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1996 Supreme(Gau) 27
GAUHATI HIGH COURT
D.N.Baruah, J.
A.B.C.India Limited -Appellant
Versus
State of Assam and Ors. -Respondent
Civil Rule Nos. 2555 and 3250 of 1993
Decided On : 20-02-1996
K.K.Gupta, S.Mitra, J.P.Bhattacharjee, B.P.Todi, A.K.Saraf, S.N.Bhuyan
The State Legislature does not have the authority to impose obligations on transporters to furnish information and maintain accounts, and empower authorities to search and seize goods, because transporters are not engaged in the sale of goods and do not have a reasonable and proximate connection to the transaction of sale.
Headnote:
ASSAM GENERAL SALES TAX ACT, 1993 - SECTIONS 42 AND 44 - TRANSPORTERS - FURNISHING OF INFORMATION AND SEARCH AND SEIZURE - ULTRA VIRES - NOTIFICATION DIRECTING PRODUCTION OF DOCUMENTS PRIOR TO ACT'S EFFECTIVE DATE - ILLEGAL.
Fact of the Case:
The petitioners, a transportation company, challenged the seizure of their books of accounts and documents under the Assam General Sales Tax Act, 1993, and the notices directing them to produce various books of accounts and documents for verification. The petitioners argued that the provisions of sections 42 and 44 of the Act, which imposed obligations on transporters to furnish information and maintain accounts, and empowered authorities to search and seize goods, were ultra vires and that the notices directing them to produce documents prior to the Act's effective date were illegal.
Finding of the Court:
The court held that the provisions of sections 42 and 44 of the Act, insofar as they related to transporters, were ultra vires and bad in law. The court reasoned that the State Legislature did not have the authority to impose such obligations on transporters because they were not engaged in the sale of goods and did not have a reasonable and proximate connection to the transaction of sale. The court also held that the authority's direction to produce books of accounts and documents prior to the Act's effective date was illegal and bad in law.
Issues: 1. Whether the provisions of sections 42 and 44 of the Assam General Sales Tax Act, 1993, which imposed obligations on transporters to furnish information and maintain accounts, and empowered authorities to search and seize goods, were ultra vires. 2. Whether the notices directing the petitioners to produce documents prior to the Act's effective date were illegal.
Ratio Decidendi: 1. The court relied on the decision of the Supreme Court in State of Haryana & others vs. Sant Lal & another, which held that the State Legislature did not have the authority to impose sales tax on clearing or forwarding agents or 'dalals' or other persons transporting goods because they did not carry on the business of selling goods and did not have authority to sell goods belonging to the dealer whose goods they booked or received. The court reasoned that the same principles applied to the provisions of sections 42 and 44 of the Assam General Sales Tax Act, 1993, which imposed similar obligations on transporters. 2. The court held that the notices directing the petitioners to produce documents prior to the Act's effective date were illegal and bad in law because the provisions of sections 42 and 44 were prospective in nature and did not authorize the authority to demand books of accounts prior to the Act's effective date.
Final Decision: The court held that the provisions of sections 42 and 44 of the Assam General Sales Tax Act, 1993, insofar as they related to transporters, were ultra vires and bad in law. The court also held that the authority's direction to produce books of accounts and documents prior to the Act's effective date was illegal and bad in law, and accordingly, it was set aside and quashed.
2. In both these Civil Rules the petitioners have challenged the seizure of books of accounts and documents made by the authorities on 9.8.93 at the offices and godowns of the petitioners under the provisions of the Assam General Sales Tax Act, 1993 and also have challenged the Annexure II notices dated 1.9.93 issued by the Superintendent of Taxes, Unit B, Guwahati, directing the petitioner to produce various books of accounts and documents on 4.9.93 for the purpose of verification of the accounts and documents seized by the officers of the department, etc. and prayed for issuance of appropriate writ or direction. The petitioners have also prayed for a declaration that sections 42 as ultra vires.
3. The facts for the purpose of disposal of these Civil : The petitioner is a company registered under the Companies Act engaged in the business of transportation of goods on behalf of the customers through out the country. The second petitioner is the Joint Managing Director of the petitioner company. The petitioner company is not engaged in business of sales and supply of goods. A bill namely, Assam General Sales Tax Bill, 1993 was passed in the Assam Legislative Assembly and the Bill received the on 14.5.93 and became an Act (Assam Act No. XII of 1993) for short, 1993. This Act has repealed all the earlier four Sales Tax Acts.
4. Under section 42 of the Act, it is an obligation on every clearing, booking or forwarding agent or any other person transporting goods who during the course of its business handles documents of title to the goods for or on behalf of any dealer or person holding certificate under section 14 to finish to the prescribed authority true and complete particulars and information and to maintain true and complete accounts, registers, documents etc. The said section also provides for levy of penalty at the rate of three times of tax calculated on the value of the goods in respect of which no particulars or information have been furnished under sub-section (1) of section 42 or no cash memo or challen has been produced before the prescribed authority under sub-section (2) or rupees one thousand whichever is greater. Section 44 of the Act empowers any authority appointed under section 3 (1) that if he has reason to suspect that any dealer is attempting to evade tax or that any person transporting goods or any other person has kept his accounts in such a manner as is likely to cause evasion of tax under the Act, such authority may for reasons to be recorded in writing seize such accounts, registers or documents. Power has also been given to the appointed under section 3(1) of the Act to enter and search any place of business of any dealer. The said section empowers the authority under clause (4) of sub section (5) of section 44 to impose a penalty equal, to three times the amount of tax calculated on the value of such goods and to release the goods as soon as the penalty is paid in case the dealer or the person in charge of the goods fails, to produce any evidence to satisfy the said authority regarding the proper accounting of the goods.
These two provisions were not there in the repealed Acts. For the first time in the new Act such provisions have been incorporated to, make liable the transporters to maintain books of accounts and imposition of penalty in case of failure to do so. The Act has come into such, the obligation in case.
The officers of the Sales Tax Department made surprise, visit to the premises and godowns of the petitioner company and searched the premises and godowns. After search a number of accounts, documents as well as goods were seized. The seizure list and order for seizure were handed over to the person therein. On 2.9.93 notices were issued to the petitioner company to produce the documents to satisfy the authority about the proper accounting of
