YOGESH TRADING CO KOTACHERY Vs. INTELLIGENCE OFFICER OF SALES TAX CANNANORE

JUDGEMENT

(1.) These writ petitions have been placed before a Full Bench, as they raise certain important questions regarding the vires of S.29 of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as the Act), and R.35 framed thereunder. The question has, in a way, been pronounced upon earlier, by a Division Bench of this Court in Sree Narayana Transports v. State of Kerala (16 STC 659). But as the correctness of that ruling was itself assailed, it was felt desirable that the matter be placed before a larger bench with greater freedom of action.

(2.) O. P. No. 4977 of 1967 may be taken as representative of the facts relating to the other writ petitions. The petitioner herein is a firm of dealers in that part of Mane, which was originally French territory, and now, part of the Union Territory of Pondicherry administered by the Government of India. It claims to have been engaged in sending goods to places outside the Pondicherry and Kerala States. The territory of Mahe aforesaid is landlocked on all sides by frontiers of the Kerala State. Nearly five miles to the north of it, lies Tellicherry, and about six or seven miles to the south of it lies Muttungal, where a checkpost has been established under the provisions of S.29 of the Act. The petitioner is possessed of registration certificates issued under the Central Sales Tax Act 1956, and under the Pondicherry General Sales Tax Act, 1967 which came into force on 20-11-1967. (vide Exts. P and P(a). In August 1967 a vehicle which was carrying certain goods of the petitioner was intercepted at the Muttungal check post and Ext. P1 notice dated 31-8-1967 was issued threatening confiscation of the goods as the transport was not accompanied by proper documents as required by the Act. The petitioner appeared with its accounts, and by Ext. P2 order dated 1-9-1967, after verification of the accounts, the goods were ordered to be released. A second consignment of goods was intercepted with a similar show cause notice (vide Ext. P1(a) dated 20-9-1967) and was followed by a similar release order (Ext. P2(a) dated 25-9-1967), again, after production of accounts and verification of records. The third consignment sent in November 1967 was also intercepted by a similar show cause notice. (Ext. P4 dated 17-11-1967). The petitioner was asked to produce all accounts and bills relating to the business for the current year for verification, and the necessary evidence to show that he had business in pepper at Mahe and was a registered dealer in that area. The notice stated that Invoice No. 96 which accompanied transport of goods (Ext. P3(b)) was found to be suspicious. Ext. P3(b) shows at its top, the number and date of the registration certificate issued to the petitioner under the Central Sales Tax Act, The petitioner produced its accounts, and, by Ext. P5 notice dated 21-11-1967, was informed that as Mahe is a small territory where pepper was grown only on a small scale, the names and particulars shown in the purchase bills, appeared to be fictitious, that it was suspected that the purchases were effected at Tellicherry and that there was manipulation of accounts. As the genuineness of the purchases had to be verified and further time was required for the purpose, the petitioner was informed that it might get the goods released on payment of cash security amounting to double the amount of tax on the goods under R.35(15) of the Rules framed under the Act. Ext. P4(a) dated 18-11-1967 is copy of a notice in respect of another consignment covered by Invoice Nos. 94 and 95 (Ext. P3 and P3(a), It is a close replica of Ext. P4. After production of the petitioner's accounts, Ext. P5(a) dated 21-11-1967 was issued on the same terms as Ext. P5. Ext P4(b) is copy of yet another notice dated 20-11-1967 on the same terms as Exts. P4 and P4(a), and in respect of Invoice No. 1 (Ext. P3(c). Ext. P5(b) is a copy of the notice dated 21-11- 1967 issued after checking accounts and on the same terms as Exts. P5 and P5(a). Ext. P6 dated 22-11-1967 is a copy of the notice on the same terms as Ext. P4 series in respect of Invoice No. 8 (Ext. P7) Exts. P10 series filed with the reply affidavit of the petitioner are the relative 'C' forms in respect of the inter State sales evidenced by Ext. P3(b) and P3(c). The petitioner has sought to quash the notices, Ext. P4 series, Ext. P5 series and Ext. P6, besides getting S.29 of the Act and R.35 of the Rules framed thereunder declared unconstitutional and invalid.

(3.) It is unnecessary to quote S.29 of the Act and R.35 thereunder in extenso, as they are both far too long, and the Rule largely repeats the terms of be section. Clause (1) of S.29 authorises the Government, with a view to prevent or check the evasion of tax under the Act, to set up check posts at such place or places as they deem necessary. Clause (2) of the section reads: