Decided on April 28,1988

Sales Tax Officer Sabarkantha District Respondents

Referred Judgements :-



R.A.MEHTA - (1.)The petitioner is the proprietor of Shree Gujarat Oil Mill at Talod in Sabarkantha District and he is a dealer registered under the Sales Tax Act. He has taken that Mill on lease from its owner. The petitioner has not started any manufacturing activity and has done the business of reselling oil purchased as per his say in the petition. The registration as a dealer is with effect from 13-12-1987. On 28-3-1988 there was a raid search and seizure by. the Special Officer of the Enforcement Branch of the Sales Tax Department at the premises of the petitioner. As a result of the seizure of the documents it appeared that the petitioner had paid less Sales Tax as per the monthly returns and challans and thereby the petitioner appeared to evaded the Sales Tax. As per the returns furnished by the petitioner the turnover of sales was only to the tune of Rs. 1 25 650 and the tax payable thereon was only Rs. 6 32 whereas as per the information collected during the seizure from the premises of the petitioner the turnover of sales was found to the tune of Rs. 3 46 29 844 and the tax payable thereon was Rs. 16 62 235.00. Thus the petitioner was said to have evaded the tax to such a huge extent. It was also stated in the letter Annexure-A/1 dated 31-3-1988 addressed to the petitioner that a similar case of an Oil Mill at Jamnagar was also noticed in which the Sales Tax dues were outstanding to the tune of Rs. 1 22 71 106 and the defaulters were declared insolvent and thus as a measure of precaution in order that the claim of the State Revenue may not turn back the petitioner was directed to furnish a security of Rs. 17 lacs on or before 8-4-1988 and a reference was made to Sec. 30 and Rule 8 It was also stated that if the petitioner failed to furnish the security proceedings for cancellation of registration would be initiated. By another order Annexure-A/1 on the same date I.e. on 31-3-1988 the respondent passed an order directing the petitioner to furnish security of Rs. 17 lacs under Sec. 26(6) of the Gujarat Sales Tax Act. One letter Annexure-A/3 of the same date was also issued to one of the customers of the petitioner requesting that customer to pay the amount due by that customer to the petitioner to the State by filing a challan instead of paying it to the petitioner on the ground that Sales Tax dues of Rs. 17 lacs were due to the State.
(2.)When this petition was moved before us on 7-4-1988 we had issued notice to the respondent and granted ad interim relief in terms of para 20(C-1) restraining the respondent from cancelling the registration of the petitioner on condition that the petitioner furnishes security in the sum of Rs. 17 lacs either in immovable property or Bank guarantee or by solvent surety on or before 15-4-1988.
(3.)On the returnable date i. e. on 12-4-1988 the respondent appeared and the matter was heard. The learned Counsel for the petitioner referred to Sec. 30B of the Gujarat Sales Tax Act the provision regarding furnishing of security by the registered dealers. Sub-sec (2) provides for furnishing of additional security for proper realisation of tax interest and penalty payable under the Act and Sec. 30B(3) was specially relied which reads as follows: No dealer shall be required to furnish any security under sub-sec. (1) or any security or additional security under sub-sec. (2) unless he has been given an opportunity of being heard.

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