TMI Blog1967 (12) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... in lieu of confiscation of the goods, passed under section 42(3)(a) of the Madras General Sales Tax Act, 1959. The prayer in Writ Petition No. 1154 of 1965 is for the issue of a writ of mandamus to the respondent directing redelivery of 45 bags of maida, 20 bags of atta and 20 bags of khandasari sugar belonging to the petitioner and which are in the possession of the respondent. The two writ petitions are connected, because the penalty, the subject-matter of Writ Petition No. 1104 of 1965, was imposed in lieu of confiscation of the goods mentioned in Writ Petition No. 1154 of 1965. The affidavit of the petitioner reveals the following facts: The petitioner is a partnership firm carrying on business in foodgrains, wheat products, etc., in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not carried in the lorry. In the above circumstances, the respondent took possession of the goods and issued a notice to the petitioner to show cause against confiscation and pay a penalty of Rs. 1,000 in lieu of confiscation. The petitioner submitted that he had really obtained sale bills for the purchase of maida and sugar from the respective merchants, but by mistake only the sale bill and delivery note for atta were sent with the lorry driver without sending the sale bills for sugar and maida. He also pleaded that the maida purchased was in the open market and that khandasari sugar was purchased in Andhra Pradesh and therefore no permit from the Civil Supplies Department was necessary for their transport. But the respondent did not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscation in section 42(3) of the Act and the provision for levy of penalty in lieu of such confiscation in section 42(3), second proviso, are identical to similar provisions in section 41(4) of the Act, and for the same reasons as were adopted by the Bench of this Court in the decision cited above, the seizure and confiscation in the present case should be declared illegal and the goods directed to be restored to the petitioner and the penalty order annulled. It appears to me that there are substantial differences between section 42 and section 41, and these differences have to be taken into account for dealing with the argument mentioned above. Section 41(4), when it confers on the officers of the Commercial Taxes Department the power to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unprofitable. The Act is not a law on goods. No such law can be made under the guise of entry 54, List 11, of the Seventh Schedule." The learned Judge thereafter held that sub-section (4) of section 41 in so far as it provided for such a power was not within the ambit of entry 54 and was neither ancillary nor incidental thereto and was incompetent and invalid. The Andhra Pradesh High Court, however, in a decision reported in Papanna v. Deputy Commercial Tax Officer[1967] 19 S.T.C. 506. arrived at a diametrically opposite conclusion and held that the power to seize and confiscate goods is only by way of punishment or penalty which is intended to operate as the most effective deterrent against tax-evaders and it is therefore ancillary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the tax had to be ordered to be recovered even before a sale had taken place in addition to the levy of penalty. They remarked that in the majority of cases under the Act recovery of tax is provided at the point of first sale in the State, and that therefore, the provision for recovery of tax in addition to penalty contained in the second proviso to section 41(4), was clearly repugnant to the general scheme of the Act. Since this second proviso and the power to seize and confiscate are not severable from the rest of sub-section (4), sub-section (4) with the two provisos thereto must fall on the narrow ground stated above. The Supreme Court struck down sub-section (4) of section 41 for reasons different from those which commended thems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the petitioner contends that since the Supreme Court has not held specifically that the reasons given in the decision of the Bench of this Court in R. S. Jhaver v. Commissioner of Commercial Taxes' are not valid, it will be open to this Court to adopt those reasons wherever they apply. From this point of view also, I am of the opinion that the attack on section 42 cannot be sustained since the facts indicate that a sale of the goods had taken place even according to the admission of the petitioner. It was open to the authorities to take the view that the clandestine features in the transport in this case, indicated a clear intention on the part of the petitioner to suppress information about the sales in collusion with the selle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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