TMI Blog1997 (11) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... entered the adjacent rooms of the office and gathered some documents and files from the said room belonging to Kalpana Industries Ltd., and one Tara Holding Ltd. The respondent No. 1, during the search, gathered whatever documents and papers he could lay his hands upon without looking into them. The applicant had informed the respondents that Kalpana Industries Ltd., and Tara Holding have no connection with the business of the applicant No. 1. The respondent No. 1 prepared a seizure receipt wherein it was alleged that he had reason to suspect that M/s. Sarla Gems Ltd. of 2B, Pretoria Street, Calcutta-700 071 is attempting to evade payment of tax under the West Bengal Sales Tax Act, 1994 and as a result the said accounts and records were being seized from the applicant. The documents and files belonging to Kalpana Industries Ltd., and Tara Holding Ltd., were also seized and included in the same seizure receipt. When the authorised representative of the applicants visited the office of the respondent No. 1 to enquire about the purported seizure of books of accounts of the applicant, he was informed by the respondent No. 1 to deposit an amount of Rs. 1,00,000. As the applicant is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isited the respondent's office to enquire about the seizure and it is also denied that an amount of Rs. 1,00,000 was demanded from the applicant or his representative. A notice under section 65 has been issued to the applicant asking him to explain the seized books of accounts and documents. None has appeared so far before the respondent No. 1 in response to the said notice. The books of accounts and documents produced by the applicant for verification were duly examined. It was only after detecting traces of attempted evasion in books of accounts and documents, which were duly recorded in a report drawn by the respondent No. 1, the respondent proceeded to seize only such books of accounts and documents which were found to bear nexus with attempted evasion of tax by the applicant. As no search was made at the place, there was no occasion to record any reasons for such search. In any case, recording of belief regarding attempted evasion of tax is not a condition precedent of conducting search under the sales tax laws. 6.. After the seizure was completed, a seizure receipt was prepared and a copy of that was handed over to the applicant. It is submitted that provisions of section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount has been received on account of sale, the question of payment of sales tax does not arise and hence mere mention of receipt of an amount of Rs. 40,250 cannot give rise to any suspicion that any sales tax has been evaded on this amount. 10.. Mr. J.K. Goswami, learned State Representative, submitted that the case of Hari Narayan Singh [1995] 98 STC 208 (WBTT) does not have any applicability in this case. In that case it was decided that in terms of the provisions of the 1941 Act, efforts should be made to comply with the said provisions, where it is applicable. The Tribunal also noted that even under the Code of Criminal Procedure, in a criminal case sometimes search witnesses are not available, but the court decided whether, in the facts and circumstances of each particular case, the explanation given in the contemporaneous records, is acceptable. Mr. Goswami submitted that in this case no witnesses were necessary as there is no question of planting of evidence here, which is the prime reason for keeping witness. The applicant has alleged that records of other firms lying in his custody have been seized; but the applicant has no locus standi in respect of these books if the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the materials seized is not disputed. 11.. Regarding the reasons for seizure recorded by the respondents, Mr. Goswami submitted that under section 65(1)(c), the authorities may require any dealer to explain any account, registers or documents produced by such dealer. On the 6th January, 1997, the respondent No.1 met Shri R.K. Surana and asked for the books of accounts based on which the dealer submitted the returns for the quarter of September, 1996. On an examination, it was found that there were several suspicious circumstances. It was found that the dealer had made sales out of lease for Rs. 3,00,000 approximately but he did not file the same in the returns. The returns, submitted for the quarter of September, 1996, showed sale at Nil. The accounts of the financial years ending 31st March, 1993, 1994, 1995 did not disclose the income from the leasings in the returns for the respective years. It would be clear, Mr. Goswami argued, that the sale by way of lease for Rs. 3,00,000 was not shown in the returns for the respective years. It was apparent that the sales detected related to the periods referred to in the recorded reasons. In this context, Mr. Goswami argued, the term " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There was no rule similar to rule 70A of the 1941 Act under the 1954 Act. The judgment in the case of Md. Masroor (RN-102 of 1994) did not refer to the earlier judgments in the Hari Narayan Singh case [1995] 98 STC 208 (WBTT) and others. Mr. Bhattacharya argued that provision of seizure would be ultra vires the Constitution unless adequate safeguards are there. Presence of witnesses was a condition precedent for the validity of the seizure. He submitted that judgment in the case of Md. Masroor (RN-102 of 1994) should be re-considered as validity of seizure cannot, it was argued, depend on the subsequent stands of the parties and hence should be dependent on the contemporaneous records and circumstances of the cases. There is no doubt that the reasons recorded are justiciable. Although sufficiency of the materials will not be gone into by the court, there must be some materials. In the instant case, Mr. Bhattacharya argued, there was no material whatsoever to give rise to any reasonable suspicion. There is no mention about the identity of the goods leased out and whether such lease was taxable. The signature of the applicant on the recorded reasons is a mere formality and does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax Rules, 1995. It was observed in that case that these precedents are of little assistance, because each case has to be decided on the facts and circumstances thereof. In other words, how far rule 207(1) can be or has been complied with in a particular case depends on the facts of that case. It would, therefore, be seen that it has been held by this Tribunal that the provisions of the Code of Criminal Procedure have neither been applied in toto, nor mandatorily. The provisions have to be followed in search and seizure under the Sales Tax Act only as far as possible. Therefore, normally witnesses are required to be present during search and seizure if the same is possible. In case witnesses are not present and there is no explanation of such absence, it would be a lacuna in the search and seizure proceedings. However, the impact of such absence of witnesses should be examined in each case carefully. If it is found that as a result of absence of witness, any prejudice has been caused to the dealer, the lacuna will have to be considered to be a serious one resulting in the seizure becoming invalid. If, on the other hand, the absence of witnesses does not result in any preju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he stationary of the dealer and is, hence, not an official record, does not at all appeal to us. If anything, it tends to establish the authenticity of the document as it appears to have been written within the business premises of the dealer. There is nothing to show that the presumption regarding official acts having been done properly and regularly can be considered to have been rebutted in the instant case. The recorded reasons are also not of such a nature that it can be held that they could not have led a prudent person to suspect evasion of taxes on the part of the dealer. When sales by way of lease is stated to have been unreported in the returns for the respective years although sales out of lease for approximately Rs. 3,00,000 were detected as per dealer's submission, it cannot be said that there is no cause to entertain any suspicion about evasion of tax. Similarly, when entries showing receipt of large amounts are not found in the books of accounts, it cannot be said that it is not a suspicious circumstance at all. We cannot look into the sufficiency of the grounds for suspicion and we can interfere only if we hold that these cannot be considered to be a ground at all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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