TMI Blog2016 (6) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... e that what is being asked to be produced, in the form of books of accounts and other documents, are "related to the activities" of either the person to whom such notice is issued or any other person as the Commissioner may deem necessary. The Commissioner has to decide what document should be asked to be produced. It is another matter that there have been instances of misuse of the powers. The Court has had to step in to correct such misuse. That by itself, however, does not make the provision bad in law. It also does not mean that in the absence of a Rule, the power under Section 59 (2) is incapable of being exercised. It is in this context that the language used in Section 45 of TNHRCE Act or Section 45 of the Maharashtra Cooperative Societies Act, 1960 or Section 38 of the Bangalore Development Authority Act, 1976 became relevant. In each of the above instances, the language of the provision was such that the exercise of the power was dependent on the framing of the Rules. However, Section 59 (2) of the DVAT Act is so worded that it can be given effect to even in the absence of the rules. Therefore, in the absence of any rules being framed under Section 102(2)(z) read with S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel appearing for the DT T, that on 24th September 2015, the Commissioner of VAT had passed an order under Section 67 (2), 68 and 106 of the DVAT Act read with Section 9 of the Central Sales Tax Act, 1956 ('CST Act') to the effect that the Assistant Commissioner, Ward 206 who would exercise jurisdiction as far as the Petitioner is concerned and that this had to be read with the order dated 12th November 2013 issued by the Commissioner (VAT) inter alia delegating the powers of assessment and re-assessment under Section 32 of the DVAT Act to all officers not below the rank of the Assistant VATO. The Court recorded in para 6 of its order dated 4th March 2016 as under: 6. Mr Narayan, ASC on instruction of Mr M. K. Aggarwal, Assistant Commissioner, states that all the notices issued to the Petitioner hereinbefore i.e. the notices which have been challenged in the present petition as well as the 13 notices dated 16th November 2015 referred to in civil miscellaneous application No. 28227/2015 should be treated as withdrawn by the DT T. It is accordingly recorded. Mr Narayan states that Mr M. K. Aggarwal will now issue a fresh notice to the Petitioner under Section 59(2) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax Appeal No. 65 of 2014) and submitted that absence of such a rule will not preclude the exercise of the powers under Section 59 (2) of the DVAT Act. The Court then adjourned the case to enable learned counsel for the Respondent to examine the issue and for the learned counsel for the Appellant to examine whether Rules of a similar nature had been framed in the VAT statutes of other States. 7. Mr. Jain has since placed on record his written submissions enclosing the details of the statutes in other States. Mr. Jain points out that in at least 10 VAT statutes, there exists a similar provision enabling the Commissioner to call for production of records subject to such conditions as may be prescribed . In these 10 States, Rules have been framed in terms of the said provision. A tabulation of such State Acts and the corresponding Rules in the said States are set out as under: S.No. State VAT Act Section VAT Rules Rule 1. Assam VAT Act 2003 74 (1) Assam VAT Rules 2005 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madhya Pradesh VAT Act, 2002 63 (1) 9. Kerala VAT Act, 2003 44 (1) 10. Karnataka VAT Act, 2003 52 (1) 11. Himachal Pradesh VAT Act, 2005 32 (1) 12. Haryana VAT Act, 2003 29 (1) 9. Mr. Jain further points out that there were other provisions of the DVAT Act, for e.g., Sections 5 (2), 6 (2), 8 (1), 9 (1), 14 (2) , 59 (2), 68 (1) and 92 (1), which used the words 'subject to such conditions as may be prescribed' and the DVAT Rules contains provisions in respect of each of the above provisions of the DVAT Act. However, it is only in respect of Sections 59 (2) of the DVAT Act that no rules have been framed despite Section 102 (2) (z) of the DVAT Act providing for it. Relying on the decision of the Supreme Court in Dr. Subramanian Swamy v. State of Tamil Nadu (2014) 5 SCC 75, Mr. Jain submitted that in the absence of any rules being framed thereunder, the power under Section 59 (2) of the DVAT Act cannot be exercised. He further relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court in The Commissioner, VAT v. A.K. Woollen Industries (supra) was against the Assessee on this point, the Court in the said decision reiterated the settled legal position as explained in Gannon Dunkerley and Co. v. State of Rajasthan 1993 (88) STC 204, Sudhir Chandra Nawn v. Wealth Tax Officer, Calcutta 1968 (69) ITR 897 (SC) and Mahim Patram Pvt. Ltd. v. Union of India 2007 (6) VST 248. 13 . The above submissions have been considered. Section 59 of the DVAT Act reads as under: 59. Inspection of records (1) All records, books of accounts, registers and other documents, maintained by dealer, transporter or operator of a warehouse shall, at all reasonable times, be open inspection by the Commissioner. (2) The Commissioner may, for the proper administration of this Act and subject to such conditions as may be prescribed, require (a) any dealer; or (b) any other person, including a banking company, post office, a person who transports goods or holds goods in custody for delivery to, or on behalf of any dealer, who maintains or has in his possession any books of accounts, registers or documents relating to the business of a dealer, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed by rules made by the State Government or as the case may be, by the Central Government under the Act . 61. Section 45 of the 1959 Act provides for appointment of an Executive Officer, subject to such conditions as may be prescribed. The term prescribed has not been defined under the Act. Prescribed means prescribed by rules. If the word prescribed has not been defined specifically, the same would mean to be prescribed in accordance with law and not otherwise. Therefore, a particular power can be exercised only if a specific enacting law or statutory rules have been framed for that purpose. (See Manohar Lal Chopra v. Seth Hiralal AIR 1962 SC 527, Hindustan Ideal Insurance Co. Ltd. v. LIC AIR 1963 SC 1083, Maharashtra SRTC v. Babu Goverdhan Regular Motor Service (1969) 2 SCC 746 and BSNL v. BPL Mobile Cellular Ltd (2008) 13 SCC 597). 15.1 In Goa Central Cooperative Consumers v. Bhagwant Narayan Tendulkar (supra), the Supreme Court interpreted Section 45 of the Maharashtra Cooperative Societies Act, 1960 which provided that: 45. Restrictions on other transactions with non-members Save as is provided in this Act, the transaction of a society with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p in to correct such misuse. That by itself, however, does not make the provision bad in law. 18. It also does not mean that in the absence of a Rule, the power under Section 59 (2) is incapable of being exercised. It is in this context that the language used in Section 45 of TNHRCE Act or Section 45 of the Maharashtra Cooperative Societies Act, 1960 or Section 38 of the Bangalore Development Authority Act, 1976 became relevant. In each of the above instances, the language of the provision was such that the exercise of the power was dependent on the framing of the Rules. However, Section 59 (2) of the DVAT Act is so worded that it can be given effect to even in the absence of the rules. 19.1 In the above context, the decision of the Supreme Court in Orissa State (Prevention Control of Pollution) Board v. Orient Paper Mills (supra) is relevant. The question that arose in the said decision was whether in the absence of any Rules framed under Section 19 of the Air (Prevention and Control of Pollution) Act, 1981 ('Air Act'), the power in terms of the said provision could be exercised. Section 19 (1) of the Air Act reads as under: 19. Power to declare air pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, it only enumerates the subjects on which the State Government is entitled to frame rules. 19.4 The Court in that process referred to the decision of the Constitution Bench in T. Cajee v. U. Jormanik Siem AIR 1961 SC 276 as well as decision in Surinder Singh v. Central Government (1986) 4 SCC 667. In the latter decision, the Supreme Court observed as under: Where a statute confers powers on an authority to do certain acts or exercise power in respect of certain matters, subject to rules, the exercise of power conferred by the statute does not depend on the existence of rules under the statute expressly provides for the same. In other words framing of the rules is not condition precedent to the exercise of the power expressly and unconditionally conferred by the statute. The expression 'subject to the rules' only means, in accordance with the rules, if any. If rules are framed, the powers so conferred on authority could be exercised in accordance with these rules. But if no rules are framed there is no valid and the authority is not precluded from exercising the power conferred by the statute. 20. Therefore, in the present case the Court is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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