HIRALAL CHHAGANLAL Vs. STATE OF RAJASTHAN
HIGH COURT OF RAJASTHAN
STATE OF RAJASTHAN
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(1.) THE thirteen writ petitions before us which were heard together raise a common question about the constitutional validity of Section 22 of the Rajasthan Sales Tax act, 1954, hereinafter to be referred as the "act". The petitioners seek appropriate writ, directions and orders against the respondents calling upon them to return to the petitioners all the account books, documents and Roods said to have been seized from them as also to restrain the respondents from taking any further action against the petitioners for forfeiting the goods or from starting enquiries and investigations against the petitioners on the basis of the books of accounts and documents seized from them. It will be convenient to recount the relevant facts pleaded with reference to writ petition No. 420 of 1967 by Messrs. Hiralal chhaganlal because the events had taken place at their premises.
(2.) PETITIONER Messrs. Hiralal Chhaganlal is a partnership firm having its place of business at Jaipur at Motisingh Bhomiyon-ka-rasta Petitioner deals in the purchase, sale, import and export of precious and semi-precious stones Jaipur City has been a centre of the trade in precious stones and jewellery since hoary past. It is said that this trade is carried on through the agency of commission agents and brokers. The brokers collect precious stones from their constituents who may be interested in marketing their stock of precious stones. The brokers contact the prospective purchasers and after negotiations sales are effected and the brokers get their brokerage. Jaipur City attracts traders from outside including foreigners according to the petitioner, foreign traders establish contacts with the traders at jaipur through the agency of their Indian traders or commission agents at places like Bombay. The intermediaries introduce the foreign trader to any local trader at jaipur who, in his turn, asks the brokers or other traders to come in contact with the foreign trader and then they settle their deal. When the deal goes through, the several intermediaries get their commission or brokerage. It is stated that precious stones, in the nature of things, do not have any fixed price and the prices thereof vary according to the cut and luster of a particular piece. Till 1-11-65 precious stones were exempt from the payment of any tax under the act, but from 2-11-65 sales-tax was imposed on the sale of precious stones. Such tax was leviable on the last point in the series of sales of precious stones in rajasthan. A trader from Milan Mr. Joseph Yadgar along with his companions had visited Jaipur for the purchase of precious stones and on 28-7-67 Mr. Yadgar and his companions came to the petitioner's premises at about 3. 00 p. m. The events which are the subject-matter of the present proceedings begin from here. At about 3. 30 p. m. on that day when Mr. Joseph Yadgar and his companions were sitting at the petitioner's business premises 11 brokers had come with packets of precious stones for showing the same to Mr. Yadgar for negotiating sales thereof on terms acceptable to both sides. According to the petitioner, the brokers had brought stocks of other local dealers at Jaipur. At about 3. 30 p. m. when Mr. Yadgar and the brokers were having their trade talks a huge party of officers of the Commercial Taxes Department headed by respondent No. 3 Shri Surendra sharma, Special Officer (Anti-Evasion); Commercial Taxes Department raided the shop of the petitioner The raid party is said to have closed the main gate of the house in which the business premises were situate and then they contemptuously treated Mr. Yadgar by insinuating that "all Jews were smugglers and that he was one of them. " Shri Surendra Sharma then questioned Shri Dulichand Tak, one of the partners of the petitioner's firm and they are alleged to have abused, threatened and bullied the dealers, brokers and visitors from outside. They recorded something by way of their statements and also forced them to sign the same. Shri Sharma and his party then took possession of the packets of precious stones which the brokers had in their pockets and prepared an incomplete and defective inventory of such goods. The raiding party then seized the stock of precious stones with the petitioner firm. Thereafter they placed the seized goods including the goods of the brokers in an almirah and having locked the almirah they took away the keys thereof though after putting seals on the almirah. According to the petitioner, these goods were worth million of rupees. Respondents Nos. 3 and 4 are further alleged to have prepared a 'supardnama' in respect of the goods of the brokers which were shown to have been entrusted to Shri Dulichand and the latter was forced to sign the same Petitioner submits that no goods whatsoever belonging to the brokers were ever handed over to Dulichand. The raiding party was then alleged to have seized all the books, files and loose papers lying in the premises of the petitioner. These books were also put in a room. Respondent No. 3 then started recording the statement of the petitioner which process continued for almost 8 hours till 11. 30 p. m. The petitioner's grievance is that during this long interval they or the brokers were not allowed to leave or even to contact anybody by phone or otherwise and were subjected to great hardship and harassment and had to go even without their meals. The raiding party left at 11. 30 p. m. , but it returned at about 11. 00 a. m. on the following day, that is, 297-67. This time they started preparing an inventory of the goods lying in one room, but they could not complete it and, therefore, locked the room and left at 6. 00 p. m. The party then returned at 11. 30 a. m. on 30-7-67 and prepared a seizure memo of the books, files, loose papers and documents seized by them. The total number of files and account books is stated to have been 202 and also there was one extra file containing 97 loose papers. After preparing the memo the respondents Nos. 3 and 4 had taken away the books, documents and flies. Nothing was heard by the petitioners from the respondents till 9-8-67 when the notice Ex2 was received calling upon the petitioner to appear before one Shri Badri Prasad, commercial Taxes Officer. Circle-B, Jaipur City "for examination of books of accounts and verification of goods therewith found at (your) business premises on 28-7-87". Thereafter the petitioner-firm made repeated requests to the respondents for the return of the goods and the account books, but without any result. Then on 16-867 shri Dulichand, the partner of the petitioner firm, had come to Jodhpur for consulting his lawyers and during his absence a notice was affixed at the premises calling upon him to be present before the Commercial Taxes Officer on 17-8-67 for further proceedings. The petitioner's grievance is that this notice was issued during Shri Dulichand's absence and moreover the purpose mentioned in the notice was too vague. The petitioner firm then gave notices to the respondents through their lawyers for the return of the goods as well as the account books, files and documents, but without any success and consequently the present writ petition was lodged in this Court on 21-8-67.
(3.) PETITIONER contends that the search of the petitioner's premises conducted by the raiding party as also the seizure of the goods, account books, files and other documents was illegal. The petitioner's case further is that the respondents were animated by malice and their sole purpose was to humiliate and defame the petitioner in the public eye. In challenging the action of the respondents the petitioner further contends that the provisions of Section 22 of the Act under which the respondents claim to have acted was ultra vires the Constitution. According to them, this Section violated Articles 19 (1) (f) and (G) of the constitution in that no provision has been made therein for obtaining a search warrant before a search is to be conducted by the Officers of the Commercial taxes Department and no safeguards whatsoever have been provided as laid down under Section 165 of the Code of Criminal Procedure for taking a search of the premises. According to the petitioner, the provisions regarding search of premises and seizure of account books, files and other documents were most arbitrary and could result in complete destruction of a dealer's business it is further submitted that Section 22 of the Act was bad also for the reason that it could be used to seize accounts, registers and the other documents as may not be relevant for the evasion of any payment of tax under the Act. Further the officer is authorised to retain the books and other documents as long as he thought necessary and under the garb of this power the officer could retain the account books and other documents indefinitely and this may completely paralyse the business of a dealer. Then as regards Sub-section (6) of Section 22 of the Act, it is contended that the provision regarding the confiscation of the goods was beyond the legislative competence of the State Legislature and the Section was also repugnant to the scheme of the Act inasmuch as the tax was sought to be levied before the goods came to be sold. In other words, the action is sought to be taken before the accrual of any liability to tax and at a time when there could conceivably be no evasion of any tax in respect of the goods sought to be confiscated. Reliance is placed on a recent judgment of the Supreme Court which I will have occasion to refer in the course of the discussion by which, according to the petitioners, analogous provisions of the Madras General Sales Tax Act were struck down. Then it is contended that there was non-compliance of the provisions of Section 22 itself assuming that it was valid. It is submitted that the officer seizing the account books and other documents had no valid reasons for seizing the same and he did not record any reasons in writing for suspecting that the petitioner was attempting to evade payment of any tax under the Act. Then it is contended that till now not a single case was instituted against the petitioner firm that it had not paid any sales tax in respect of any transaction and the respondents were retaining the account books, files and other documents without any rhyme or reason.;
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