TMI Blog1992 (3) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... cutta imports the EMK and mats for sale in West Bengal and outside West Bengal. The applicant is a registered dealer under the Act of 1941 as well as under the West Bengal Sales Tax Act, 1954 (hereinafter referred to as "the Act of 1954" for the sake of convenience) and the Central Sales Tax Act, 1956. The applicant has necessary licence under the Insecticides Act, 1968, for carrying on his business of manufacturing and selling insecticides. The applicant alleges that the mat, which is manufactured by the applicant, is an insecticide under the provisions of the Insecticides Act, 1968. The mat ii at first inserted into the heating place located on the EMK and thereafter the EMK is operated by electricity. As soon as the electricity passes through EMK, a flavour comes out from the mat by which the mosquitoes are killed and destroyed. For the purposes of taxation the Act of 1941 is applicable regarding EMK and the Act of 1954 is applicable regarding mats. Taxes were being regularly paid by the applicant on the sale of EMK and mats in accordance with the provisions of the Act of 1941 and the Act of 1954. On April 19, 1991, the respondent No. 1 as well as the Commercial Tax Officer, Bho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid. 4.. An affidavit-in-reply was filed for the applicant. Subsequently, when the case was taken up for hearing on January 15, 1992, the applicant filed an application for a direction on the respondents to supply the applicant with a copy of the report of the inspector mentioned in paragraph 21 of the affidavit-in-opposition of the respondents, giving out the reasons for the seizure made on April 19, 1991. On that date Mr. T.N. De, the learned State Representative, supplied to Mr. Sumit Chakraborty, learned advocate for the applicant, a copy of the report of the inspector dated April 19, 1991. After receipt of that report of the inspector, the applicant filed a supplementary affidavit wherein the applicant prayed for passing of an order directing the respondents to treat mat as a notified commodity under the Act of 1954 and directing further the respondents not to take any steps against the applicant for not producing permit at the check-post on importation of mats. 5.. The applicant's case in the supplementary affidavit is that the applicant used to obtain permits for importation of mat which was a notified commodity under the Act of 1954. On the basis of such permit, the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned must necessarily hold a bona fide suspicion that the person whose premises is to be searched is a dealer who is evading or attempting to evade payment of taxes and that he must also form an opinion that for the purpose of detection or prevention of such evasion of payment of taxes, it would be necessary to seize the material accounts, registers and documents from the dealer. It has also been held in the case of State of West Bengal v. Oriental Rubber Works [1977] 39 STC 333 (Cal) that unless the concerned officer has a suspicion and unless he satisfied himself about the necessity of the search, he cannot conduct the search. In effecting seizure, the authority must record his reasons which must be based on facts with reference to the purpose or object behind it. Seizure under sub-section (3) of section 14 of the Act of 1941 can be made only with reference to detection of evidence of evasion of payment of tax payable under the Act of 1941. In the present case, there is no denial of the allegations of the applicant that the applicant was paying regularly taxes on the sale of mats in accordance with the provision of the Act of 1954. The applicant applied for registration und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration under the Act of 1954 in respect of the mats. The provisions of section 5(4)(b) of the Act of 1954 show that the prescribed authority has power, for good or sufficient reasons, to cancel, modify or amend any registration made or any registration certificate issued by him. If mats ought to have been governed by the Act of 1941 and not by the Act of 1954 under the provisions of which registration certificate was issued to the applicant in respect of mats, the concerned authority ought to have proceeded under the provisions of section 5(4)(b) of the Act of 1954 for cancelling the registration in respect of mats under the Act of 1954 and for taking steps for bringing mats under the Act of 1941, instead of making the seizure on April 19, 1991, on the view that mats would be governed by the Act of 1941 and not by the Act of 1954. The question of rate of tax depends on the Act which is to be followed in respect of mats. If the Act of 1954 is to be followed in respect of mats, the alleged less payment of tax at 4 per cent can be no ground to justify seizure on April 19, 1991. Considering these facts, we are of the opinion that there was no "reason to suspect" that the applicant was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... things from the rigours of that Act. Under section 38(1)(b) of that Act, nothing in that Act shall apply to any substance specified or included in the Schedule or any preparation containing any one or more of such substances, if such substance or preparation is intended for purposes other than preventing, destroying, repelling or mitigating any insects, rodents, fungi, weeds and other forms of plant or animal life not useful to human being. The definition of "insecticide" in section 3(e) comprehends (i) any substance specified in the Schedule of that Act as well as (ii) any preparation containing any one or more of such substances. In the Schedule of the Insecticides Act, 1968, a list of insecticides has been given. Allethrin is one of these articles mentioned in that list of insecticides in the Schedule of that Act. On the basis of the Schedule of that Act read with the provision in section 3(e)(i) of that Act, the contention of Mr. Chakraborty is that mat is an insecticide as it contains "d-Allethrin 4 per cent" and is described on the label as "mosquito mat insecticide" to avert misbranding, the word "misbranded" being defined in section 3(k) of that Act. An insecticide shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Lal v. R. Kondiah AIR 1979 SC 1132 and has contended that meaning of words and expressions used in an Act must take their colour from the context in which they appear. The contention is that the meaning of insecticide, as appearing in the Insecticides Act, 1968, should not be considered for the purpose of taxation under the Act of 1941. Mr. De has also referred us to the decision of the Supreme Court in the case of Commissioner of Income-tax v. Amarchand N. Shroff [1963] 48 ITR 59 and has contended that the legal fiction created for the purpose of understanding the meaning of insecticide on the basis of the provisions in section 3(e)(iii) of the Insecticides Act, 1968, can only be used for that definite purpose for the Insecticides Act, 1968 and should not be extended beyond that legitimate field. Mr. De has also referred us to another decision of the Supreme Court in the case of Ramavatar Budhaiprasad v. Assistant Sales Tax Officer [1961] 12 STC 286 and has contended that the question as to whether the mat is an insecticide or not should be decided not on taking any technical or scientific meaning of insecticide, but on understanding the term insecticide as used in common parlan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same kind or nature, so far as the Act of 1941 and the Act of 1954 are concerned. Even then, it is not necessary for us to enter into the controversy whether the Insecticides Act can be considered for determination of the question in dispute before us, though it is not a cognate Act. As already stated, the meaning of the word insecticide will be as it is understood in trade circle or in commercial parlance. In trade circle the mat is understood as an insecticide in view of the existence of the label on the package "d-Allethrin 4 per cent mosquito mat insecticide". The traders deal with insecticides in accordance with the provisions of the Insecticides Act, 1968. The preamble to that Act shows that Insecticides Act, 1968, is for regulating the import, manufacture, sale, transport, distribution and use of insecticides. We have already referred to the relevant provisions of the Insecticides Act, 1968, for the purpose of showing that nobody can deal with insecticides otherwise than in accordance with the provisions of the Insecticides Act. Accordingly, we are to hold that mat manufactured by the applicant is understood in commercial parlance or trade circle as an insecticide and as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that the Commercial Tax Officer, Bhowanipur Charge, thought that the mats sold by the applicant under the brand name Good Knight containing Allethrin should be treated as a goods taxable under the Act of 1941. For that reason, an Inspector of Commercial Taxes visited the place of business of the applicant and ultimately seized books of account and documents on the apparent ground that tax was being evaded or attempted to be evaded by the applicant-company. It will appear from the discussion in detail made by the honourable Chairman that no such reason was actually present. The company was registered as a dealer under the Act of 1954 in respect of the mats. The concerned authority might cancel the registration under section 5(4) of the Act of 1954, if he thought that the registration was not proper. He also might have taken necessary steps for assessment of tax under the Act of 1941 at the stage of assessment. Without doing so, the step of seizure was adopted which does not appear to me to be in conformity with the object of section 14(3) of the Act of 1941. I must add that there has not been any allegation of suppression of sales or any other tactics adopted by the applicant fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but only repels it. Even if that is true, the trade circle cannot but treat this material as an insecticide because of the mandatory provisions in the Act of 1968. Therefore, even though, technically the Insecticides Act, 1968, may not be directly referable for interpretation of the expression "insecticides" as used in the Notification dated March 29, 1986, the definition in the Act of 1968 indirectly applies, because the trade circle and the commercial parlance must follow the provisions of the Insecticides Act, 1968. This is a peculiar situation, but undoubtedly our view is the only appropriate solution, because otherwise there will be a complete anarchy. Let us think of a situation where we apply the Act of 1941 to the mat taking it as a noninsecticide, but the trader is bound to take a licence under the Insecticides Act, treating it as an insecticide. This is a highly anomalous situation which itself is a very strong reason for holding that the mat containing Allethrin is an insecticide as understood under the impugned notification dated March 29, 1986, issued under the Act of 1954. Accordingly, I agree with the honourable Chairman that the mat as sold by the applicant-compan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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