TMI Blog1968 (9) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... in this State and Calicut in the Kerala State. The learned Judge declined to accept that the said provision is invalid, and held that R.S. Jhaver v. Commissioner of Commercial Taxes[1965] 16 S.T.C. 708. and Commissioner of Commercial Taxes v. R.S. Jhaver[1967] 20 S.T.C. 453., in which this Court held, the Supreme Court agreeing with it, that section 41(4) was invalid, were distinguishable. The lorry, K.L.R. 3919, was searched by the Check Post Officer and was found to carry at the time 85 bags of which 45 contained maida, 20 atta and 20 khandasari sugar. The lorry driver, however, carried with him a sale bill and delivery note which covered only 85 bags of atta. On the ground that the lorry attempted to transport without any sale bill or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a law of goods and a power to confiscate is not ancillary or incidental to a power to tax on sale or purchase of goods, though of course such power to tax undoubtedly included the power to make due provisions to prevent or check evasion of tax and make it unprofitable. On that view this Court struck down section 41(4) which provided for search and seizure, from the premises of a dealer, of goods unaccounted for and for confiscation thereof. The section also provided for levy of penalty in lieu of such confiscation. The Supreme Court agreed with the conclusion of this Court as to the invalidity of section 41(4), but on a different ground. Clause (a) of the second proviso to section 41(4), which was introduced by a later amendment, stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te goods found on search and not accounted for in the books of account of the dealer was an ancillary power necessary for the purpose of stopping evasion of tax. Section 42(3) of the Act, with which we are concerned in the appeals before us, is substantially in pari materia, if not identical, with section 41(4) the only difference being that unlike the latter, which provides for goods searched and seized in the premises of the dealer, which are not accounted for, the former concerns itself with goods under transport by any vehicle or boat across the check post or barrier, and not covered by the specified documents. Except for this difference, which is quite inconsequential from the standpoint of the question of invalidity, clause (a) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our opinion, the factual position in this case has or can have no bearing on the legislative competence to enact section 41(4) or section 42(3) in their present form, or the invalidity of the provisions, because they, as they exist at the moment, proceed to charge the goods to tax even before a sale or purchase thereof has occurred which is repugnant to the scheme of the Act. Legislative competency to provide for confiscation of goods entirely depends on whether such a power is ancillary or incidental to a power to check evasion of tax or to make it unprofitable which is undoubtedly a part of the power to tax on sale or purchase of goods. This Court held that such a power was not ancillary or incidental to the power of taxation of sale or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 42(3), proviso 2(a). The appellant is an out of State dealer. So far as his purchase of khandasari sugar from Nellore is concerned, the transport by him has no reference to any sale or purchase, whether inter-State or intra-State, chargeable to tax in this State. It does not also appear that the sales of goods in question are subject to single point of taxation. Even so, it is nobody's case that the first sales or any sales, for that matter, have been effected by the appellant. In such circumstances, two things will follow: one is if there is evasion of tax it is not on the part of the appellant. If he colluded, as the learned Judge apparently thought, that is not covered by the penal provision in section 42(3). Secondly, it is only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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