M R DAIRY PRODUCTS PVT LTD Vs. S S GAIN C T O CENTRAL SECTION

JUDGEMENT

(1.) THE three cases bearing Nos. 122 of 1999, 123 of 1999 and 129 of 1999 filed by different parties, are taken up together for hearing because these are in connection with seizure of skimmed milk powder (in short, "SMP") on the same date and at the same premises. The applicant in case No. RN -123 of 1999 is a firm running business in the name and style of "Fair Traders" at shop Nos. A -11 and A -20 at Hari Ram Market, Jagannath Ghat Cross Road and is, as claimed by it, engaged in purchase and sale of SMP/dairy whitener within West Bengal. The firm claims that it being a re -seller within the State and that the first sale of such SMP within the State having been already taxed, it (the firm) has no legal obligation to get itself registered under the West Bengal Sales Tax Act, 1994 (in short, "the 1994 Act"). But on April 28, 1999 a team of Revenue officials of the Central section headed by the respondent No. 1 held a search at the shops of the applicant -firm and also shop Nos. A -18 and A -19 belonging to another business concern named M.R. Dairy Products Pvt, Ltd. The firm alleges that inspite of production of relevant documents and registers, the respondent No. 1 seized the goods found at its (firm's) shops as well as the goods found in shop Nos. A -18 and A -19 belonging to M.R. Dairy Products by single seizure receipt drawn in the name of the firm alone. Seizure was made by the respondent No. 1 on the allegation that there was a contravention of the provisions of Section 68 of the 1994 Act, The firm alleges that it has been served with a notice in form 44 initiating a penalty proceeding. Its further case is that though its Accountant Shri Subrata Mondal, who is also the Accountant for M.R. Dairy Products Ltd., produced relevant documents to establish that the stocks of SMP in question were purchased locally within West Bengal, the respondent No. 1 imposed a penalty of Rs. 16,08,450 after determining the value of the goods to be Rs. 64,33,800. A demand notice in form 45 was served. The firm challenges the validity of the seizure and the order imposing penalty on the ground of their being arbitrary, illegal and without jurisdiction. According to the firm the seizure, having been made without any reason to believe that there were contravention of Section 68 of the 1994 Act, is null and void. It is also contended by the firm that since Section 69(b) does not cast any obligation on the officer, conducting the search, as a precondition for such search, to form an opinion that there were reasons to believe violation of the provisions of Section 68, the provision of Section 69(b) is violative of the provisions of Articles 14 and 19(1)(g) of the Constitution of India.

(2.) IN the application giving rise to RN -122 of 1999 the applicant a private limited company, alleges that the shop Nos. A -18 and A -19 of Hari Ram Market belong to it and that as a re -seller of SMP/ dairy whitener it had stock of such goods in the said shops ; but while similar goods, belonging to another business concern, namely, Fair Traders, were being seized from shop Nos. A -11 and A -20, the respondent No, 1 seized goods also from shop Nos. A -18 and A -19 inspite of the fact that its employee produced all material documents and registers in support of local purchase of the goods found in shop Nos. A -18 and A -19. This company's further grievance is that though the goods, found at Shop Nos. A -18 and A -19 belonging to it, were seized along with the goods of Fair Traders found at Shop Nos. A -11 and A -20 only a single receipt was granted for the entire seizure and that the said receipt was granted in the name of Fair Traders. This applicant has challenged the validity of the search and seizure of its godown. It has also challenged the constitutional vires of Section 69(b) of the 1994 Act.

(3.) THE case made out by the respondents in their affidavits -in -opposition in the three cases is that the searches in the four shop rooms were made strictly in accordance with the legal provisions after recording the reasons for such searches and ultimate seizures. In disputing the applicants claim that they are not liable to be assessed to tax, the respondents contend that every dealer is liable to pay tax on his turnover of sales under Section 10(1) of the 1994 Act unless he can prove to the satisfaction of the competent authority that the goods sold were purchased in West Bengal. The respondents also assert that the provisions of Section 69(b) of the 1994 Act are not ultra vires the Constitution nor does it vest unguided and arbitrary power on the competent authority to effect search or seizure in violation of the constitutional safeguard enshrined in Articles 14 and 19(1)(g) of the Constitution. The claim of the applicants in the case of RN -122 of 1999 that shop Nos. A -18 and A -19 belong to it has been discounted by the respondents on the ground that the godown in -charge could not produce till 7 p.m. on the date of the search any documents like rent receipt, trade license, etc., in support of such claim. The respondents further contend that the godown keeper himself identified the goods, found in the four godowns, as belonging to Fair Traders, and accepted on behalf of the Fair Traders the seizure receipt issued in the name of Fair Traders without any clamour.