9911796707
TMI Blog1992 (9) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... uveer, Jaswantlal and Smt. Rampyari. The petitioner carries on the business of electric goods of all kinds. The petitioner has a sister concern known and styled as M/S Khanna Electric Corporation a partnership firm constituted by 4 partners: Sarva Shri Raghuveer, Sudarshan Kumar, Jaswantlal and Smt. Rampyari and they are doing the business of electric goods at Sri Ganganagar and is located in the same premises. Shri N.R. Vyas, respondent No. 3 while posted as Assistant Commercial Taxes Officer, Ward No. 1 of Sri Ganganagar Circle, was the assessing authority in relation to the petitioner under the provisions of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as the Act of 1954 ). After the transfer of respondent No. 3 as Assistant Commercial Taxes Officer, Anti-Evasion, Bikaner, he ceased to be the assessing authority of the petitioner under the provisions of the Act of 1954. The respondent No. 3 while posted as Assistant Commercial Taxes officer, Wardl, Sri Ganganagar allegedly received information from the Inspectors Commercial Taxes, Sarva Shri K.D. Sharma and Santilal that the petitioner was indulging in tax evasion and on the basis of that information on 14.8.1986 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt No. 3 under the provisions of Rule 52(1) of the Rajasthan Sales Tax Rules, 1955 (referred to hereinafter as the Rules of 1955 ) is also bad as the same being in violation of the principles of natural justice, as the petitioner was not afforded a reasonable opportunity of being heard before transferring this case. In this back-ground, the demand notices for the years 1985- 86 and 1986-87 have been challenged by the petitioner by filing the present writ petition. 3. A reply has been filed by the respondents and the respondents have taken the position that the respondent No. 3 was posted as Assistant Commercial Taxes Officer, Ward No. 1, Sri Ganganagar and he was the assessing authority of the petitioner firm under the provisions of the Act of 1954. It is also admitted that Shri N.R. Vyas was transferred as Assistant Commercial Taxes Officer, Anti Evasion, Bikaner in the month of July, 1987. Shri N.R. Vyas, respondent No. 3, while working as Assistant Commercial Taxes Officer. Ward 1, Sri Ganganagar did survey the business premises of the petitioner firm on 14.8.1986 in the presence of the petitioner firm's partner Shri Raghuveer. It is submitted that when the premises of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it was a case of survey and inspection, which is covered by the provisions of Sub-section (2) of Section 22 of the Act of 1954. It is further submitted that the account-books were retained by the respondent No. 3 beyond the period of 3 months under the orders of the Commissioner, Commercial Taxes, Rajasthan. Thus, it is submitted that the retention is also not illegal. Regarding the transfer of the file of the petitioner firm by the Commissioner, Commercial Taxes, Rajasthan to the Assistant Commercial Taxes Officer, Anti Evasion, Bikaner, it is submitted that this was done in the exercise of the power under Rule 52(1) of the Rules of 1955. A notice dated 16.10.1987 was served on the petitioner in exercise of the power conferred by Sub-rule (1) of Rule 52 by the respondent No. 2, whereby it was proposed to transfer the case of the petitioner firm from the Assistant Commercial Taxes Officer, Ward 1, Sri Ganganagar to the Assistant Commercial Taxes Officer, Anti Evasion, Bikaner, respondent No. 3. It is submitted that even before issuance of the notice dated 16.10.1987 by the Commissioner, Commercial Taxes, Rajasthan, the petitioner firm was served with a notice dated 31.7.1987 (Ann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 22(3), (4) and (6) of the Rajasthan Sales Tax Act do not violate Article 19(1)(g) or (g) of the Constitution. The reasons are as under: (1) The provisions have been enacted to enable the Sales- tax authorities to prevent the evasion of tax and, therefore, the purpose underlying these provisions is undoubtedly in the general public interest. (2) As a result of seizure of account books a dealer is certainly deprived of their use and to that extent there is infraction of his fundamental right, but the underlying purpose of seizing the account books is for the collection of the legitimate tax dues of the State and to prevent the evasion thereof. It will not be open to the concerning officer to retain the account books or documents seized by him Indefinitely without his utilising them for the purposes of their examination or for any enquiry or proceeding or for a prosecution. The restriction contained in Sub-section (3) of Section 22 is not disproportionate to the evils sought to be eliminated. (3) The necessity of recording the reasons in writing is calculated to eliminate arbitrariness on the part of the authority or officer concerned while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Counsel in terms of Sub-section (2) of Section 22 read with Sub-section (4) and Sub-section (8) of Section 22 of the Act of 1954. Sub-section (2) of Section 22 says that it will be incumbent upon the dealer to keep his business premises, godown, factory, vessel or vehicle etc. open for inspection and examination of the authorities at all reasonable times. Therefore, the concerned authority can always survey and inspect the business premises of a trader and for such inspection and examination there is no prohibition. But Sub-section (3) says that if an officer or authority has reason to suspect that any dealer is evading payment of tax then he may for reasons to be recorded in writing seize his account-books, registers or other documents and shall give the receipt of those seizure. Sub-section (3) further says that such officer who seized those account-books, registers and other documents shall retain those account-books, registers and documents for their examination or for any enquiry or proceedings or for prosecution so long as they are necessary. But a proviso has been added which lays down that such accounts-books, registers and documents seized shall not be retained beyon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed thereafter. Therefore, there is a distinction between survey and inspection on the one hand and search and seizure on the other hand. Sub-section (4) only enables the authorities to enter into the business premises and search at all reasonable times any office, shop, godown, vessel and vehicle or any other place of business or any building or place where any such authority or person has reason to believe that the dealer keeps or for the time being keeping any goods, account books, register other documents. Nonetheless the moment the authorities start making exhaustive enquiry and collecting the incriminating material that amounts to search and for that the provisions of the Code of Criminal Procedure have to be complied with. 8. In the present case, it is true that when the Assistant Commercial Taxes Officer, respondent No. 3 alongwith his officers entered the premises of the petitioner firm for just inspection and survey, it was found that there was a case of further search as there was suspicion of evasion of tax and in that process they seized certain incriminating documents of the dealer and while seizing these documents etc. the raiding party should have to follow th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnataka Sales Tax Act, 1957. The two appellants challenged the seizure by filing writ petition being illegal on the ground that it was made without complying with the mandatory requirements of the provisions of Section 28 of the Act of 1957. The learned Single Judge dismissed the petitions of both the appellants on the ground that the seizure was made upon inspection and not upon search and therefore, the seizure was legal. Therefore, both the appellants filed appeals and in the appeals it was held that the seizure was illegal and the documents were ordered to be returned, though the department was permitted to retain the extracts and notes made therefrom. 11. In the case of Kehar Singh and Ors. (supra), the Hon'ble Supreme Court held that under the provisions of the Code of Criminal Procedure, for search and seizure two respectable witnesses either from the locality or otherwise should be taken so as to lend support to the case of the prosecution. The presence of two public witnesses under the Scheme of the Code of Criminal Procedure is necessary. 12. Mr. Mehta, learned Counsel for the revenue could not justify the search and seizure of the account-books and registers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l manner then too the same can be used for assessing the tax liability of the assessee after due notice to him. Thus, in our opinion, there is no prohibition for the taxing authorities to use these account-books and registers seized from the premises of the incumbent for assessing the tax liability of the petitioner after due notice to the, assessee to account for the evasion on the basis of these account-books and other incriminating documents. Thus, this contention of Mr. Garg is overruled. 19. The next question learned Counsel urged before us is that the retention of the books beyond the period of 3 months is illegal. It is submitted that no unguided or unlimited power can be conferred on the authorities to retain the books. In this connection, suffice it to say that the proviso to Sub-section (3) of Section 22 only provides the period of 3 months to the officer/authorities for retaining the account books, registers or documents etc. seized and after the period of 3 months if they want to retain the same then they will have to obtain an order in writing from the Commissioner for reasons to be recorded therein. There is no two opinion that the executive authorities cannot be g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1965. 22. Likewise, Metal Fittings P. Ltd. and another v. Union of India and Ors. [1983]141ITR758(Delhi) was also a case under the Income Tax Act, 1961 and the Delhi High Court held that under Section 132 of the Income Tax Act, 1961, it is a condition precedent for retention of the documents seized beyond the period of 180 days that approval of the Commissioner should be obtained before the expiry of the period of 180 days and the Commissioner has to record its reasons, as the provisions were found to be mandatory. 23. Likewise, in the case of Commissioner of Income Tax, West Bengal III and Ors. v. Oriental Rubber Works [1984]145ITR477(SC) , it was held that retention of the books beyond the period of 180 days is illegal and the extension should be obtained before the expiry of the period of 180 days and the Commissioner should record the reasons for further extension of the period and it was held that the communication thereof is mandatory and in default of such expeditious communication regarding the approval of the Commissioner and for retention of the books and documents seized by the authorities, the retention will be invalid and unlawful. 24. Mr. Mehta, learned Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (3) of Section 22 is mandatory. 26. The next question relates to the communication of the order of Commissioner. 27. In the case of Oriental Rubber Works (supra) the Hon'ble Supreme Court held that the non-communication of the reasons recorded by the Commissioner for extension will render the retention illegal. But that was so because an appeal against the order of the Commissioner was provided under the Act. Therefore, if the reasons are not recorded and communicated to the party for retention of the account-books and document, the party will not be able to effectively file an appeal before the Board. Therefore, in that context, the Hon'ble Supreme Court held that the communication of the reasons is mandatory. But here there is no such provision of appeal against the order passed by the Commissioner permitting the officer to retain the account-books and other documents beyond the period of 3 months. As such it cannot be held that the non-communication of the reasons will render the retention illegal. 28. In the present case, no order extending the period of 3 months has been placed on the record. It has only been said in the reply that the books were ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should appear on 3.11.1987 and to show-cause against the proposed transfer. This notice was served on the petitioner on 20.10.1987, a copy whereof has been placed on the record as Annex. R.3, which bears the signature of Shri Raghuveer a partner of the petitioner firm. But no reply was received till 2.11.1987 and the case was fixed on 3.11.1987 before the Commissioner for orders. It is admitted that a reply was received in the office of the Commissioner, Commercial Taxes dated 2.11.1987, on 6.11.1987 and not on 4.11.1987 as alleged by the petitioner. Therefore, the matter was decided by the Commissioner without taking the representation of the petitioner. 30. From the narration of these facts we are satisfied that the petitioner had been given sufficient opportunity to make his representation but he did not choose to file any reply when the notice was given to him on 31.7.1987 and he sought time on 10.8.1987. Then, again he did not appear on 31 8.1987. When second notice was given he was expected to file reply by 3.11.1987 but he dispatched the reply on 2.11.1987 which reached the office of the Commissioner, Commercial Taxes, Rajasthan on 6.11.1987 and before that on 3.11.1987 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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