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2000 DIGILAW 248 (GAU)

Crompton Greaves Ltd. v. Commissioner of Taxes

2000-07-27

BRIJESH KUMAR, D.N.CHOWDHURY

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Brijesh Kumar, C.J.— This appeal arises out of the judgment and order passed by the learned Single Judge dated 18.5.95, in Civil Rule No. 2810 of 1991. 2. The question involved for consideration is as to whether an offence under the provisions of the Assam Finance (Sales Tax) Act, 1956, would be a cognizable offence and liable to be investigated under the provisions of the Code of Criminal Procedure, 1973, or not. 3. We have heard Dr. AK Saraf, learned counsel appearing for the appellant and Shri AK Goswami, learned counsel appearing for the State. 4. The petitioner/appellant is a limited company dealing in supply of pump sets etc. It has a branch at Guwahati, registered as a dealer under the Assam Finance (Sales Tax) Act, 1956. According to the appellant, it has submitted its return and paid the sales tax and the concerned authority of the Sales Tax Department completed the assessment for the period ending on 31.3.87. The appellant was, however, served with a notice dated 17.2.90, under section 31 (1) of the Assam Finance (Sales Tax) Act, 1.956 (herein after to be called as the Act), requiring the appellant to produce the accounts etc indicated in the notice for the last 8 years for verification .of purchase and sale of Monoblock Pump Sets. On the objections raised in revision to the department al authorities, the case of the appellant is that the notice requiring the petitioner to submit the accounts was the set aside. Later, however, the Deputy Superintendent of Police, Bureau of Investigation (Economic Offences), Assam, accompanied with respondent No.5, the Superintendent of Taxes attached to the Bureau of Investigation (Economic a Offences) and the Inspector of Police, BIEO, Rehabari, Guwahati, they seized the account books of the appellant on 27.2.91 on the basis of suspicion of evasion a of taxes. It may be pertinent to mention here that the search and seizure was made under a warrant of seizure issued by the Chief Judicial Magistrate. A copy of the Seizure Memo dated 27.2.91 has been filed as Annexure VIII to the Memorandum of Appeal, indicating seizure of 43 documents, witnessed by two witnesses. The Seizure Memo also narrates that search was conducted on the strength of search warrant issued by the Chief Judicial Magistrate, Kamrup, Guwahati, as it was suspected that there was evasion of tax. 5. The Seizure Memo also narrates that search was conducted on the strength of search warrant issued by the Chief Judicial Magistrate, Kamrup, Guwahati, as it was suspected that there was evasion of tax. 5. The main contention raised on behalf of the appellant is that the Police authorities had no jurisdiction to make the seizure on suspicion of evasion of sales tax, more particularly, when such documents summoned by the departmental autho­rities, namely, the authorities of the Sales Tax Department and notice issued for their seizure was resisted and challenged and the authorities had passed orders setting aside such notice, in connection with which some proceedings were still pending. 6. Yet another submission which has been made is that according to the findings recorded by the learned Single Judge, no offence was made out under the Assam Finance (Sales Tax) Act, 1956 and the Police authorities had taken action on suspicion. The records otherwise would not justify such seizure, unless it was clearly indicated as to what offence was committed and made out by the petitioner/appellant. 7. Yet another submission which has been most vehemently made before us is that the provisions of the Code of Criminal Procedure would not be applicable for the offences made out under the Assam Finance (Sales Tax) Act, 1956, unless sanction is obtained from the Commissioner of Sales Tax, without which no Magistrate could take cognizance of the offence. 8. In the light of the above submissions, we have to ascertain as to whether any offence under the Assam Finance (Sales Tax) Act, 1956 is made out or not and in case such an offence is made out, it will be cognizable offence for the purposes of investigation under the Code of Criminal Procedure or not. . 9. Section 25 of the Assam Finance (Sales Tax) Act, 1956 provides for offences and penalties. The section enumerates nine kinds of omissions and commissions amounting to offence making a dealer liable for imprisonment, which may extend to six months, or for fine not exceeding Rs. 1,000, or both addition to any tax or penalty. . 9. Section 25 of the Assam Finance (Sales Tax) Act, 1956 provides for offences and penalties. The section enumerates nine kinds of omissions and commissions amounting to offence making a dealer liable for imprisonment, which may extend to six months, or for fine not exceeding Rs. 1,000, or both addition to any tax or penalty. To mention a few offences, some sub-sections may be quoted: “(3) fails, when required by or under the provisions of this Act, to keep accounts or records of sales; or (4) fails, when required by or under the provisions of this Act, to produce any accounts, evidence or documents or to furnish any information; or (5) fails or neglects to comply with any requirement made of him under the provisions of this Act; or (6) knowingly produces incorrect accounts, registers or documents, or knowingly furnishes incorrect information; or (7) prevents or obstructs inspection or entry by an officer acting under the provisions of this Act; or” 10. The above provisions show that failure to produce any accounts, evidence or documents as required under the provisions of the Act, or prevents or obstructs inspection or entry by an officer, or to produce incorrect information, amounts to an offence. Section 27 of the Act reads as under : “27. Cognizance of offence-(1) No Court shall take cognizance of any offence a under this Act, except with the previous sanction of the Commissioner. (2) Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (Act V of 1898), all offences punishable under this Act or the Rules made there under shall be cognizable and bailable.” 11. Reading of sub-section (2) of section 27 of the Act quoted above, leaves no room to doubt that all offences punishable under the Act are cognizable and bailable; whereas sub-section (1) of section 27 provides that no Court shall take cognizance of any offence under the Act except with the previous sanction of the Commissioner. A clear distinction must be noticed. Sub-section (1) comes for the purpose of the Court to take cognizance of any offence, which mandatory requires sanction of the Commissioner, that is to say, a Court will have the right to proceed in the matter only after sanction has been given by the Commissioner and not otherwise. A clear distinction must be noticed. Sub-section (1) comes for the purpose of the Court to take cognizance of any offence, which mandatory requires sanction of the Commissioner, that is to say, a Court will have the right to proceed in the matter only after sanction has been given by the Commissioner and not otherwise. But, so far sub-section (2) of section 27 is concerned, it makes all the offences under the Act cognizable and bailable, notwithstanding anything contained in the Code of Criminal Procedure, meaning thereby, a Police Officer may proceed to investigate the case in relation to the offences under the Act as in the cognizable offences without requiring any order of a Magistrate. In d the present case, though we find that he had obtained search warrant from the Court of the Chief Judicial Magistrate. 12. Learned counsel for the appellant, however, submits that the powers of the Police to plunge into action and to search and seize, does not arise in view of the provisions contained under section 31 of the Act, which reads as under : “31. Powers to order production of accounts and power of entry and inspection- (1) Subject to such conditions and restriction as may be prescribed, the Commissioner may, for the purpose of the Act, require any dealer to produce before him any accounts, registers, vouchers or other documents relating to the manufacture, making, processing, import, sale or purchase of taxable goods or matters connected therewith. (2) All accounts, registers and other documents as referred to in sub-section (1), the taxable good in the possession of a dealer and his offices, shops, godowns, buildings, vessels and vehicles shall, at all reasonable times, be open to inspection by the Commissioner. (3) If the Commissioner has reason to suspect that any dealer is attempting to evade payment of any tax under this Act, he may, for reasons to be recorded in writing, seize such accounts, registers or documents of the dealer as may be necessary, and shall grant a receipt for the same only for so long as may be necessary for the purposes of this Act. (4) The Commissioner may, for the purposes of sub-section (2) or sub-section (3), enter and search any place where he has reason to believe that the dealer keeps or is for the time being keeping any accounts, registers, vouchers or other documents referred to in sub-section (1), on the authority of a search warrant issued by a Magistrate. (5) The provision of section 102 and section 103 of the Code of Criminal Procedure, 1898 (Act V of 1898), shall so far as may be, apply to searches under sub-section (4).” On the basis of the above provision, it is submitted that the Commissioner Tax has all the powers to summon and to require production of the documents and accounts from the dealer and also to enter into the premises and inspect the same as well as seize the documents etc, under authority of a search warrant issued by a Magistrate and in that event, provisions of sections 102 and 103 of the Code of Criminal Procedure would be applicable to such search. That being the position, there is no occasion for the Police authorities to undertake the functions as envisaged to be performed by the Commissioner of Sales Tax for production, search and seizure of the documents. 14. It is to be examined as to whether section 31 of the Act does away with the powers and functions of the authorities other than the Commissioner of Sales Tax, namely, the Police authorities, to act in accordance with the provisions contained under section 25 read with sub-section (2) of section 27 of the Act and sub­section (2) of section 4 of the Code of Criminal Procedure, which reads as under: “4. Trial of offences under the Indian Penal Code and other laws-(1) All offences under the Indian Penal Code (45 of 1860) shall be investigated, inquired into, tried and otherwise dealt with according to the provisions hereinafter contained. (2) All offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences.” Sub-section (2) of section 4 of the Code of Criminal Procedure provides about investigation of all offences under any law other than the Indian Penal Code. Such offences are to be investigated and inquired into and tried in accordance with the provisions of the Code of Criminal Procedure except in respect of offences for which any law for the time being is in force regulating the manner and place of investigation, inquiry into or trying or otherwise dealing with such offences; that is to say, in respect of offences other than offences under the Indian Penal Code, a procedure relating to investigation, inquiry and trial would be applicable if provided under any other law other than the Code of Criminal Procedure. But, in the absence of any such procedure specially provided in respect of such offences, all such offences are to be investigated, inquired into and tried according to the procedure provided under the Code of Criminal Procedure. Avoiding unnecessary or avoidable discussion, straightway it may be pointed out that section 31 of the Assam Finance (Sales Tax) Act, 1956, does not provide for trial of an offence under the Act or its investigation or inquiry for the purposes of trial and conviction. That power is available to the Commissioner for the purposes of departmental assessment proceedings. Learned counsel for the appellant could not show any provision under the Act specifically providing for any procedure for investigation, inquiry or trial, other than as provided under the Code of Criminal Procedure, or for trial of an offence under section 25 of the Act. Section 25 of the Act, as indicated earlier, indicates the offences and provides for the penalty for committing the offences, where an offence is proved and a person is found guilty. Section 27 of the Act makes all such offences cognizable and bailable, meaning thereby, as indicated above, a Police officer can take 13. On the basis of the above provision, it is submitted that the Commissioner of Sales Tax has all the powers to summon and to require production of the documents and accounts from the dealer and also to enter into the premises and inspect the same as well as seize the documents etc, under authority of a search warrant issued by a Magistrate and in that event, provisions of sections 102 and 103 of the Code of Criminal Procedure would be applicable to such search. That being the position, there is no occasion for the Police authorities to undertake the functions as envisaged to be performed by the Commissioner of Sales Tax for production, search and seizure of the documents. 14. It is to be examined as to whether section 31 of the Act does away with the powers and functions of the authorities other than the Commissioner of Sales Tax, namely, the Police authorities, to act in accordance with the provisions contained under section 25 read with sub-section (2) of section 27 of the Act and sub­section (2) of section 4 of the Code of Criminal Procedure, which reads as under: “4. Trial of offences under the Indian Penal Code and other laws: (1) All offences under the Indian Penal Code (45 of 1860) shall be investigated, inquired into, tried and otherwise dealt with according to the provisions hereinafter contained. (2) All offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences.” Sub-section (2) of section 4 of the Code of Criminal Procedure provides about investigation of all offences under any law other than the Indian Penal Code. Such offences are to be investigated and inquired into and tried in accordance with the provisions of the Code of Criminal Procedure except in respect of offences for which any law for the time being is in force regulating the manner and place of investigation, inquiry into or trying or otherwise dealing with such offences; that is to say; in respect of offences other than offences under the Indian Penal Code, a procedure relating to investigation, inquiry and trial would be applicable if provided under any other law other than the Code of Criminal Procedure. But, in the absence of any such procedure specially provided in respect of such offences, all such offences are to be investigated, inquired into and tried according to the procedure provided under the Code of Criminal Procedure. Avoiding unnecessary or avoidable discussion, straightway it may be pointed out that section 31 of the Assam Finance (Sales Tax) Act, 1956, does not provide for trial of an offence under the Act or its investigation or inquiry for the purposes of trial and conviction. Avoiding unnecessary or avoidable discussion, straightway it may be pointed out that section 31 of the Assam Finance (Sales Tax) Act, 1956, does not provide for trial of an offence under the Act or its investigation or inquiry for the purposes of trial and conviction. That power is available to the Commissioner for the purposes of departmental assessment proceedings. Learned counsel for the appellant could not show any provision under the Act specifically providing for any procedure for investigation, inquiry or trial, other than as provided under the Code of Criminal Procedure, or for trial of an offence under section 25 of the Act. Section 25 of the Act, as indicated earlier, indicates the offences and provides for the penalty for committing the offences, where an offence is proved and a person is found guilty. Section 27 of the Act makes all such offences cognizable and bailable, meaning thereby, as indicated above, a Police officer can take cognizance of the offence for the purposes of investigation without any orders of the Magistrate. In absence of any provision specifically provided under the Act for investigation, inquiry and trial of offences under section 25 of the Act, the provisions of the Code of Criminal Procedure would be applicable under sub­section (2) of section 4 of the Code of Criminal Procedure. 15. The position which thus emerges is clear and unambiguous. 16. In respect to the submission that conferment of such powers on the Police may results in injustice and at times the ordinary traders and dealers may be vulnerable to hazards of misuse of the power. It is further submitted that there is no reason that all the offences under the Act be made cognizable authorising the Police officers to investigate the offence or even arrest the suspect without warrant in view of the fact, the offence being cognizable in nature. 17. Shri AK Goswami, learned counsel appearing for the State has rightly submitted that vires of section 27 (2) of the Act has not been challenged, hence, it is not open to raise this submission. 17. Shri AK Goswami, learned counsel appearing for the State has rightly submitted that vires of section 27 (2) of the Act has not been challenged, hence, it is not open to raise this submission. It is also rightly pointed out on behalf of the' respondents that the case relied upon by the learned counsel for the appellant, reported in 1988 Crl LJ (Part 2) 1181, Koran Singh vs. State of Punjab, does not apply to the facts of the present case since that case relates to a matter where the procedure for investigation, enquiry and trial etc was provided under the special Act itself and to that extent it would exclude the operation of the provisions contained under the Code of Criminal Procedure. But in the present case it could not be shown that any such special provision has been made under the Assam Finance (Sales Tax) Act, 1956. The powers of the Commissioner as contained under section 31 of the Act for the purposes of the provisions of the Act do not pertain to sub-section (2) of section 27 of the Act. The Commissioner has power to search and seize the documents of a dealer after recording the reason for the same, as provided under sub-section (3) of section 31 of the Act, after obtaining a search warrant and in that event, sections 102 and 103 of the Code of Criminal Procedure would be applicable. But, if there is suspicion of evasion of tax or failure to produce the documents or to make them available for inspection attracting sub-section (2) of section 27, namely, it being a cognizable offence, a Police officer would be entitled to resort to the provisions of section 4 (2) of the Code of Criminal Procedure. 18. That being the position, we find no reason to interfere in the matter. There is no merit in the appeal. It is accordingly dismissed. There would, however, be no order as to costs.