9911796707
TMI Blog1998 (7) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies Act, 1956, whose shareholders are Indian citizens. The registered office of the company was at P-43A, New Alipore, Block C, Calcutta-700 053, but allegedly the company shifted its place of business to premises No. 522/1/2, Diamond Harbour Road, within post office Behala, Calcutta-700 034. The case of the applicant is that the change of place of business was duly intimated to respondent No. 2, Commercial Tax Officer, Alipore Charge, with a request to transfer the company s file to Budge Budge Charge which exercises jurisdiction over the new address. The applicant obtained trade licence from Calcutta Municipal Corporation and also enlistment certificate for the new address. It also filed income-tax return for the assessment year 1994-95, giving the new address. Application was also made to the Registrar of Companies for change of address. An agreement was entered between the applicant and landlord of the new address for occupation of the same. The applicant-company carries on the business of executing works contracts in the field of controlling air pollution and in manufacturing fabricated items. It is a registered dealer under the Bengal Finance (Sales Tax) Act, 1941 and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that section were not complied with. It is alleged that reasons were not recorded prior to the seizure, as required by section 66. The seizure was made as a result of roving inquiry or fishing investigation which is not contemplated by section 66. Mere allegation that respondents suspected attempted evasion of tax did not satisfy the conditions precedent leading to a seizure. Several respondents could not individually or jointly form a suspicion. It is contended that any arbitrary suspicion will not serve the purpose; there must be bona fide or reasonable suspicion entered by an honest and reasonable person. Applicant has alleged that apart from seizure of books of account and documents which are recorded in the seizure receipt, various other records of the applicant, not related to its business, were seized without granting any seizure receipt for the same. Rule 207 of the West Bengal Sales Tax Rules, 1995 (in short, the 1995 Rules ) was allegedly violated. There was no witness to the seizure. 3.. The application is resisted by respondents through an affidavit-inopposition. The case of respondents is that applicant is still carrying on business at and from P-43A, New Alipore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ascertained that the applicant was maintaining the place of business at New Alipore. Mention of Diamond Harbour Road address in the order passed by the appellate authority is said to be immaterial, because the appellate authority exercised jurisdiction in respect of both the places of business of the applicant. It is claimed that the seized books of account and documents had all been produced by the applicant himself (obviously referring to Prabir Sen, Director). Most of the books of account and documents were not produced on the plea that those were lying with Sri Anup Dutta, Advocate. After examining books of account produced by the applicant, the seizure was made after recording the reasons for the seizure in writing, because it was believed that the applicant was attempting evasion of tax. Seizure receipt was granted in respect of all that were seized. Respondents have denied the allegation that no seizure receipt was granted in respect of various other papers. The contention of the respondents is that the jurisdiction of an officer or Inspector posted in a Charge extends not only to the place of business situated within the territorial jurisdiction of that Charge, but also to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id question of competence of respondent No. 1 belonging to Alipore Charge to make seizure at a place within territorial jurisdiction of Budge Budge Charge. That being so, in terms of section 9 of the West Bengal Taxation Tribunal Act, 1987, the case was assigned to and heard by the Bench of three Members constituted of the Honourable two Members of the earlier Bench and the Chairman. 6.. From the seizure receipt, annexure C, it appears that there was no witness to the seizure. Pages 12 to 14 constitute the recorded reasons. There is endorsement by respondent No. 1 at the end of the recording that attempts were made to procure witness, but none could be made available at the time of seizure. There is another endorsement that Prabir Sen, Director, whose presence at the time of seizure is undisputed, refused to countersign the report (i.e., the recorded reasons) in spite of request. The refusal has been denied in the affidavit-in-reply. The recorded reasons have been signed by at least three other Inspectors of Commercial Taxes, apart from respondent No. 1 who made the seizure. Similarly, the seizure receipt was signed by two Inspectors of Commercial Taxes. The items noted in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person to be the Commissioner of Commercial Taxes, together with such other persons to assist him as it thinks fit and may specify the area or areas over which they shall exercise jurisdiction. (2) Persons appointed under sub-section (1) shall exercise such powers as may be conferred, and perform such duties as may be required, by or under this Act. (3) Notwithstanding anything to the contrary contained in sub-section (1), the Commissioner may transfer any case or matter from any person appointed under sub-section (1) to assist the Commissioner to any other person so appointed, whether such other person has jurisdiction over the area to which the case or matter relates or not, provided he is otherwise competent to deal with such case or matter in exercise or performance of the powers or duties referred to in subsection (2). (4) Subject to such restrictions and conditions as may be prescribed, the Commissioner may, by order in writing, delegate any of his powers under this Act except those under sub-section (4) of section 17 and sub-section (12) of section 88 to any person appointed under sub-section (1) to assist him. 9.. Under section 3(1) the State Government may ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irrespective of their jurisdiction. This provision clearly indicates that under section 3(1) an Inspector posted in Alipore Charge cannot, without special authority from the Commissioner under section 3(3), exercise jurisdiction over the area of Budge Budge Charge. Merely because the Alipore Charge, where the applicant-company is assessed, considers that an inspection or verification or seizure should be made at its another place of business within Budge Budge Charge, law does not permit anyone posted in Alipore Charge to exercise those powers without valid authorisation at another place of business of applicantcompany within the jurisdiction of Budge Budge Charge. Law has simultaneously made provision for achieving the object for inspection, verification, seizure, when needed, by providing in section 3(3) that the Commissioner may transfer any case or matter to any officer who is otherwise competent to exercise the powers. The Notifications Nos. 1116, 1117, 1118 and 1119-F.T., dated April 20, 1995 to which reference has already been made, show that the Commissioner might, if he thought necessary, transfer the matter to any officer of the Assessment Wing or the Central Wing, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision in the 1994 Act, and also because in such situations section 3(3) can be well applied, and there are Central Section and Assessment Wing, officers posted wherein can exercise powers over the whole of the State of West Bengal. The Commissioner of Commercial Taxes is there for removal of any difficulty which his subordinate officers may find in course of discharging their duties conscientiously. 11.. On the above ground alone, the impugned seizure dated November 22, 1996 is quashed. The application is thus allowed. I direct respondent No. 2 to dispose of, according to law, the pending application for amendment of registration certificate on the ground of change of place of business within a period of four weeks from today after giving the applicant an opportunity of being heard. Respondents Nos. 1 and 2 are directed to return the seized books of account and documents to the company within two weeks from today, if necessary, after retaining photocopies of the same. No order is made for cost. M.K. Kar Gupta (Technical Member).-I agree. J. Gupta (Judicial Member).-In the argument on behalf of the applicant, primacy has been given to the question of jurisdiction of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Additional Commissioner or (iii) any person appointed under sub-section (1) of section 3, after fulfilling the conditions as to the circumstances and statutory formalities prescribed in the section, can seize accounts, registers or documents of any dealer. Then again, sub-section (1) of section 67 confers power of the said categories of officials, for the purpose of section 66, to enter and search the place of business or any other place where any dealer keeps or is keeping such documents, registers and documents of his business (underscoring* has been done to lay emphasis). Thus, the two sections embody the provision relating to the specific powers to search and seize, as conferred by the 1941 Act on the said officials including an Inspector appointed under sub-section (1) of section 3. These are some among the powers conferred by the statute itself. 15.. No doubt under sub-section (1) of section 3, for carrying out the purposes of the Act, the Government may in its delegated authority specify the area or areas over which such an official will exercise power under the Act. If the Government does not specify the area, an Inspector is not divested the power which the Act has co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 3 lays down that persons appointed under sub-section (1) shall exercise such powers and perform such duties as may be required by or under the Act. Therefore, if law so demands, for the effective discharge of statutory duties and for carrying the scheme of the Act to its logical end an Inspector shall pursue the follow-up action to a place beyond the area specified for him, provided however, the matter giving rise to exercise of statutory power cropped up within his normal territorial jurisdiction. I shall discuss, later on, that unless the position is considered to be so, the scheme of the Chapter VIII of the Act will be rendered infructuous to a large extent. We shall also see that canons of interpretation demand such interpretation of section 67. It is pertinent to examine the different aspects of the two expressions, viz., (i) "any place of business appearing in clause (a) and (ii) any other place appearing in clause (b) of section 67(1). 17.. It is true that section 3(1) of the Act lays down that a person appointed under its provision shall exercise jurisdiction over the area or areas specified by the Government. Again, Notification No. 1115-F.T. dated April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here a dealer under section 65(2) is obliged to keep all accounts, registers and documents for inspection by the Commissioner or an Additional Commissioner or an official (including an Inspector of Commercial Taxes under a delegated power). Since a place of business of a dealer shall fall within the territorial jurisdiction of one or the other Chargeoffice and since the inspection of accounts is a part of Inspector s official duties which he is to perform normally within his territorial jurisdiction, the expression the place of business of any dealer , as appearing in section 65(2) in relation to an Inspector, means the place of business of the dealer which falls within the area over which such Inspector exercises his jurisdiction in terms of the specification made under section 3(1). In clause (a) of sub-section (1) of section 67 also the expression any place of business has been used exactly in the same sense. Therefore, under the clause (a) of sub-section (1) of section 67 an Inspector can enter and search only the place of business of any dealer which falls within the area over which he exercises jurisdiction. But the unqualified expression any other place as appearing in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral provision shall have overriding effect on the general provision. This well-accepted canon of interpretation has been fully discussed in the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. State of Uttar Pradesh AIR 1961 SC 1170. The Supreme Court in that case following the decision of Pretty v. Solly (1859) 53 ER 1032 quoted the Rule as mentioned by Romilly, M.R., thus: The rule is that whenever there is a particular enactment and a general enactment in the same statute and the latter, taken in most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to effect only other parts of the statute to which it may properly apply. 21.. In the aforesaid reported case what fell for the consideration of the Supreme Court is the effect of clauses 5(a) and 5(b) of the U.P. Government Order dated March 10, 1948 issued under sections 3 and 8 of the U.P. Industrial Dispute Act, vis-a-vis clause 23 of the said Order. Clause 5(a) and 5(b) provide the mode for commencement of the proceeding for settlement of industrial dispute generally. But clause 23 makes a special provision that if any enquiry proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in the context of the scheme it will be evident that such special provision has been deliberately included to carry the purposes of section 67 for search and seizure to their logical end. We have already seen that clause (a) of section 67(1) authorises any of the officials, as enumerated in section 3(1), to enter and search the place of business of a dealer falling within the territorial jurisdiction of the official for the purposes of sections 65 and 66. Clause (b) of the said section as discussed above provides that such official may make similar search and seizure at any other place where upon information the official has reason to believe that any accounts, registers, documents or records are kept or being kept, for the time being by such dealer [i.e., the dealer, as referred to in clause (a), having place of business within the area specified for such official under section 3(1) for exercise of his jurisdiction]. Such information may be, as in the instant case before us, gathered from the outcome of search and seizure under clause (a) or otherwise. Unless clause (b) is so interpreted the result would simply defeat the purpose of section 67. If any other place within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown to the satisfaction of the Commissioner or the Additional Commissioner or the person appointed under sub-section (1) of section 3 to assist the Commissioner. Thus, this sub-section prohibits a dealer from keeping at or removal to any place other than the normal place of business all accounts, registers and documents. This casts a duty on the official, who exercises territorial jurisdiction over the place of business of such dealer, in appropriate circumstances and based on reason, to enquire or detect if there was due compliance of this statutory prohibition. Therefore, if in course of inspection or enquiry by the official at the place of business of a dealer (as has happened in the instant case), or otherwise, it gives rise to reasons for a belief that some such documents or accounts have been removed to a place other than the normal place of business of the dealer, such official is laden with the duty of tracking down such transgression of law and it is only possible if he makes search and seizure at such other place. Unless that be the position the prohibition under section 62(2) shall be infructuous and unenforceable. Even when an official within whose territorial j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal observed as follows: There is no controversy that a Commercial Tax Officer attached to a North Circle as such, has no authority and jurisdiction over any part of the North Circle to effect seizure. The Tribunal, therefore, opined as thus,- We, therefore, hold that both the seizures were effected by the Commercial Tax Officers of the North Circle who had no authority and jurisdiction to effect such seizure. 26.. In that case this Tribunal in giving its decision, proceeded from the premises (which this State Representative conceded to) that a Commercial Tax Officer (C.T.O.) attached to a circle has no power at all to effect seizure irrespective of place of seizure. That is why the Tribunal quashed the seizure effected at the place of business as well as at the factory of the applicant, though the place of business was within the territorial jurisdiction of the North Circle to which the concerned C.T.O.s were attached. In view of the specific admission by Mr. Majumdar this Tribunal was not required to go into the questions (1) whether the Notification No. 1116-FT dated April 20, 1995, creating under section 3(1) jurisdiction of circles, by its expression ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeps or is keeping for the time being any documents, registers, etc., of his business at such other place. Only this interpretation can carry the effects of section 67 and section 62(2) to their logical ends in the context of sections 65 and 66 and would ensure checks over attempts to evade tax. 28. Mr. Chakraborty has argued that only to tackle situations involving two or more Charges, the central section having jurisdiction over the entire West Bengal has been created and that unless the central section is not permitted to exercise its special jurisdiction, its creation will be meaningless. But such creation does not take away the special power under section 67(1)(b). Moreover, besides the acts of inspection, search and seizure within the provision of sections 65, 66 and 67 there are hosts of duties of the officials appointed under section 3(1) where there is no special provision like section 67(1)(b). In such cases involving two or more Charges, the central section can play effective co-ordinating role besides exercising its other independent powers conferred under the Act. So, the creation of the central section is not in any way repugnant to the special power under clause ..... X X X X Extracts X X X X X X X X Extracts X X X X
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