TMI Blog2013 (2) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... d only see whether the satisfaction of the authority is due to mala fide reasons or based on extraneous factors or mere rumours. If there are some materials available for a reasonable and prudent man to believe that a search is warranted, then it is not for this Court to delve deeper into the subtle and complex intricacies involved in the process of the formation of the opinion in the mind of the authority concerned. However, in the present case before this Court, the respondents have been in a position to show that certain transactions relating to the services rendered by the petitioner companies have taken place within the jurisdiction of the Coimbatore Commissionerate. It is found that the acceptance of certain contractual obligations, billing, accounting and other such processes had further place within the jurisdiction of the Coimbatore Commissionerate. Based on the bona fide belief that certain transactions were being made through the offices of the petitioner' companies at Coimbatore, the first respondent had issued to the impugned warrants to search the premises in question. Especially, when the petitioners have not been in a position to show that the respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises at 21A, Manorama Estate, Rashulgarh, Bhubaneswar, Orissa. 3. It has been further stated that the petitioner has never provided any service within the jurisdiction of the Coimbatore Commissionerate, nor it has been registered under the said Commissionerate. Its registered office is situated at Centre Point Building, 4th floor, No.405, 21, Hemanta Basu Sarani, Kolkata, in the State of West Bengal. The petitioner has been maintaining its books of accounts at its registered office at Kolkata. The petitioner has its branch office, at Coimbatore, in the state of Tamil Nadu. Usually, projects orders and work orders are placed at its Head Office, at Kolkata. 4. It has been further stated that its address, 119, Amaravathy second street, Gurusamy Nagar, Coimbatore, is a premises shared by a private limited company, by the name of Chitra Builders Private Limited, which is the petitioner in W.P.No.22902 of 2012. The said private limited company has a branch office at the given address. The petitioner, in W.P.No.20943 of 2012, is an independent enterprise with separate books of accounts, PAN number, VAT registration and service tax registration. 5. With regard to the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited, as one of its main contractors, for various infrastructural works. It has been further stated that the petitioner, in W.P.No.22902 of 2012, has its branch office, located at No.119, Amaravathy second street, Guruswamy Nagar, Bharathiar University Post, Coimbatore. The residence of Ms.Rakhi shah, the Director of the petitioner company, is located at No.357, Western Valley, Green Home, Onampalayam, Coimbatore. While so, the offices of the Central Excise Service Tax Department attached to the head quarters preventive unit, Coimbatore, had conducted a search, on 1.3.2012, at the branch office of the petitioner, located at 119, Amaravathy second street, Guruswamy Nagar, Coimbatore and at the residence of Ms.Rakhi shah, the Director of the petitioner company, at No.357, Western Valley Green Home, Onampalayam, Coimbatore. However, the copy of the search warrant had not been given to the petitioner, in spite of a request having been made for the same. A mahazar had been drawn, when the searches had been conducted, on 1.3.2012. In the said mahazar, it had been recorded, as though it has been deposed that the head office of the petitioner was situated at Coimbatore. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. As such, the recovery by the officer of the respondent department is arbitrary and illegal. The petitioner had registered their protests, vide their letter, dated 9.8.2012. It has also been stated that the activities of the site formation and excavation carried on by the petitioner is exempted from the levy of service tax on account of the notification, in notification No.17/2005-ST, dated 7.6.2005. The petitioner had not been carrying on any taxable activities, within the jurisdiction of the respondents. The petitioner had been rendering its services only in the states of Orissa and West Bengal. A search could be conducted, under Section 82 of the Finance Act, 1994, only by the jurisdictional Commissionerate where taxable service is being rendered, as held in the decision rendered in COMMISSIONER OF CENTRAL EXCISE KOLHAPUR Vs. HELIOS FOOD ADDITIVES PRIVATE LIMITED, reported in (2012) 25 STR 107 (Tri-Mum) and ORES INDIA PVT LIMITED AND OTHERS. Therefore, the searches conducted by the offices of the Coimbatore Commissionerate, on 1.3.2012, is arbitrary and illegal and therefore, they are liable to be ultra vires Section 82 of the Finance Act, 1994. In such circumstances, the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps of companies, namely, Sri Sunil Kumar Shah, is located at Western Valley, Green Home, Onapalayam village, Coimbatore. They have the textile unit in the name and style of Chitra textiles at Kallampalayam, Pappampatti Pirivu, Coimbatore. 18. It has been further stated that the information received by the respondents had been discussed at the level of the Commissioner and thereafter, the Additional Commissioner of Central Excise, having applied his mind to the materials available before him, had the reason to believe that certain incriminating documents and things relating to the companies, showing large scale service tax evasion, had been secreted in the premises in question. Accordingly, the first respondent had taken a conscious decision to issue search warrants, under Section 82 of the Finance Act, 1994, read with Section 12E of the Central Excise Act, 1944, made applicable to service tax, in terms of Section 83 of the Finance Act, 1994. Based on the search warrants issued, a search was conducted, on 1.3.2012, in the premises at 119, Amaravaty second street, Gurusamy Nagar, Vadavalli, Coimbatore and at 357, Western Valley Green Home, Onapalayam village, Coimbatore and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit of ₹ 17 crores. Having collected such a huge amount of service tax, the service providers ought to have remitted the same and should have also informed about it by complying with the provisions of the service tax law. In such circumstances, there is a reasonable belief that this amount had not been remitted to the Department. Similarly, there is no evidence to show that the Department was atleast informed of the committed service tax liability. As such, the tax liabilities of the petitioner companies ought to be quantified and that could be done only if the petitioners co-operate with the investigating team. 20. It has been further stated that the search warrant had been issued based on specific information and that it was not for any specific company or concern. It had been issued in respect of the premises said to be housing all the companies/concerns, which includes the petitioner companies. During the search, recovery had been made of incriminating documents and things showing collection of huge amounts of service tax from the service recipient, namely, Larsen and Toubro Private Limited. It had also been found, from the scrutiny of the documents, that the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of service would not, by itself, determine the jurisdiction of the tax authorities. In fact, the issue relating to the jurisdiction of the tax authorities concerned would also depend on the location of the premises or office of the service provider where the transactions, including accounting, billing and banking, are taking place, as in the case of the petitioners company. A mere holding of service tax registration certificate, PAN numbers and VAT registration at other places would not take away the jurisdiction of the Coimbatore commissionerate to investigate the matter relating to the evasion of the service tax liability by the petitioners. 23. It has also been stated that the non-rendering of service by the petitioners, within the territorial jurisdiction of Coimbatore commissionerate, does not deter the authority from conducting a search of the premises within its jurisdiction, when there is a reasonable belief based on the specific information that the documents, records and things had been secreted at the petitioners premises, at Coimbatore, containing incriminating materials about the evasion of service tax. 24. It has been further stated that the search warrant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual place of the rendering of service, as claimed by the petitioners. Further, the claim of the petitioners that the services rendered by them had been exempted, as per the notification No.17/2005-ST, dated 7.6.2005, cannot be accepted, as it is only a conditional exemption, that has been granted by the said notification. Nothing has been shown on behalf of the petitioners to support their claim that they are entitled to be exempted from the payment of service tax for the services rendered by them. Further, an element of surprise is essential for a search to achieve its desired results. No prior information is given to those in occupation of the premises to be searched. Therefore, it is not open to the petitioners to claim that they had not been given prior notice of the search conducted on 1.3.2012. Further, all the documents and other things seized at the petitioners premises, at Tantra , 119, Amaravaty street, Guruswamy Nagar, Coimbatore, and at No.357, Western Valley, Green Home, Onampalayam, Coimbatore, are required for a detailed investigation and initiation of proceedings, under the Finance Act, 1994 and therefore, they cannot be returned to the petitioners, at this stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had no proper information for having a reason to believe for the issuance of such warrants. If they had the necessary information, specific warrants could have been issued in the names of the particular persons. 33. The learned counsel appearing on behalf of the petitioners had relied on the decision of the Karnataka High Court, in Nenmal Sankarlal Parmer Vs. Assistant Commissioner of Income Tax, (Investigation) (1992) 195 ITR 582, to state that the search proceedings could be challenged and held to be invalid on the ground that no proper information was available for issuing the search warrant. Further, he had submitted that if any proceedings had been initiated based on incorrect information, it could be categorised as `legal malice', as held in H.L.Sibal Vs. Commissioner of Income Tax, 1975 101 ITR 112 PH. 34. The learned counsel had further submitted that the facts constituting the information must be relevant to the enquiry. They must be in such a form, based on which a reasonable and prudent man can come to the requisite belief or conclusion. 35. It had also been stated that the petitioners have never rendered any taxable service at Coimbatore, nor have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd as to whether there was a rational connection or a relevant bearing to the formation of the belief and that they were not extraneous or irrelevant for such a purpose. 39. It has also been stated that the search warrant issued by the first respondent is not proper, as it had not been issued against any person. The warrant of authorisation must specify the person in respect of whom it is issued, as held in Southern Herbals Ltd Vs. Director of Income Tax, (1994) 207 ITR 55 (Kar.). Further, the search of the premises of a partner of a company, firm or concern should have been specifically authorised, as held in Nenmal Shankarlal Parmer Vs. Assistant Commissioner of Income Tax, (1992) 195 ITR 582. 40. The learned counsel appearing on behalf of the petitioners had also pointed out that it is the Commissioner, in whose territorial jurisdiction the assessees have their registered office, can only exercise the jurisdiction for service tax purposes. Further, no copy of the search warrant had been furnished to the petitioners before the search had been conducted. 41. Even though Section 82 of the Finance Act,1994, specifically provides for the issuance of a search warrant by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination, on 20.2.2012, for their consideration. From the information, it was gathered that there was a large scale service tax evasion by M/s.Chitra Group of companies comprising of five concerns, namely (1) M/s.Chitra Builders (P) Ltd. (2) M/s.Chitra Construction Company (3) M/s.Coastal Infra (4) Costal Infratech (P) Limited and (5) M/s.Pratik Associates. 46. It had also been learnt that the said concerns had been providing various taxable services like site preparations, works contracts etc. to M/s.Larsen and Toubro Private limited and that they had received the payment of the service tax amounts. It had also been noted that the turnover of the group of companies was more than 300 crores and the service tax evasion by them was to the tune of about 30 crores. 47. It had also been stated that the gist of the information had been discussed, on 21.2.2012, at the level of the Assistant Commissioner, the Additional Commissioner and the Commissioner, along with the documents furnished by the informer. The observations of the Senior Officers had been recorded in the office file maintained in the office of the respondents. Sufficient care was taken to analyse the data availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel appearing on behalf of the respondents had relied on the decision rendered in P.K.Ghosh Vs.Kailash Kumar Mazodin 2000 (117) E.L.T. 14 (Cal), wherein, it had been held that the procedural, statutory and judicial restraints evolved by the Courts of law, thrown around a suspect as a cloak of protection, should not be pushed to the extreme verge, so as to degenerate into a taboo of disability in dealing with economic offences, by an organised section of the community. 51. It had been further stated that Rule 4 of the Service Tax Rules, 1994, contemplates the registration by every person liable to pay service tax. Every person has to subject himself to the concerned jurisdictional authority. If not, the concerned authority is empowered to invoke his jurisdiction for the necessary service tax compliance by the parties concerned. Further, under the laws relating to Central Excise, the place of manufacture of the goods in question would determine the jurisdiction. The jurisdiction, under the Service Tax Laws, is not determined by the actual place of the rendering of service because of its intangible and floating nature. It would depend on the location of the office from where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Commissioner of Customs, calcutta, 1996 (86 ELT 28 (Cal.), the issues relating to jurisdiction, as well as the legality of the search, had been challenged. It had been held that the question as to whether the authority concerned has the territorial jurisdiction to effect the search and seizure is essentially a question of fact. At the first instance, it should be allowed to be decided by the authorities concerned. Further, a sum of ₹ 2 crores had been paid by the petitioners as part of the service tax amounts due to be paid by the petitioners. The petitioners had neither declared the details of the taxable service rendered by them, nor had remitted the service tax amounts collected from other parties. Therefore, the contention raised on behalf of the petitioners, in the rejoinder affidavit, cannot be accepted. 55. The learned counsel appearing for the petitioners had submitted, inter alia, that the search undertaken by the respondents, on 1.3.2012, at No.119, Amaravaty Street, Gurusamy Nagar, Coimbatore, under search warrant No.24, dated 1.3.2012, is illegal and without jurisdiction. In fact, there was no search warrant issued in the name of Chitra Construction Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applications, dated 16.7.2012, and 30.7.2012, submitted by the petitioners. At least, photo copies ought to have been furnished to the petitioners in compliance of the principles of the natural justice. 61. It had also been submitted that the search warrant issued by the first respondent and the seizure of the documents and other items made during the search are beyond the jurisdiction of the Coimbatore Commissionerate, as the petitioners are carrying on their business in various places outside the state of Tamil Nadu. Further, the works of excavation and site clearances undertaken by the petitioners are exempted from the payment of service tax, by the Government of India, by way of the notification, in notification No.17/2005-ST, dated 7.6.2005. Therefore, the search and seizure made by the first respondent, on 1.3.2012, in the premises in question, belonging to the petitioners, ought to be declared as null and void. 62. The learned counsel appearing on behalf of the petitioners had submitted that the officer concerned, who had issued the search warrant had no jurisdiction to do so. It is for the said officer to have transmitted the materials available before him to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation), 1974 AIR 348. In the said decision, it had been held that the illegality of the search and the seizure would not affect the relevancy of the evidence collected thereby. 65. The Delhi High Court had held, in Commissioner of Income Tax Vs. M/s.Rohini S.Walia and another, (2007) 289 ITR 328 (Delhi) that, unless a search warrant had been issued the assessing officer cannot invoke the provisions of Section 158BC of the Income Tax Act, 1961, for initiation of block assessment proceedings, under Chapter XIV B of the Act. 66. In Smt.Mohinder Kaur Chandigarh Vs. The Income Tax Appellate Tribunal-Chandigarh, it had been pointed out that from a reading of the provisions of Section 132(1) of the Income Tax Act, 1961, it is clear that the Section is person specific and not premises specific. The Tribunal had relied on the decision of the Delhi High Court, in CIT Vs. Pushpa Rani, 289 ITR 328, wherein, it had been held that if there is no search warrant issued in the name of the assessee the proceedings, under Section 158BC of the Income Tax Act, 1961, are without jurisdiction and void ab initio. 67. In Joint Commissioner of Income Tax Vs. Latika V.Waman, 1 SOT 535 (Mum), i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernible in the order granting a search warrant. 71. In State of Punjab Vs. Baldev Singh, AIR 1999 SC 2378, the Supreme Court had reiterated the concept that the welfare of an individual must yield to that of the community. However, the action of the State must be right, just and fair. 72. In S.Narayanappa and others Vs. Commissioner of Income Tax (1967) AIR 523, it had been held that it would be open to the Court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not irrelevant or extraneous to the purpose of Section 34 of the Income Tax Act, 1922. 73. In Chhugamal Rajpatl Vs. S.P.Chaliha and others, 1971 AIR 730, the Supreme Court had held that the report of the Income Tax Officer does not set out any reason for coming to the conclusion that it was a fit case for issuing of a notice, under Section 148 of the Income Tax Act, 1961. The material that he had before him for issuing the notice, under Section 148 of the Act, had not been mentioned in the report. He had not mentioned the facts contained in the communications received by him, based on which he had issued the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the powers set out therein. 77. In Balwant Singh V. R.D.Shah, Director of Inspection, [1969] 71 ITR 550 (Delhi), a Division Bench of the Delhi High Court had held that, before the Commissioner acts under Section 132(1) of the Income Tax Act, 1961, he must be reasonably satisfied that it is necessary to take the action contemplated by the said section. If the grounds on which the belief is found are non-existent or irrelevant, or are such on which no reasonable man can come to that belief, the exercise of the power would be bad. 78. In Commissioner of Income Tax Vs. Ramesh Chander (1974) 93 ITR 450 (Pun.) a Division Bench of the Punjab and Haryana High Court had followed with approval the decision of a Division Bench of the Gujarat High Court, in Ramjibhai Kalidas Vs. I.G.Desai, Income Tax Officer, (1971) 80 ITR 721 (Guj.), wherein, it had been held that the condition precedent to the exercise of power to issue the authorisation for search and seizure is that the Director of Inspection or the Commissioner must have the requisite reason to believe in consequence of information in his possession. The power to authorise search and seizure is hedged in and by the requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Guj.), the Gujarat High Court had held that it is evident from the Scheme of sub-section 5 of Section 132 of the Income Tax Act, 1961, that the `assets' which are seized during the course of an authorised search, under Section 132, are expected to be retained only for the purpose of satisfying the tax liability of an assessee, as ascertained from his undisclosed income. Therefore, mere documents, which have only an evidentiary value and which do not carry any saleable interest are not the valuable things or articles contemplated, either by sub-section 5 of Section 132 of the Act or by Rule 112A of the Rules. 83. The learned counsel appearing on behalf of the petitioners had relied on the decision of the High Court of Delhi, in Dr.Nalini Mahajan Vs. Director of Income Tax ( Investigation) and others, (2002) 257 ITR 123 (Del.) to emphasize that if the requirements of a statute which prescribe the manner in which something is to be done it shall be done in such a manner and in no other manner. Therefore, the search and seizure ordered by the authority concerned cannot be held to be valid, as the procedures for passing such an order had not been followed. 84. The Calcutta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a rational connection or relevant bearing to the formation of the belief. If the reasons are extraneous or irrelevant, having regard to the purpose of the section, the action should be without jurisdiction. The belief should also be in good faith and not by a colourable exercise of power, as held in Gulab and Co. Vs. Superintendent of Central Exercise, 1975 (98) ITR 581. 88. The Madras High Court, in I.Devarajan and others Vs. Tamilnadu Farmers Service, (1981) 131 ITR 506 (Mad.) had held that it would be open to the assessee to contend that the authority concerned did not hold the belief, which is essential for the exercise of the jurisdiction, under Section 132 of the Income Tax Act, 1961. The existence of the belief could be challenged but not the sufficiency or the reasons therefor. So long as the belief is held in good faith and was not a mere pretence, the authority concerned would be free to exercise his power. The Court cannot sit in judgment over the same materials and substitute its belief for that of the said authority. 89. In Mapsa Tapes Pvt. Limited Vs. Union of India, 2006(201) ELT 7 (PH), the Punjab and Haryana High Court, had held that the view that while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the officer. The belief must be held in good faith and it cannot merely be a pretence. It is open to the Court to examine the question to the limited extent whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the Section. 92. In Dr.C.Balakrishnan Nair and another Vs. Commissioner of Income Tax, 1999 237 ITR 70 Ker, the High Court of Kerala had relied on the decision of the Supreme Court, in Commissioner of Commercial Taxes Vs. Ramkishan Shrikishan Jhaver, (1967) 66 ITR 664, wherein it had been held that if the safeguards provided, under Section 165 of the Code of Criminal Procedure, had not been followed when the search was made anything recovered on a defective search must be returned. It had also relied on a Division Bench of the Punjab and Haryana High Court, in Sibal Vs. CIT, (1975) 101 ITR 112, wherein it had been held that the information, under Section 132(1) of the Income Tax Act, 1961, must be relevant to the enquiry. They must be such that a reasonable and prudent man can come to a requisite belief or conclusion therefrom. If either of the elemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Security Service, 2010 (20) S.T.R. 87 (Tri,-Del.), it had been held that it is for the appropriate jurisdictional authority to adjudicate the matter following the due process of law and it is not for any other authority to conduct the proceedings. 98. In Commissioner of Central Excise, Vs. Integral Construction Company, 2009(09) LCX 0108, the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore, in its order, dated 14.9.2009, had held that when the appellants had not opted for centralized billing/accounting system and in the absence of proof of exercise of such an option by the appellants the authorities in Guntur Commissionerate would have no jurisdiction, either for the issuance of the demand notice or for the confirmation of the said demand. The proviso to rule 4(3A) of the Service Tax Rules, 1994, states that where an assessee is providing a taxable service from more than one premises or offices, and does not have any centralized billing systems or centralized accounting systems, as the case may be, he shall make separate applications for registration in respect of each of such premises or offices to the jurisdictional superintendent of Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, as it is not a voluntary payment. A direction had also been issued to the revenue to pay the interest at 9%per annum, from the date of encashment of the cheque upto the date of making the payment, in terms of the order passed by the Court. 105. Similarly, the High Court of Punjab and Haryana, in Gee Kay International Vs. Union of India, 2008 (230) E.L.T. 590 (P H), had directed the department to pay the amount deposited by the petitioner during the search and seizure, as no amount had been determined, as due and payable by the petitioner, at the time of the search and seizure. 106. In Abhishek fashions Pvt. Ltd. Vs. Union of India, 2006 (202) ELT 762 Guj., the Gujarat High Court had directed the refund of the amount recovered by the respondent authorities, without the tax liability of the petitioner company having been quantified. 107. Per contra, the learned counsel appearing on behalf of the respondents had relied on the decision of the Supreme Court, in M.P.Sharma and others Vs. Sathish Chandra, 1954 AIR SC 300, wherein it had been held that a search, by itself, is not a restriction on the right to hold and enjoy property. No doubt a seizure and carrying away ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, in the interest of the community, it is only right that the fiscal authority should have sufficient powers to prevent tax evasion. As a broad proposition, it can be stated that, if the safeguards, while carrying out search and seizure are general on the lines adopted by the criminal procedure code they would be regarded as adequate and render the temporary restrictions imposed by these measures as reasonable. On a detailed examination of provisions of Section 132 of the Income Tax Act, 1961, and Rule 112 of the Income Tax Rules, it is clear that the safeguards are adequate to render the provisions of search and seizure as less onerous and restrictive as is possible under the circumstances. It had also been held that the income tax authorities can use as evidence any information gathered from the search of the documents and accounts and articles seized. Neither by invoking the spirit of our constitution, nor by strained construction of the fundamental rights can we spell out the exclusion of evidence obtained on an illegal search. It had also been stated that the Courts in India and in England have consistently refused to exclude relevant evidence merely on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In V.V.V.R.Sathyam Vs. Superintendent (Stu), Superintendent (Stu), Madurai, 2012 (276) E.L.T. 318 (Mad.), it had been held that no proceedings had been initiated under the Central Excise Act, 1944. The petitioner had come before the High Court even before such statutory proceedings had culminated into concrete findings. As such, no ground had been made out to oppose the summons issued by the authority concerned. 116. In State of Gujarat Vs. Shri.Mohanlal Jitamljiporwal and another, CDJ 1987 SC 280, the Supreme Court had held that the circumstances have to be viewed from the experienced eye of the officer, who is well equipped to interpret the suspicious circumstances and to form a reasonable belief in the light of such circumstances. The Supreme Court had stated that an economic offence is committed with cool calculation and deliberate design, with an eye on personal profit, regardless of the consequences to the community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there relevance or utility can be determined. However, it is essential that before the power is exercised, the preliminary conditions required by the section must be strictly satisfied. 121. In State of Punjab Vs. Balbir Singh, AIR 1994 SC 1872, it had been held that the Narcotic Drugs and Psychotropic Substances Act, 1985, is not a complete code incorporating all the provisions relating to search, seizure or arrest etc. The said Act after incorporating the broad principles regarding search, seizure and arrest etc. in Sections 41, 42 and 43 and 49 had laid down in Section 51 that the provisions of the Criminal Procedure Code shall apply in so far as they are not inconsistent with the provisions of the said Act to all warrants issued and arrests, searches and seizures made under the Act. Therefore, the provisions of Section 100 and 165 of the Criminal Procedure Code, which are not inconsistent with the provisions of the Narcotic Drugs and Psychotropic Substances Act, 1985, are applicable for effecting search, seizure or arrest etc. under the Narcotic Drugs and Psychotropic Substances Act, 1985. The procedural instructions for effecting search seizure or arrest etc. ought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Haryana had held that, since the investigation was continuing and the adjudicating authority had not determined any amount to be due and payable by the petitioner, the department had no legal or moral right to retain the amount deposited by the writ petitioner when no demand had been raised. As such, the department had been directed to refund the amount, along with the copies of the Panchanama drawn during the search and seizure, the other records and data collected from the petitioner. 126. The learned counsel appearing on behalf of the respondents had relied on the decision of a Division Bench of this Court, dated 23.12.2010, made in W.A.No.1205 of 2010, (Assistant Director of Income Tax Vs. Apparasu Ravi), wherein, the order of a learned Single Judge of this Court, dated 13.4.2010, made in W.P.No.921 of 2010, had been overruled. 127. The Division Bench, in its order, dated 23.12.2010, made in W.A.No.1205 of 2010, had held as follows: 51. In the decision of the Delhi High Court, wherein an earlier decision of the same High Court reported in (1992) 194 ITR 32 (L.R.Gupta Vs. Union of India), has been pointed out wherein it is stated that there must be some materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppearing for the petitioners in the above writ petitions and the learned counsel appearing on behalf of the respondents, and on a perusal of the relevant records available before this Court, it is noted that one of the main issues raised on behalf of the petitioners is that the searches and seizures conducted by the respondents, in the premises in question, are arbitrary and illegal, due to lack of jurisdiction. As such, all the proceedings of the respondents, based on the illegal searches and seizures, would be void and therefore, the respondents are liable to return the documents and other items seized during the searches, to the petitioners. 129. It is also noted that the petitioners had claimed that the respondents had not followed the procedures contemplated under the relevant provisions of law, for ordering such searches and seizures, including the provisions contained in Section 82 of the Finance Act, 1984, and the relevant provisions of the Criminal Procedure Code 1973, relating to searches. 130. It is not in dispute that the first respondent had issued the search warrants, in question, for searching the premises at No.119, Amaravathy Second Street, Gurusamy Nagar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 134. In the present cases, this Court is of the considered view that the first respondent was justified in having the reasons to believe that certain documents and other things had been secreted in the premises in question and that they would be relevant, in respect of the alleged evasion of payment of service tax, said to be payable by the petitioners. 135. A specific plea had been raised on behalf of the petitioners that the petitioners are not carrying on any taxable activity within the jurisdiction of the first respondent. However, it is seen from the records available that the petitioners have been using the premises at 119, Amaravathi second street, Gurusamy Nagar, Coimbatore, in carrying on their business activities at various places in India. 136. From the records available before this Court, it could be seen that the petitioners had been carrying on their transactions from the said premises, including the process of accounting, banking and billing relating to their business. Centralised accounting and banking transactions had been carried on from the said premises. Regular correspondences had also been taking place from the Coimbatore office of the petitioners. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar that the formation of the opinion, prior to the issuance of the search warrants, had been based on the materials available before the authority concerned. As such, it would not be appropriate for this Court to analyse, in detail, whether the decision of the first respondent to issue the warrants of search and seizure is perfect or logical in nature. It would be sufficient if there were certain materials, which could have prompted a prudent man to arrive at such a conclusion. When serious allegations of tax evasion by the petitioners, to the tune of several crores of rupees, have been made, it would not be appropriate for this Court to scuttle the process by placing undue emphasis on the hypertechnical pleas putforth on behalf of the petitioners, with regard to the procedural formalities in the issuance of the search warrants. 139. From the decisions relied on by the learned counsel appearing on behalf of the petitioner there is no doubt that the authority concerned, who issues the warrant for search and seizure, ought to have the necessary materials before him to have a reason to believe that an order for search and seizure is warranted. However, it is clear that if certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned, authorized by law, to unearth and to bring to light large scale evasions in the payment of taxes and other such serious irregularities being committed with impugnity. Even if there had been certain minor irregularities committed by the authorities concerned, relating to the procedural aspects of the search and seizure operations, they cannot be held to be substantial or sufficient in nature to declare the search and seizure operations as illegal and void. Based on the specific directions issued to the respondents, they had placed before this Court the original records, based on which the first respondent had a reason to believe that there was a necessity to issue a warrant to search the premises in question. On a perusal of the said records this Court is inclined to hold that the opinion formed by the first respondent that there was a necessity to issue a warrant of search, in respect of the official premises of the petitioner companies and the residential premises of one of its directors cannot be held to be arbitrary and void, as prayed for by the petitioners, in the present writ petitions. 142. There is no doubt that the personal liberty and the privacy of a citizen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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