A. K. MATHUR, J. - (1.) THE petitioner by this writ petition has prayed that the first proviso to Section 22 (3) of the Rajasthan Sales Tax Act, 1954 may be declared ultra vires to the extent it empowers the respondent No. 2 to sanction the retention of the seized account-books and documents being ultra vires of Article 19 (1) (g) of the Constitution of India. He has also prayed that by an appropriate writ, order or direction the order dated 16. 12. 1987 (Annex. 7) may be quashed and the respondents may be directed to return the account-books and documents seized by the respondents. It is also prayed that the respondents may be restrained from recovering the demand in pursuance of Annexs. 13 and 14 and demand notices Annexs. 15 and 16 respectively.
(2.) THE petitioner is a partnership firm known and styled as M/s. Khanna Electric Stores, Sri Ganganagar located at Sri Ganganagar. It is constituted by 5 partners Sarva Shri Kasbmirilal, Sudarshan Kumar, Raghuveer, Jaswantlal and Smt. Rampyari. THE petitioner carries on the business of electric goods of all kinds. THE petitioner has a sister concern known and styled as M/s. Khanna Electric Corporation, a partnership firm constituted by 4 partners : Sarva Shri Raghuveer, Sudarshan Kumar, Jaswantlal and Smt. Rampyari and they are doing the business of electric goods at Sri Ganganagar and is located in the same premises. Shri N. R. Vyas, respondent No. 3 while posted as Assistant Commercial Taxes Officer, Ward No. 1 of Sri Ganganagar Circle, was the assessing authority in relation to the petitioner under the provisions of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as'the Act of 1954' ). After the transfer of respondent No. 3 as Assistant Commercial Taxes Officer, Anti-Evasion, Bikaner, he ceased to be the assessing authority of the petitioner under the provisions of the Act of 1954. THE respondent No. 3 while posted as Assistant Commercial Taxes Officer, Ward 1, Sri Ganganagar allegedly received information from the Inspectors Commercial Taxes, Sarva Shri K. D. Sharma and Sant Lal that the petitioner was indulging in tax evasion and on the basis of that information on 14. 8. 1986 raided the business premises of the petitioner accompanied by another Assistant Commercial Taxes Officer, Ward II and the above named two Inspectors. Shri Sudarshan Kumar partner of the petitioner firm was available at the shop. Respondent No. 3 enquired from Shri Sudarshan Kumar partner about the account-books of the petitioner firm and he told respondent No. 3 that the account-books were with the Muneem of the firm at his house. THE cash-memos and bills found at the shop were said to have been initialled by the respondent No. 3. Meanwhile Shri Raghuveet another partner of the petitioner firm appeared at the scene and enquiries were also made from him about the account-books of the petitioner. He also informed that the account-books were with the Muneem of the firm at his house. At this moment it is alleged that the Inspector, who was a member of the raiding party informed the respondent No. 3 that the Muneem Girdhari Lal was writing the account-books on the 'duchhati' an apartment in the shop. THE books of the petitioner firm and that of the sister concern M/s. Khanna Electric Corporation were found there which were seized by the respondent No. 3 as he noticed that there was evasion of sales tax. THE respondent No. 3 prepared a common seizure memo of the account-books and the documents found there and furnished a copy of the same to the petitioner. It is alleged that the act of the respondent No. 3 in effecting the seizure was illegal as he had not complied with the provisions required for search and seizure under the Code of Criminal Procedure for conducting the search and seizure as sub-sections (4) and (8) of Section 22 of the Act of 1954 require that those provisions have to be complied with. It is further submitted that since search and seizure was illegal and, therefore, under the first proviso to Section 22 (3) of the Act of 1954 the seizure of the account-books and documents and retaining the same beyond 3 months is bad likewise the further extention if any, granted by the Commissi oner is bad as well because no reasons have been recorded by the Commissioner and the order was not communicated to the petitioner. It is also submitted that the transfer of this case from the regular assessing authority of the petitioner i. e. Assistant Commercial Taxes Officer, Ward 1 Sri Ganganagar to the Assistant Commercial Taxes Officer, Anti Evasion, Bikaner respondent No. 3 under the provisions of Rule 52 (1) of the Rajasthan Sales Tax Rules, 1955 (referred to hereinafter as 'the Rules of 1955') is also bad as the same being in violation of the principles of natural justice, as the petitioner was not afforded a reasonable opportunity of being heard before transfering this case. In this back ground, the demand notices for the years 1985-86 and 1986-87 have been challenged by the petitioner by filing the present writ petition. A reply has been filed by the respondents and the respondents have taken the position that the respondent No. 3 was posted as Assistant Commercial Taxes Officer, Ward No. 1 Sri Ganganagar and he was the assessing authority of the petitioner firm under the provisions of the Act of 1954. It is also admitted that Shri N. R. Vyas was transferred as Assistant Commercial Taxes Officer, Anti Evasion Bikaner in the month of July, 1987. Shri N. R. Vyas, respondent No. 3, while working as Assistant Commercial Taxes Officer, Ward 1, Sri Ganganagar did survey the business premises of the petitioner firm on 14. 8. 1986 in the presence of the petitioner firm's partner Shri Raghuveer. It is submitted that when the premises of the petitioner firm were being inspected Shri Sudarshan, partner of the firm was present and he was informed by the respondent No. 3 that he being the Assistant Commercial Taxes Officer, Ward-I, Sri Ganganagar Circle and being the assessing authority of the petitioner firm wanted to survey and inspect the business premises of the petitioner firm. Shri Sudarshan Kumar allowed the respondent No. 3 to survey and inspect the premises of the petitioner firm. The respondent No. 3 and other members of the survey party entered in the business premises of the petitioner firm to carry out survey and inspection. During the course of survey and inspection on 14. 8. 1986 the respondent No. 3 asked Shri Sudarshan Kumar a partner of the petitioner firm to produce the books of accounts of the petitioner firm for inspection. Meanwhile another partner Shri Raghuveer came there and he was also asked to produce the account-books but they knowingly furnished wrong information that the same are available at the residence of the Muneem but it was found that the Muneem Girdhari Lal was writing the account book at Duchhati (mazinine floor of the business premises ). Therefore, all these account-books were seized and nece- ssary memos were prepared and the list was given to the petitioner. It is submitted that the document Annex. 2 filed by the petitioner purported to be of 14. 8. 1987 is absolutely wrong (But after perusing the file it appears that it bears the date 14. 8. 1986 only and not 1987 ). It is submitted that it is wrong to say that respondent No. 3 carried out the search of the business premises of the petitioner firm in exercise of the powers conferred by Section 22 (4) of the Act of 1954 but the account - books and documents were seized under sub-section (3) of Section 22 of the Act of 1954. The allegation of illegal search has been denied, It is submitted that since the respondent No. 3 neither searched nor raided the business premises of the petitioner firm, therefore, there was no need for the respondent No. 3 to obtain search warrant or to summon two independent, respectable witnesses of the locality. It is submitted that under Section 22 of the Act of 1954, these conditions are not required to be complied with in case of any survey and inspection of business premises of the petitioner firm or any assessee. Therefore, it is contended that it was not a case of raid or search but it was a case of survey and inspection, which is covered by the provisions of sub-section (2) of Section 22 of the Act of 1954. It is further submitted that the account-books were retained by the respondent No. 3 beyond the period of 3 months under the orders of the Commissioner, Commercial Taxes, Rajasthan. Thus, it is submitted that the retention is also not illegal. Regarding the transfer of the file of the petitioner firm by the Commissioner, Commercial Taxes Rajasthan to the Assistant Commercial Taxes Officer, Anti Evasion, Bikaner, it is submitted that this was done in the exercise of the power under Rule 52 (1) of the Rules of 1955. A notice dated 16. 10. 1987 was served on the petitioner in exercise of the power conferred by sub-rule (1) of Rule 52 by the respondent No. 2, whereby it was proposed to transfer the case of the petitioner firm from the Assistant Commercial Taxes Officer, Ward 1, Sri Ganganagar to the Assistant Commercial Taxes Officer, Anti Evasion, Bikaner, respondent No. 3. It is submitted that even before issuance of the notice dated 16. 10. 1987 by the Commissioner, Commercial Taxes, Rajasthan, the petitioner firm was served with a notice dated 31. 7. 1987 (Annex. R. 2) fixing 10. 8. 1987 as the date on which the petitioner was required to file his objections for transfer of the file. But the petitioner firm sought time to file reply and the case was adjourned from 10. 8. 1987 and 31. 8. 1987. But on that date no one appeared before the Commissioner to oppose the proposed transfer of the file. The Commissioner, Commercial Taxes, Rajasthan again afforded an opportunity to the petitioner firm and, therefore, the notice dated 16. 10,1987 was issued whereby the petitioner firm was asked to appear on 3. 11. 1987 to show cause against the transfer of the file. This notice was served on the petitioner on 20. 10. 1987, which is evident from the signature of Shri Raghuveer a partner of the petitioner firm and the same has been filed as Annex. R. 3. But still the petitioner firm did not choose to file any reply and communication dated 2. 11. 1987 was despatched from Ganganagar when the case was filed on 3. 11. 1987 before the Commissioner, Commercial Taxes, Rajasthan. This was received by the Commissioner, Commercial Taxes on 611. 1987 and not on 4. 11. 1987 as contended by the petitioner in the writ petition. It has also been denied that the respondent No. 3 was on tour on 3. 11. 1987. It is submitted that by the order dated 4. 11. 1987, the Commissioner, Commercial Taxes, Rajasthan directed the transfer of the file of the petitioner firm from the file of the Assistant Commercial Taxes Officer, Ward No. 1, Sri Ganganagar to the Assistant Commercial Taxes Officer, Anti Evasion, Bikaner. Therefore, it is submitted that the assessment made on the basis of those seized account-books and documents by the respondents and a notice of demand are well justified. We have heard learned counsel for the parties at length and perused the record. Mr. Garg, learned counsel for the petitioner has challenged the validity of proviso to Sub-Section (3) of Section 22 of the Act of 1954 being violative of Article 19 (1) (g ). In this connection, suffice it to say that the Division Bench of this Court in the case of Nathulal Fatehpuria vs. State of Rajasthan (1) has already upheld the validity. Likewise in M/s Hira Lal Chhaganlal vs. State of Rajasihan (2), this Court has also upheld the validity of Section 22 (3) of the Act of 1954. While upholding the validity of this sub-section, it was observed as under :- The provisions of S. 22 (3), (4) and (6) of the Rajasthan Sales Tax Act do not violate Article 19 (1) (g) or (g) of the Constitution. The reasons are as under :- (1) The provisions have been enacted to enable the sales-tax authorities to prevent the evasion of tax and, therefore, the purpose underlying these provisions is undoubtedly in the general public interest. (2) As a result of seizure of account books a dealer is certainly deprived of their use and to that extent there is infraction of his fundamental right, but the underlying purpose of seizing the account books is for the collection of the legitimate tax dues of the State and to prevent the evasion thereof. It will not be open to the concerning officer to retain in the account books or documents seized by him indefinitely without his utilising them for the purposes of their examination or for any enquiry or proceeding or for a prosecution. The restriction contained in sub-section (3) of S. 22 is not disproportionate to the evils sought to be eliminated. (3) The necessity of recording the reasons in writing is calculated to eliminate [arbitrariness on the part of the authority or officer concerned. While the reason for suspicion in the mind of the officer may not be capable of easy scrutiny, the reasons that the officer has to record in writing are capable of proper scrutiny. Apart from this, it will be open to the revisional authority under S. 14 to scrutinise the reasons recorded by an authority providing a further check on the action that may be taken under this provision. (4) Sub-section (4) of S. 22 is only incidental to sub-section (3) of S. 22 and, therefore, what ever is said about sub-section (3) is equally applicable to sub-section (4 ). (5) The power of seizure and confiscation of goods under sub-section (6) of S. 22 is not arbitrary, nor the provision is unreasonable. When the authority would be acting under this sub-section it is expected to follow the principles of natural justice and will be arriving at a decision quasi-judicially. " Therefore, the validity of sub-section (3) of Section 22 is no more res integra. Mr. Garg, learned counsel for the petitioner has submitted that the search in the present case is not according to law and therefore, the search was illegal. He submitted that for conducting search and seizure under Section 22 (4) of the Act of 1954, the provisions of the Code of Criminal Procedure have been made applicable. It is submitted that in the present case, no such formalities as required under the Code of Criminal Procedure that the two independent and respectable persons of the locality have to be called as witnesses and search warrant has to be obtained were not complied with. In this connection, learned counsel for the petitioner has invited our attention to G. M. Agadi & Bros. vs. The Commercial Taxes Officer, Enforcement Northern Zone, Belgaum (3), Binny Limited vs. Assistant Commercial Taxes Officer (Intelligence) LR, South Zone, Bangalore and Kehar Singh vs. The State (Delhi Admn ) The stand of the respondent State is that it was not a case of search and seizure but it was a case of survey and inspection as required by sub-section (2) of Section 22 of the Act. Therefore, it is not necessary to have complied with the provisions of sub-section (4) read with sub-section (8) of Section 22 of the Act of 1954. A distinction has been sought to be made between search and inspection.
(3.) WE have considered the arguments of both the learned counsel in terms of sub-section (2) of Section 22 read with sub-section (4) and sub-section (8) of Section 22 of the Act of 1954. Sub-section (2) of section 22 says that it will be incumbent upon the dealer to keep his business premises, godown, factory, vessel or vehicle etc. open for inspection and examination of the authorities at all reasonable times. Therefore, the concerned authority can always survey and inspect the business premises of a trader and for such inspection and examination there is no prohibition. But sub-ssction (3) says that if an officer or authority has reason to suspect that any dealer is evading payment of tax then he may for reasons to be recorded in writing seize his account books, registers or other documents and shall give the receipt of these seizure. Sub-section (3) further says that such officer who seized those account-books, registers and other documents shall retain those account-books, registers and documents for their examination or for any enquiry or proceedings or for prosecution so long as they are necessary. But a proviso has been added which lays down that such account-books, registers and documents seized shall not be retained beyond a period of 3 mon:hs without a reasoned order passed by the Commissioner in this behalf. This period of 3 months has now by a subsequent amcndment has been extended to 6 months. Be that, as it may, the legislature has put a rider on the power of the authorities that they will not retain the account-books, registers or documents seized beyond a period of 3 months and if it is required beyond the period of 3 months, then the higher authority i. e. Commissioner, Commercial Taxes, Rajasthan can extend the period for retention after recording the reasons thereof. Sub-section (4) of Section 22 of the Act of 1954 lays down that for the purposes of sub-sections (2) and (3) the concerned authority shall have the power to enter and search at all reasonable times any office, shop, godown. vessel, vehicle or any other place of business or any building or place where such authority has reason to believe that the dealer keeps account-books, registers or other documents pertaining to his business and also to search the body of any other person where it has reason to suspect that he may have to his personal possession any such goods, books of accounts, registers or documents. Sub-section (8) says that the provisions of the Code of Criminal Procedure relating to searches shall apply so far as to such searches done under sub-section (4) of Section 22 of the Act of 1954. That means that the provisions of the Code of Criminal Procedure will be applicable to the searches made/done under sub-section (4) of Section 22 of the Act of 1954. But it will not be applicable to the provisions of sub-section (2) of Section 22. Subsection (2) lays down that the authorities will have a right to enter into the business premises of the trader for survey and inspection at all reasonable times The moment they start search then that action will be covered by the provisions of sub-section (3) of Section 22 though initially it may be with an intention to enter the premises for survey and inspection. But the moment they apprehend that there is evidence of evasion of sales tax then from that stage onwards the enquiry turns into a search and the authorities will collect the incriminating documents, the moment that stage starts the provisions of sub-sec. (3) come into play then for such search/seizure the provisions of the Criminal Procedure Code will have to be complied with and search can proceed thereafter. Therefore, there is a distinction between survey and inspection on the one hand and search and seizure on the other hand. Sub-sec. (4) only enables the authorities to enter into the business premises and search at all reasonable times any office, shop, godown. vessel and vehicle or any other place of business or any building or place where any such authority or person has reason to believe that the dealer keeps or for the time being keeping any goods, account books, registers & other documents. Nonetheless the moment the authorities start making exhaustive enquiry and collecting the incriminating material that amounts to search and for that the provisions of the Code of Criminal Procedure have to be complied with. In the present case, it is true that when the Assistant Commercial Taxes Officer, respondent No. 3 alongwith his officers entered the premises of the petitioner firm for just inspection and survey, it was found that there was a case of further search as there was suspicion of evasion of tax and in that process they seized certain incriminating documents of the dealer and while seizing these documents etc. the raiding party should have to follow the procedure prescribed in the Code of Criminal Procedure i. e. they should have obtained the search warrant or atleast called 2 independent and respectable witnesses of the locality for search and seizure. But no such steps were taken by this party and they have only seized the documents. No justification has been pointed out in the reply. Only it was stated in the reply that the party headed by the Assistant Commercial Taxes Officer went for inspection and survey and during that time they seized certain account-books and registers from which it was apprehended that there was evasion of tax. It has not been poined out as to why, when such search and seizure were being undertaken, the two independent and respectable witnesses of the locality were not summoned. From these facts, it emerges that during the inspection and survey which ultimately resulted in search and seizure of the documents, the raiding party did not comply with the provisions of sub-section (8) of Section 22 of the Act of 1954 i. e. they have not followed the procedure for search as required under the Code of Criminal Procedure. Therefore, such search and seizure of the documents etc. cannot be said to be valid and the same is invalid. In this connection, Mr. Garg, learned counsel for the petitioner has invited our attention to G. M. Agadi & Bros. (supra ). In G. M. Agadi & Bros. (supra), it was held that all searches are inspections, but all inspections are not searches. A search is a thorough inspection of a man's house, building or premises or of his person with the object of discovering some material which would furnish evidence of guilt for some offence with which he is charged. In this case, it was also held that the action of the respondent amounted to a search of the petitioner's premises for the purpose of securing hold of the concealed account books and as the provisions of the Criminal Procedure Code required to be followed were not followed/ complied with by the respondent, the search was illegal and the seizure of the account books also became illegal- ;