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TMI Blog1971 (12) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... r-respondent Is a licensed dealer in gold, gold ornaments and articles of gold. It is authorised to acquire, possess and dispose of gold and gold ornaments and other articles of gold in accordance with the provisions of the Gold (Control) Act, hereinafter referred to as the "Act". 3. The Assistant Collector. Central Excise received information that the petitioner was dealing In foreign gold and that it had in its possession such gold. A raiding party, consisting of the Superintendent, Central Excise, Lucknow, and a few other officers conducted a search of the petitioner-respondent's business premises at 20, Jhandewala Park. Lucknow, on 27-4-1971. The Officers found that Forms Nos. G.S. 10, 11 and 12 were not maintained by the respondent from 19th to 26th April, 1971. They found that Form No. G. S, 10 was maintained upto the 18th April, 1971; Form No. G.S. 11 was maintained upto the 17th of April. 1971 and Form No. G.S. 12 was maintained upto 1st April, 1971 in respect of 71 items upto 11th of April, in respect of two items, upto 17th of April, in respect of two items and upto the 18th of April, 1971 in respect of four items. It might be observed that Form No. G.S. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 10 and 12 from 19th to 26th April. 1971 an equivalent number of other ornaments carrying the same weight were liable to seizure and were accordingly seized. The ornaments, so seized, might at the time of seizure, have been accounted for or might not have been accounted for; but according to the Department they attracted the liability of seizure because an equal quantity of gold actually liable for seizure was not identifiable in the stock. It is relevant to notice the proceedings of the writ petition at this stage. 5. Sri T.N. Sapru, learned counsel for the Department, at the time of the admission of the writ petition, stated that the Department had not checked the accounts and gave an undertaking that the Department would return such ornaments which, after verification, were found to have been properly accounted for. The statement made by the learned counsel clearly suggested that at the time of the seizure the entire stock of the petitioner-respondent was seized without any verification of the accounts: The Bench then issued a direction that the Department will return such of the ornaments as had been properly accounted for. It further directed the checking to be done within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock including the 3770.015 grams of gold sought to be detained was accordingly held illegal and without jurisdiction. 7. The order of the learned Single Judge has been challenged on the ground that the dispute now related only to the 3770.015 grams of gold which is under detention, that this quantity of gold is, according to the appellant, unaccounted for, that the burden of proving that it is accounted for is on the respondent, that there exist no Forms G.S. 10 and 12 in respect of this quantity and that is prima facie proof of the fact that they are unaccounted for. and that the retention of this part of the articles seized was thus justified in law. It was urged in this connection that the existence of reasonable belief as required by Section 66 of the Act is a matter of subjective satisfaction, 8. The Act was enacted to check the smuggling of gold Chapter 12 of the Act deals with the entry, search, seizure and arrest for the purposes of the Act. Section 66 of the Act provides for a power of seizure. Sub-section (1) (a) of Section 66 reads:-- "If any Gold Control Officer has reason to believe that in respect of gold any provision of this Act has been, or is being or is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le enunciated in [1967]63ITR219(SC) was applied. In Smt. Kantamani Venkata Satyavathi v. Income-tax Officer B-Ward, Rajamundry [1967]64ITR516(AP) the Andhra Pradesh High Court held that a fishing or roving enquiry info the whole question as to how the capital has grown with a hope that it might land the Income Tax Officer somewhere wherefrom he can find out that income chargeable to tax has escaped assessment ... ... is not permitted under Section 147(a) of the Indian Income Tax Act. 1961. Section 147(a) of the Income Tax Act 1961 corresponds to Section 34 of the Income Tax Act. 1922. In Haji Ahmad Haji Esak and Co. v. Commr. of Income Tax, Bombay City [1951]19ITR331(Bom) the Bombay High Court held that suspicion, or apprehension was not enough to attract the provisions of Section 34 of the Income Tax Act. 1922. It was further held in that case that mere possession of materials was not information. Information must be a knowledge or a mental awareness of the facts which are revealed by the materials. In Deoki Nandan v. M.L. Gupta, a case arising under Section 21 of the U.P. Sales Tax Act, a Bench of this Court held that the existence of "reason to believe' is a condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery certified goldsmith shall as and when he buys or otherwise acquires or accepts or otherwise receives, or sells, delivers, transfers or otherwise disposes of any gold, enter in the accounts referred to in subsection (1) the prescribed particulars of such gold and the prescribed particulars of the person from whom such gold was bought, acquired, accepted or otherwise received or to whom such gold was sold, delivered, transferred or otherwise disposed of. (3) No licensed dealer or refiner and no certified gold-smith shall, in his capacity as licensed dealer or refiner, either own or have in his possession, custody or control any gold which has not been Included in the accounts referred to in Sub-section (1)". 12. There must, therefore, exist a belief in the mind of the officer concerned that there was a failure to maintain accounts as required by Section 55 of the Act, in respect of the entire stock seized on 27-4-1971 and that there were reasons to support that belief. The officers of the Department at the time of seizure having found that Forms G.S. 10. 11 and 12 were not duly filled seized the entire stock on the supposition that it attracted the liability of seizure, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment formed one opinion at one stage when it seized the goods and formed another opinion at another stage when it detained the goods. What was the state of affairs in the beginning continued throughout. It cannot be said that although there was no reasonable belief at the initial stage of seizure, there exists such a belief at the stage of the detention of the goods. The two stages being inseparable forming parts of a process of one transaction the case will have to be judged on the footing that either there existed a reasonable belief as required by Section 66 of the Act at the initial stage of the seizure or it did not exist at all in this case. 13. The power of seizure is an in-road into the fundamental right to property of a citizen. The power of seizure has to be exercised strictly under an authority of law. See Wazir Chand v. State of Himachal Pradesh: 1954CriLJ1029 and Hamdard Dwakhana v. Union of India 1960CriLJ671 . The power of seizure under Section 66 of the Act has, therefore, to be exercised strictly according to the provisions of that section. We have already held that the seizure of the entire stock in trade belonging to the petitioner-respondent was not under a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this aspect is that he has actually discharged the burden as he has maintained an account of all the goods seized including that portion of the stock which is under detention. The relevant vouchers have been produced and the Department has not made any allegation that the vouchers are either suspicious or fictitious. 17. The provisions of Section 55 of the Act will have to be examined in this regard. That section contemplates two situations; (1) Failure to maintain any account; and (2) failure to maintain accounts in the relevant G.S. Forms; the relevant vouchers on the basis of which the forms are prepared being maintained as required by Rule 13 of the Gold Control Rules, the respondent's case is, that although the G.S. Forms were not posted from 19th to 26th April 1971. the corresponding vouchers of the entire gold received or issued during that period having been maintained strictly in accordance with Rule 13 of the Rules and, their genuineness having not been doubted at the time of seizure there was no violation of the provisions of Section 55 of the Act. The failure to maintain accounts in the G.S. Forms is an offence punishable by a penalty under Section 87 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir weight and purity, in the absence of any mark of identification, an equivalent number of unaccounted ornaments were seized". This shows that the seizure was effected in respect of ornaments which may or may not have been covered by the vouchers from 19th to 26th. The tenor of the statement rather suggests that the seizure was in fact not in respect of ornaments covered by the vouchers, that is why an equivalent number was seized. If the Department's case had been that there was an excess stock of gold or ornaments on the 27th exceeding the quantity covered by the G.S. Forms and the vouchers it might have been possible for it to contend that the quantity or number of ornaments which were in excess could be picked up from the entire stock. But that is not the case of the Department. It does not justify seizure on the basis of any excess in stock. It confines its case to the non-maintenance of G.S. Forms. 'Such gold' will not, in the circumstances, mean any gold. It will mean only unaccounted gold. The allegation is not that the substituted gold is unaccounted for. What it purports to state is that the original being unaccounted for the liability has devolved upon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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