of sales and purchases in his regular books of accounts and that he keeps many records of such repressed transactions at his residence, the Special Officer, Bureau of Investigation had directed a thorough inquiry in the place of business and residence of the dealer. It is not, therefore, correct to say that the requirement of section 67(1)(b) has not been complied with. Though Mr. M.L. Bhattacharjee in the course of his arguments in reply tried to contend that the requirement of section 62(2) was not mandatory, he withdrew this contention on his attention being drawn to section 88(d) which provides for penalty for failure to comply with the provisions of section 62. 12.. From the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was received to the effect that the dealer was keeping some books of accounts at his residence. Such parrot like repetition of the language, of the section does not and cannot amount to substantive compliance with its requirement which stipulates reasons to believe , which is a more stringent requirement than reasons to suspect used in section 66. 13.. Moreover, as held by this Tribunal, in the case of Khinw Karan Doshi [1994] 94 STC 298 at page 329, the information to be received and the reason to believe must be entertained by the same officer or officers who enter a place other than a place of business or warehouse and search it. Annexure B clearly shows that the team of seven Inspectors of the Bureau of Investigation which conducted the search at the residence did not directly receive any information and did not entertain any reason of their own to believe that the dealer was keeping books of accounts at his residence and that they visited the residence and searched it under the orders of the Assistant Commissioner who, in turn, had no direct knowledge but was directed by the Special Officer. As was observed in the case of Khinw Karan Doshi [1994] 94 STC 298 (WBTT), t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of tax. The other limb of his argument is that section 100(4) and (5) of the Code of Criminal Procedure enjoin that there shall be two or more independent and respectable inhabitants of the locality in which the place to be searched is situated or of any other locality if no such inhabitant of the said locality is available or is willing to be a witness to the search, to attend and witness the search and sign the seizure list. There was only one witness to each of the seizures and that too, persons who were working for him and were not therefore independent and who did not also stay in the locality where the seizure was made, their residences being elsewhere. There has thus been non-compliance with the provisions of section 100(4) and (5) of the Code of Criminal Procedure, 1973 both as regards the number and the qualifications of the witnesses as prescribed for the purpose. He also referred to the fact that in the case of seizure at the residence, both the seizure report and the seizure receipt mention the time at 18.30 hrs which according to him is impossible. In the case of seizure at the place of business the seizure report does not indicate any time though a time has been r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace of work is situated and, in any case, it is not the legal requirement that the witnesses to the search must have their residences in the same locality where the searches and seizures are made. Mr. M.L. Bhattacharjee submitted that the question of number of witnesses had not been argued in that case. 16.. On a perusal of the two reports relating to the two seizures at the place of business as well as residence of the applicant, it is amply clear that there were sufficient reasons for suspecting evasion of payment of tax arising from the numerous discrepancies listed therein and that the reasons had been recorded prior to the actual seizures in both the cases. It is also not possible to hold that the presence of only one witness in each case, of a person working for the applicant and not living in the same locality as the place of seizure, has vitiated the validity of the seizures in any way nor are the discrepancies in time referred to by him of any significance in the present case. However, since it has already been held that the entry and search at the residence of the applicant was bad and in contravention of section 67(1)(b) of the 94 Act, it follows that the seizure at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eading the same into it. 18.. In the result, the application is allowed in part. The search and seizure at the place of residence of the applicant are declared to be invalid and in contravention of law and those proceedings are accordingly quashed. The respondents are directed to return forthwith to the applicant the documents seized from his residence as per seizure list thereof. The search and seizure at the place of business of the applicant are held to be valid and proper and the respondents will be at liberty to continue further proceedings thereof in accordance with law. The interim orders passed on January 31, 1996 are vacated and there will be no order for cost. L.N. Ray (Chairman).-Having gone through the draft judgment prepared by honourable Mr. P.R. Balasubramanian, Technical Member, I am unable to agree with his conclusions in respect of the seizure of books of account and documents from the residence of applicant, Sushil Kumar Bahety at AE-512, Sector-I, Bidhannagar, Calcutta. 20.. I, of course, agree with the conclusion arrived at by the honourable Technical Member, upholding the validity of the seizure of books of account and documents at the place of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up prior to the seizure at the residence. They rather stated that the report was not only drawn up prior to the seizure, but applicant was asked to put his signature therein which he declined. In paragraph 11 of the opposition also, respondents have made the same statement. Two separate written reports which may be called recorded reasons under section 66 of the West Bengal Sales Tax Act, 1994 (in short, 1994 Act ) have been annexed to the affidavit-in-opposition. The report in respect of the visit and seizure at the residence is annexure B at pages 35 to 37 and the seizure receipt in respect of that seizure is at page 38 of the opposition. The relevant portion of the aforesaid report or recorded reasons is reproduced below: On receipt of an information from a secret source that Sri Sushil Kumar Bahety, proprietor of M/s. Plastic Products (India) of 140, C.R. Avenue, Calcutta, a dealer registered under the Sales Tax Act, has been attempting to evade payment of due sales tax by not incorporating all of his transactions of sales and purchases in his regular books of accounts and that the dealer keeps many records of such suppressed transactions at his residence at AE-512, Salt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equested to go through it and countersign but Sri Bahety declines to do so. Tapan Kr. Chaudhuri Inspector of Commercial Taxes, Bureau of Investigation--W.B. Date: 11-12-95 Time: 17.30 hrs. Place: AE-512, Salt Lake City, Calcutta-64. 22.. The seizure receipt at the residence shows that the following documents were seized: 1. Two registers containing details of the purchasers. 2. One exercise book containing business transactions with effect from 17-10-1995. 3. One diary of 1991 containing details of business transactions. 4. Three challan books for 1993-94. 5. One statement of commission account book for 1994. 6. Miscellaneous loose business documents, 14 in number. 7. Loose business documents, 177 in number. The seizure receipt was signed by a witness named Sanjoy Chandak, son of Sri S.N. Chandak, 10, Clive Row, Calcutta. The receipt was drawn up by Tapan Kumar Chaudhuri, Inspector of Commercial Taxes. The time is given as 18.30 hrs on December 11, 1995. The seizure receipt contains an endorsement signed by the applicant stating that the original was received by him. 23.. But in the affidavit-in-reply the applicant did not reiterate the allegation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to believe cannot be entirely subjective satisfaction of the officer concerned. There must be some material for formation of the belief. Although the court cannot investigate about the sufficiency of the material, the court can certainly examine whether there was any material at all in the possession of the officer concerned and whether the material had any nexus with the formation of the belief. 26.. The allegation of the applicant is that the report (recorded reasons) was not drawn up prior to the seizure at the residence. One of the grounds in support of the allegation was that the hours noted in the seizure receipt and the report (6.30 p.m.) were the same. I have already pointed out that the reading of the time by the applicant given at the end of the report is obviously erroneous. Another ground taken by the applicant in support of his contention is that the report does not contain his signature. It is true that the reasons are to be recorded in writing prior to the seizure under the provisions of section 66(1), but none of the provisions of 1994 Act requires that the recorded reasons should be attested or countersigned by the applicant. Moreover, it is noted at the end o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any reason to believe and rather they visited the residence and searched it under the orders of the Assistant Commissioner. 28.. The decision in Khinw Karan Doshi s case [1994] 94 STC 298 was rendered by this Tribunal in the context of section 14(4) of the Bengal Finance (Sales Tax) Act, 1941 which is in pari materia with section 67(1) of 1994 Act which governs the present case. Whenever a decided case is considered as a precedent, it should be kept in mind that each case is decided on its own facts. So, the ratio of a precedent should be understood against the background of the facts of that case. In Khinw Karan Doshi s case [1994] 94 STC 298 (WBTT) the team of officers who conducted the search at the residence, had done so merely under the direction of the Assistant Commissioner (see page 329 of the Report in [1994] 94 STC 298). Moreover, from paragraph 5 of the said judgment at pages 307 and 308 of the Report it will be seen that there was no information that the dealer was keeping his business papers at his residence. In the instant case, annexure B to the affidavit-in-opposition clearly points out that the Special Officer had received the said information from a secret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written record of the same for the purpose of mere entry or search. From annexure B it appears that the team of Inspectors obtained entry to the residence upon disclosing to the applicant their identity and purpose of visit, namely, to check whether business records are kept at the residence according to information received. The action of the Inspectors evidences that they were entertaining the required reason to believe. Moreover, when the applicant allowed entry of the Inspectors, he also provided the basis for reason to believe that he was keeping his business records at his residence. He did not say, when approached by the Inspectors, that no, he was not keeping such records at home. Thus, prior to entry, there was enough reason to believe by the Inspectors including Inspector Chaudhuri that applicant was keeping his business records at the residence. Reference may be made in this connection to a recent judgment dated May 30, 1996 of this Tribunal by a 3-Member Bench under the West Bengal Luxury Tax Act, 1994 in the case of Giridharilal Agarwal v. M.K. Mukherjee, Inspector of Commercial Taxes [1997] 106 STC 522. In that case the learned counsel for the respondents submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be entertained before the entry or search. But on the ratio of the decision of this Tribunal (paragraph 16) in the case of Giridharilal Agarwal v. M.K. Mukherjee, Inspector of Commercial Taxes [1997] 106 STC 522 the discovery of the business records at the residence should show that the information received was genuine and also that the reason to believe held by the Inspectors for entry to the residence of the applicant and, if necessary, for search was bona fide. 31.. The next stage is seizure under section 66. Under that section, reason to suspect that any dealer is attempting to evade payment of tax, for which records are seized, should be recorded in writing. The same report, annexure B to the opposition, at pages 35 to 37 is the recorded reasons for this purpose. On behalf of the applicant it has been contended that annexure B was not written prior to the seizure. I have already concluded that it was recorded prior to the seizure on December 11, 1995 at 17.30 hrs (5.30 p.m.). A reading of annexure B shows that quite a number of business records was kept at the residence and those were examined by Inspector Chaudhuri after being produced by the applicant. The registers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned State Representative, when constitutional validity of section 66 has not been challenged, this ground naturally fails. 33.. There was one witness to the seizure at the residence. Mr. Bhattacharjee submitted that in terms of rule 207(1) of 1995 Rules to the effect that all seizures or searches under sections 66 and 67 should be made as far as possible in accordance with the Code of Criminal Procedure, 1973, there should have been at least two witnesses to the seizure, and moreover, they ought to be independent and men of the locality. He referred to sections 100(4) and 165 of the Code of Criminal Procedure in this connection. The witness, Sanjoy Chandak is a man whose address is given as Clive Row, Calcutta. The seizure was taking place in Salt Lake. There is no dispute that Clive Row is several kilometres away from Salt Lake. In that sense Sanjoy Chandak is not a man of the locality. Applicant has also questioned the independence of the witness, because, according to him [paragraph 15(ii) of the application], Sanjoy Chandak looks after his business. It is interesting that business records were kept at the residence and Sanjoy Chandak who admittedly looks after the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of rule 207(1) of 1995 Rules, the applicability of the provisions of section 165 Cr. P.C. (to the extent discussed below) to a search under section 67 cannot be disputed. The expression may enter and search appearing in section 67 means may enter as well as may search . There may be an entry without necessity for search. This position is borne out by the fact that the Commissioner or an Additional Commissioner derives jurisdiction under the same section 67, when he enters the place of business solely for the purpose of inspection of accounts of a dealer under section 65(2) where no search is in contemplation. It is the specific assertion of the respondents, as evident in the affidavit-inopposition, that there was no occasion for search on the date at the residence because the applicant himself in response to the requisition by the respondent No. 1, produced the books of accounts and papers relating to his business. On the other hand, in the affidavit-in-reply this specific assertion of the respondents has not been traversed by specific denial. Though in the affidavit-in-reply the words search and seizure have appeared a couple of times in a routine manner, such words ..... X X X X Extracts X X X X X X X X Extracts X X X X
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