9911796707
TMI Blog1998 (7) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1994. 3.. (a) On November 1, 1995 some persons alleged to be Inspectors of Commercial Taxes, Bureau of Investigation, visited the place of business of the applicant of RN-178 of 1997 at 12B, Russell Street, Calcutta-16. They took out various books of accounts and records, prepared a seizure receipt and handed over the same to Shri Sheo Prakash Bhatter, one of the partners of the firm and informed him that the said books of accounts and records have been seized by them as they had reasons to suspect that the applicant-firm was attempting to evade payment of tax under the 1994 Act. After the seizure list was prepared and handed over to the applicant, they made certain notes in separate papers. But Shri Sheo Prakash Bhatter, to whom the seizure receipt was handed over, was not allowed to read the said papers. (b) On November 1, 1995 some persons alleged to be Inspectors of Commercial Taxes, Bureau of Investigation, visited the business place of the applicant of RN-179 of 1997 at 23A, Kalakar Street, Calcutta-7. They took out various books of accounts and records of the applicant, prepared a seizure receipt and handed over the same to Shri Om Prakash Bhatter, one of the partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the seized records in both the cases from respondent No. 3 till October 30, 1997. Respondent No. 3 accorded sanction in both the cases for retention of the seized records made on November 1, 1995 till October 30, 1997 by orders dated October 9, 1996 relying upon the grounds stated by respondent No. 2 in seeking sanction for retention of the seized records. 7.. The applicants have challenged the seizure of books of accounts and documents from the business places at 12B, Russell Street in RN-178 of 1997 and 23A, Kalakar Street in RN-179 of 1997. They have also challenged the seizure of books of accounts and documents from the residence of the partners by respondent No. 1 on November 1, 1995. In RN-179 of 1997 the applicants have also challenged the seizure of books of accounts and documents in the office of the Bureau of Investigation on October 1, 1996. They have further challenged the orders dated October 9, 1996 passed by respondent No. 3 according sanction for retention of the seized records till October 30, 1997 in RN-178 of 1997 and RN-179 of 1997. 8.. The case of the respondents is that the Special Officer, Bureau of Investigation, received an allegation from a secr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d records. The report is countersigned by Shri Om Prakash Bhatter in each page thereof. 10.. In the residence also the business records produced on behalf of the applicants showed evidence of attempt on the part of the applicants to evade tax. Shri A. Mukherjee, Inspector of Commercial Taxes, who examined the business records had reasons to suspect that the applicants were attempting to evade payment of tax, after the representative of the applicant had failed to explain the discrepancies in spite of being granted reasonable time and opportunity. Shri A. Mukherjee recorded in detail the reasons for formation of his suspicion and thereafter seized the records as noted in the seizure list. It is denied that the seizure of records was made at the residence of the partners in the face of protest by the partner. The seizure was made in accordance with law after recording the reasons in the report which was countersigned on behalf of the dealer in every page thereof. 11.. The records seized on October 1, 1996 by respondent No. 2 in his office were seized because these records, which were the basis of the returns submitted by the applicant in RN-179 of 1997 in respect of the year 1994-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6; the learned advocate was informed of the order in token of which he countersigned the said order. Thereafter, the formal order was signed by respondent No. 3 on October 9, 1996 and communicated to the applicants. 14.. The allegation that rule 207 of the West Bengal Sales Tax Rules, 1995 was not complied with, it is submitted, is not correct. There was one witness in the case of each seizure from the places of business and there was one witness in the case of seizure from the residence also. This would be evident from the seizure receipts themselves. It would also be seen from the reason recorded on October 1, 1996 in connection with the seizure at the Bureau of Investigation that since the seizure was being made in the office at a belated hour no independent witnesses were available. This indicates substantial compliance with rule 207 of the 1995 Rules. 15.. In their affidavit-in-reply, the applicants have generally reiterated their case and have further submitted that since the seizure of the books of accounts and documents were made on November 1, 1995, the respondents are required to show that there were attempts to evade payment of tax by the applicant prior to that date, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke on behalf of the detaining authority, namely, the State Government as well as the authorities who dealt with the representation, viz., the Assistant Secretary and the Special Secretary (Home Department). The court asked the learned counsel for the respondent to explain as to under what authority the Deputy Superintendent of Police had arrogated himself to the knowledge of the entire file relating to the impugned order and pleaded for the detaining authority and other authorities who subsequently dealt with the file. The learned counsel took an adjournment and then filed an additional affidavit sworn by the Commissioner and Secretary (Home Department). In that additional affidavit no explanation was given to the query of the court. It is in these circumstances that the court held that this practice of allowing a police officer who has not dealt with the case at any point of time at any level and who in the very nature of the case could not have any personal knowledge of the proceedings, to swear a counter and reply affidavit on behalf of the appropriate authorities should be highly deprecated and condemned and the counter and reply affidavits sworn by such officer merit nothing b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bureau of Investigation. From the recorded reasons it is clear that on that date the books of accounts were produced before Mr. Mia. It would be evident from this that Mr. Chakraborty's submission that Mr. Mia was not connected in any way with the investigation of the case cannot be accepted. Hence, Mr. Mia's position in the instant case is not at all similar to the position of the Deputy Superintendent of Police in the case of Gazi Khan AIR 1990 SC 1361. The facts in the case of Shiva Lal [1970] 77 ITR 999 (Cal), relied on by Mr. Chakraborty also are distinguishable from the instant case. In that case the assessee under the Income-tax Act, 1922, specifically alleged that the relevant and material facts had been disclosed to the assessing officer. But the allegations in the affidavit were denied by an officer who was neither the original assessing officer nor the officer who issued the notice. Moreover, the learned advocate for the Revenue was unable to refer the court to any part of the records from which it could be concluded that there was any omission or failure on the part of the assessee to disclose the material facts. In the circumstances, it was held by the High Court that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Khinw Karan Doshi [1994] 94 STC 298 (WBTT). We are of the opinion that the submission of Mr. Saha on this point is reasonable and that there is no reason why the reasons recorded by Shri M.K. Mukherjee regarding the search and seizure operations at 12B, Russell Street and the reasons recorded by Mr. A.R. Mia regarding the seizure at the office of the Bureau of Investigation on October 1, 1996 should not be taken into consideration by us. We are also of the opinion that the affidavits sworn by Mr. A.R. Mia are affidavits sworn by a competent person in the circumstances of the case. 17.. The seizure of books of accounts from the places of business at 23A, Kalakar Street, Calcutta-7 (in RN-179 of 1997) and 12B, Russell Street, Calcutta-16 (in RN 178 of 1997) have been challenged by Mr. Chakraborty on the ground that no reasons were recorded prior to seizure and whatever have been recorded were not reasons in the eye of law as the alleged recorded reasons were irrelevant and perverse. The officers, he alleged, have not indicated clearly how they came to form an opinion that there was any attempt on the part of the dealer to evade tax. As far as the seizure of documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase of gold old ornaments has not been shown in the return for quarter ending June, 1994 as the ornaments were of 22 carat quality and, therefore, was of 91.6 per cent purity. Since gold of purity above 90 per cent was not taxable such ornaments were not liable to tax and therefore there was nothing improper in non-declaration of this purchase in the return. Mr. Saha has argued that the exemption from payment of tax applies to gold of 90 per cent purity and above but that does not mean that gold ornaments of 22 carat are exempted from taxation. He submitted that in sales tax laws "gold" means gold of a fineness not below 90 percentum while "gold ornament" means ornament meant for personal adornment made or manufactured from gold and not set with stones or gems, whether real or artificial, or with pearls, whether real or cultured. Therefore, Mr. Saha argued, what has been purchased by the dealer from unregistered dealers was subject to taxation and omission to report it in the quarterly returns was definitely an attempt at evasion of taxes. Mr. Chakraborty has argued that in the past the dealer has never been assessed to taxation for purchase of old gold ornaments and henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted shows that because the officer had reason to suspect that the dealer was attempting to evade payment of tax, he seized the books of accounts and records of the dealer. If these two documents are taken together there does not seem to be any reason for suspecting that the seizure receipt was not issued after the reasons recorded, or that the reasons were not recorded prior to the seizure. 20.. Similarly, in the case of the seizure at 12B, Russell Street (RN178 of 1997) the reasons recorded by M.K. Mukherjee, Inspector of Commercial Taxes, clearly mention the circumstances under which the Inspector came to suspect that the dealer had been attempting to evade payment of sales tax. From the report it is seen that there were some bound books of accounts for the current year which are mentioned as order slips. None of these order slips showed the addresses of the persons who deposited the goods with the dealer. The partner stated that these orders were in respect of job-work being executed by them and the goods mentioned in those orders had been placed by the persons noted therein. The partner failed to give any satisfactory explanation, as recorded by the officer, why the addre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the applicant could not have been unaware of the reasons having been recorded as the said record is countersigned by Pawan Kumar Agarwal, Accounts Assistant of Bhatter and Co. Mr. Chakraborty has argued that in this recorded reason no details have been given and no specific material has been brought on record and he therefore submitted that the reasons so stated were not reasons in the eye of law. But we cannot agree with the contention of Mr. Chakraborty as on going through the record it is found that Shri Pawan Kumar Agarwal produced a set of books of accounts and other records all pertaining to the year 1994-95. These documents recorded the business transactions of Bhatter and Co., during the year 1994-95 and the dealer admittedly submitted his returns on the basis of the set of books of accounts which were produced. The Assistant Commissioner thereafter observed that another set of books of accounts and records had been seized from the residence of the partners on November 1, 1995 and the set produced by Shri Agarwal was completely different from the one seized on November 1, 1995. It is also noted that the set seized on November 1, 1995 reflects much higher turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 995-96. Considering the date of inspection and seizure, it could not be said that these were old documents whose presence in the residence of the partners could be anticipated. Secondly, Mr. Chakraborty's argument that there was nothing to show that the loose sheets had anything to do with the business of the applicant could be taken seriously if there had been any statement by Mr. Bhatter at that time indicating that these documents had no connection with his business. The reasons recorded by Mr. A. Mukherjee on November 1, 1995 categorically state that Mr. Bhatter failed to explain, in spite of being given sufficient time, these transactions with regular books of accounts. Mr. Chakraborty has also argued that although this recorded reason indicates that there was suspicion that the dealer was trying to evade proper payment of sales tax, there was nothing to show any connection with the seizure or that it was recorded prior to seizure. This does not appear convincing to us. As has been mentioned earlier in connection with the seizure at 23A, Kalakar Street, the recorded reason should be read along with the seizure receipt and mere presence or absence of certain words or phrases in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. 23.. The applicant has alleged that no order of retention of the books of accounts which were seized on October 1, 1996 was issued and hence the retention is illegal. This has been challenged by the learned advocate for the respondents who submitted that the notice under memo No. 2073BI dated August 26, 1997 fixing the date of hearing in respect of retention of these books of accounts was received by the applicant on August 30, 1997. As no one turned up on that day, an order was passed under memo No. 2230BI dated September 12, 1997 and he produced the acknowledgement card which showed that the addressee had received the same on September 22, 1997. The acknowledgement receipt was shown in the court room to the learned advocate for the applicant who thereafter admitted receipt of the same. Under the circumstances, the applicant's allegation that the retention of the books of accounts seized on October 1, 1996 was without any legal authority cannot be considered to be valid. Regarding the retention of documents seized on November 1, 1995 (in RN-178/97 and RN-179/97), Mr. Saha has argued that a show cause notice was issued to the dealer in each of these two cases asking him why t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lid one. 24.. The applicants have challenged the validity of the seizures on the ground of non-compliance with the provisions of rule 207, because in the case of the seizure at the office of the Bureau of Investigation, there was admittedly no witness, while in each of the other three seizure cases, there was only one witness and not two as specified under rule 207. This is an argument which does not appeal to us. It will appear from rule 207 that provisions of the Code of Criminal Procedure had neither been applied in toto, nor mandatorily. The provisions have to be followed in searches and seizures under the Sales Tax Act only "as far as possible". How far rule 207 can be or has been complied with in a particular case depends on the facts of the case. We must not lose sight of the fact that the provisions of the Criminal Procedure Code relating to presence of witnesses during seizure is not just a ritual. It has a specific purpose to serve. In criminal cases the fact of seizures of the articles from the possessor should be proved by convincingly fair and independent evidence to guard against planting or fabrication of evidence. In the cases before us there is no such dispute. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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