TMI Blog2008 (4) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... ompleted, the process of verification or enquiry, within a period of one week from today, and, upon completion of such verification or enquiry, respondents shall permit the petitioner to obtain release of the seized goods in terms of the provisions contained in section 74(5) and other provisions relevant thereto or connected therewith. - W.P. (C) No. 1050 of 2008 - - - Dated:- 11-4-2008 - ANSARI I.A. , J. I.A. ANSARI J. The petitioner No. 1, namely, M/s. Dhanani Shoes Ltd., is a company registered under the Companies Act, 1956. The petitionercompany is registered both under the Central Sales Tax Act, 1956, as well as the Assam Value Added Tax Act, 2003 (in short, the Act ). The petitioner-company deals in plastic and leather footwear, sports goods, readyade garments and allied business. The petitioner-company is distributor, in the entire North-Eastern India, of some classified products, namely, Liberty, Action, Hotshot, Woodland, Levis, Lakhani, etc. The petitioner No. 2, accounts officer of the petitioner-company, is the authorised signatory of the company. The petitioner-company is engaged in the business of stocking and selling, in wholesale as well as retail, of diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, the notice for production of cash book, register, etc., served on the petitioner-company, cannot be said to be without jurisdiction and/or illegal. The petitioners have, however, seriously assailed the seizure of the various documents including the books of account, register, etc., and also seizure of the goods. Appearing on behalf of the petitioners, Mr. Goswami, pointing out to the provisions of section 74(3)(a) of the Act, has submitted that under subsection (3)(a) of section 74, the sine qua non for exercise of power of seizure of books of account is that the authority concerned must have reason to believe that the dealer has evaded or attempted to evade any tax liable to be paid and is keeping or has kept his accounts in such a manner as is likely to cause evasion of tax. In the present case, according to Mr. Goswami, there was no material available with the respondents enabling them to seize the books of account and other documents. Assailing the seizure of the goods, Mr. Goswami has contended that under sub-section (5)(a)(ii) of section 74, the power of seizure is exercisable only when the authority concerned has reason to believe that though the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia, not maintainable. Regarding the seizure of the books of account, registers, etc., and the seizure of goods, Mr. Saikia submits that the petitioner-company has been deliberately misclassifying the leather goods as plastic goods and thereby making payment of sales tax at the rate of four per cent, whereas the tax liable to be paid, in the case of leather goods, is as much as 12 per cent. Thus, on the basis of reliable information received by respondent No. 4 that the petitioner had been evading payment of value added tax by resorting to misclassification of goods, when respondent No. 4 inspected the petitioner-company's business premises, goods and also documents as well as registers lying there, he cannot be said to have committed any wrong and, on noticing anomalies, when he made the seizure of the books of account, etc., he may be held to be wholly justified. As far as seizure of the goods is concerned, Mr. Saikia submits that the seizure list, made in this regard, clearly shows that the reason for seizure was that the stock of goods did not tally with the invoices; hence, in such circumstances, contends Mr. Saikia, the goods, in question, cannot be said to have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the end of the year in respect of which or part of which tax is assessable. Coupled with the above, section 74(1) empowers the prescribed authority to demand production of accounts, registers or documents or to furnish any information relating to stock of goods, etc. Section 74(3)(a) empowers the prescribed authority to seize such accounts, registers, documents including electronic records or computer of the dealer, as may be necessary, and when such seizure is made, the prescribed authority shall grant a receipt for the same and obtain acknowledgement of the receipt so given to the dealer provided that the prescribed authority has reasons to believe that the dealer has evaded or is attempting to evade the payment of any tax due from him and he is keeping or has kept his accounts in such a manner as is likely to cause evasion of tax payable under the Act. Once the seizure of the accounts, registers, etc., in such a case, is made, the authority concerned may take into custody the seized accounts, registers, etc., or may leave such seized accounts, registers, etc., in the custody of the dealer or his representative. A conjoint reading of section 40 and section 74, particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are seized, the authority is obliged, under the law, to serve, as soon as possible, upon a dealer, a notice directing him to show cause, within a period of 30 days from the date of service of the notice, as to why penalty equivalent to three times of the amount of tax be not imposed on the dealer for not making entries in respect of such goods in his books of account or registers or other documents, as the case may be, maintained by him in the ordinary course of his business. Law, thus, obliges the authority concerned to serve a notice, as soon as possible, on the dealer upon seizure of goods on the ground that the same have not been accounted for by the dealer in his accounts or registers or other documents maintained in the ordinary course of his business. In the present case, the prescribed authority has not served such a notice till date on the petitioner-company. Though such a notice should be served as soon as possible, the language employed by section 74(5)(b) clearly shows that it will entirely depend on the facts of a given case as to when a notice, as envisaged in section 74(5)(b), should be given to the dealer. There cannot be a hard and fast rule with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evision, which have been made in the Act by way of section 82, the petitioners had an alternative remedy available to them as regard their grievances, if any, against the seizures, which, according to the petitioners, are illegal, and, hence, the present writ petition is not maintainable, it is necessary to bear in mind that existence of alternative remedy does not create any legal and/or constitutional bar to the entertainment of a writ petition; it is, rather, a restriction, which courts impose upon themselves not to interfere, generally, in a matter, where alternative remedy is available. Notwithstanding, however, such self-imposed restrictions, the writ court has the discretion to interfere in a matter, where the State action is shown to be suffering from arbitrariness and/or without authority of law and/or in violation of the principles of natural justice. In Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta [1961] 41 ITR 191 (SC); AIR 1961 SC 372, it was contended, on behalf of the State, that since provisions exist in the statute enabling the person, proceeded against, to show cause against the assessment, which is sought to be made, and whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in [1998] 8 SCC 1, wherein the apex court has clarified the position of law in the following words: The power to issue prerogative writs under article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the fundamental rights contained in Part III of the Constitution but also for 'any other purpose'. Under article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the fundamental rights or where there has been a violation of the principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es District I, Calcutta [1961] 41 ITR 191 (SC); AIR 1961 SC 372, needs to be construed. In short, from the judicial pronouncements, as catalogued above, what becomes transparent is that an authority, which can exercise a power subject to satisfaction of some conditions precedent and when such authority assumes jurisdiction without the conditions precedent having been satisfied, such exercise of power would be treated as exercise of power without jurisdiction and such exercise of power can be challenged by way of a writ petition under article 226. In the present case, when the specific case of the petitioners is that the conditions precedent for exercise of powers, under section 74, had not been satisfied or were non-existent and the seizures could not have been legally made, it logically follows that if this contention is correct, exercise of power by the respondent concerned was without jurisdiction and such exercise of power is amenable to the writ jurisdiction of the High Court under article 226, notwithstanding the fact that there may be statutory provisions for revision against such an action of the respondent/authority concerned. In fact, even in the case of Hindalco In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, under article 226, if there be an alternative remedy available. Thus, according to the decision in Gujarat Ambuja Cement Ltd. [2005] 142 STC 1 (SC); [2005] 5 RC 307; [2005] 6 SCC 499, an alternative remedy does not completely bar the High Court from exercising its jurisdiction under article 226, if a person approaches the court without availing an alternative remedy, which may be available to him. However, in such a case, the petitioner must satisfy the High Court that there exist good grounds to invoke extraordinary jurisdiction under article 226. In short, thus, even according to the decision, in Gujarat Ambuja Cement Ltd. [2005] 142 STC 1 (SC); [2005] 5 RC 307; [2005] 6 SCC 499, alternative remedy has never been considered as an absolute bar to the exercise of extraordinary jurisdiction by the High Court under article 226. In a given case, therefore, when the High Court finds that an authority has acted without jurisdiction or an exercise of power is without the authority of law, the High Court has the duty to step in and invoke its jurisdiction under article 226. At one stage of the hearing, Mr. Saikia had sought to contend that section 3(10) of the Act prohibits a per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd tax at the rate of four per cent has been shown as payable or has been paid. The allegations, so made, in the grounds of seizure, may or may not be true. This court is, at this stage, has to assume that these allegations are true. If these allegations are true, the inescapable inference would be that by misclassifying the goods and showing, in the books of account, the goods, which are, otherwise, taxable at the rate of 12.5 per cent, as goods liable to be taxed at the rate of four per cent, there has been evasion of tax or, at least, an attempt to evade tax. In such a case, section 74(3) did empower the respondent No. 4 to seize the accounts, registers, etc., if he had reason to believe that the dealer, i.e., the petitioner-company has evaded or is attempting to evade payment of any tax due from it and is keeping or has kept its accounts in such a manner as is likely to cause evasion of tax. Thus, in the face of the accusations, made in the grounds of seizure, it clearly follows that if these accusations are true, respondent No. 4 had good reasons to believe that the petitioner-company had evaded or was attempting to evade payment of tax due from it and was keeping or h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In such circumstances, the goods, in question, cannot be said to be accounted or by the petitioner-company. The exercise of power, under section 74(5)(a)(ii) by respondent No. 4, in such a case, cannot be said to be illegal or without foundation. Because of what have been discussed and pointed out above, I do not find that the seizure of books of account, registers, etc., and/or seizure of the goods are without the authority of law. The challenge to the seizure of books of account, registers, etc., and/or seizure of the goods cannot, therefore, be sustained. The petitioners cannot, however, be left without any remedy, for, there is yet another aspect of this writ petition, which needs some observations by this court. In para 18, this court has clearly held that though there is no fixed timeframe for the authority concerned to give notice, as contemplated by section 74(5)(b), the fact remains that the legislative intent is that service of notice shall not be delayed, even for a moment, beyond what is absolutely indispensable or necessary for the purpose of enabling the authority concerned to assess as to what is the amount, which shall be realisable from the dealer on account ..... 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