The provisions of Section 22A of the Rajasthan Sales Tax Act, 1954, empowering the seizure of goods from a transporter of goods vehicle, were not beyond the ambit of ancillary power of the Legislature under Entry 54 of List II of the Seventh Schedule of the Constitution of India.

Headnote:
CONSTITUTIONAL LAW - SALES TAX - SEIZURE OF GOODS - POWER OF STATE LEGISLATURE - SCOPE - PROVISIONS OF SECTION 22A OF THE RAJASTHAN SALES TAX ACT, 1954 - VALIDITY - WHETHER ULTRA VIRES THE POWERS OF THE STATE LEGISLATURE - WHETHER AN INCIDENTAL OR ANCILLARY POWER TO THE POWER OF TAXATION - WHETHER VIOLATIVE OF ARTICLE 19(1)(F) AND (G) OF THE CONSTITUTION - INTERPRETATION OF SECTION 22A(5) AND (6) - SAFEGUARDS PROVIDED - PROCEDURE FOR SEIZURE OF GOODS - REASONABLE OPPORTUNITY OF HEARING - IMPOSITION OF PENALTY - RELEASE OF GOODS ON PAYMENT OF PENALTY OR FURNISHING SECURITY - WHETHER PROVISIONS OF SECTION 22B REGARDING TRANSIT PASS RELEVANT - FRAMING OF RULES BY STATE GOVERNMENT - WHETHER A CONDITION PRECEDENT FOR VALIDITY OF SECTION 22A - DISTINCTION FROM CASES RELATING TO CONFISCATION OF GOODS - EXERCISE OF EXTRAORDINARY JURISDICTION - CONDUCT OF PETITIONER - RELEVANCE.
Fact of the Case:

The petitioner, a registered partnership firm engaged in the business of transporting goods, challenged the provisions of Section 22A of the Rajasthan Sales Tax Act, 1954, authorizing the seizure of goods and documents, and sought a direction to release the seized goods and documents. The petitioner also prayed for a direction to the State Government to frame suitable Rules and forms for the issue of transit pass as contemplated under Section 22B of the Act.
Finding of the Court:

The Court held that the provisions of Section 22A of the Rajasthan Sales Tax Act, 1954, empowering the seizure of goods from a transporter of goods vehicle, were not beyond the ambit of ancillary power of the Legislature under Entry 54 of List II of the Seventh Schedule of the Constitution of India. The Court observed that the provisions were aimed at preventing tax evasion and were part of the incidental or ancillary powers to the power of taxation. The Court further held that the provisions regarding furnishing of security and seizure of the goods in default, were only in the nature of an effective provision to recover the penalty, which, in turn, was a measure aimed at prevention of tax evasion and perfectly within the incidental or ancillary power of taxation.
Issues: 1. Whether the provisions of Section 22A of the Rajasthan Sales Tax Act, 1954, authorizing the seizure of goods from a transporter of goods vehicle, were beyond the ambit of ancillary power of the Legislature under Entry 54 of List II of the Seventh Schedule of the Constitution of India? 2. Whether the provisions of Section 22A were ultra vires the powers of the State Legislature? 3. Whether the provisions of Section 22A were violative of Article 19(1)(f) and (g) of the Constitution? 4. Whether the framing of Rules by the State Government under Section 22B was a condition precedent for the validity of Section 22A?
Ratio Decidendi: 1. The Court held that the provisions of Section 22A of the Rajasthan Sales Tax Act, 1954, were not beyond the ambit of ancillary power of the Legislature under Entry 54 of List II of the Seventh Schedule of the Constitution of India. The Court observed that the provisions were aimed at preventing tax evasion and were part of the incidental or ancillary powers to the power of taxation. 2. The Court held that the provisions of Section 22A were not ultra vires the powers of the State Legislature. 3. The Court held that the provisions of Section 22A were not violative of Article 19(1)(f) and (g) of the Constitution. 4. The Court held that the framing of Rules by the State Government under Section 22B was not a condition precedent for the validity of Section 22A.
Final Decision: The writ petition was dismissed with costs.

JUDGMENT

1. - M/s Gill Sandhu Haryana Transport Co. (here in after referred to as 'the petitioner') has filed this writ petition challenging the provisions of Section 22A of the Rajasthan Sales Tax Act, 1954 (here in after referred to as 'the Act') in so far as it authorises the seizure of goods and. documents. It has also been prayed that a direction be given to the Assistant Commercial Taxes Officer, Anti Evasion, Head Office Circle, Jaipur to release the seized goods and documents of the petitioner. A prayer has also been made to direct the State Government to frame to suitable Rules and forms for the issue of transit pass as contemplated under Section 22B of the Act.

2. Brief facts leading to this writ petition are that the petitioner is a registered partnership firm having its head office at Naya Bazar, New Delhi and Branch Office at Agra Road, Jaipur. The petitioner is carrying on the business of transporting goods from one place to another.

3. According to the petitioner, the modus operandi of its business is that the consignors come at the place of its business and intimate that the goods are to be sent from a particular place to another destination. The petitioner takes delivery of the goods and issues goods receipts (GR) in which the name of the consignor is written. The GR is a document of title in respect of the goods. The delivery of the goods can be made only at the destination to the person who produces the goods receipt. The petitioner notes down the name of the consignee, which is intimated to it by the consignor. According to the trade usages and practice, the petitioner is not under any obligation to verify the name and address of the consignor or the consignee, nor the reasons for the despatch of the goods to a particular destination. The petitioner is only concerned with the freight which is payable to it in connection with the despatch of the goods from one place to another.

4. The case of the petitioner is that certain parties booked their goods from Delhi for Jaipur, Jodhpur and Indore. The goods were loaded in truck No. HRU 2995. The truck left Delhi on September 18, 1985 in the evening. The truck was accompanied with copies of the bills of sale along with the challan and the goods receipts.

5. The case of the petitioner further is that after leaving Delhi, the truck was first checked at Haryana check post, both inward and outward and thereafter the same was checked at Shahjanhpur, which is the first inward checkpost in the State of Rajasthan. The goods were duly checked and verified at Shahjanhpur check post and the challans were duly sealed bythe check post incharge. One of the GR's meant for Jodhpur was not considered to be in order and a penalty of Rs. 1,600/- was levied under the provisions of Section 22A(7) of the Act. The rest of the GRs were found to be in order. There after the goods truck proceeded towards Jaipur. The truck was intercepted by the Assistant Commercial Taxes Officer, Anti Evasion, at Amber in the afternoon of September 20, 1985 without any reason or rhyme before the Octroi Check post, Amber. The driver of the truck was asked to drive the truck to 'Kar Bhawan' for verification and checking of the goods.

6. It has been further alleged that the driver under the direction of the Assistant Commercial Taxes Officer brought the truck to 'Kar Bhawan' and there he was served with a notice purporting to be under Section 22A of the Act mentioning therein to get the physical verification of the goods loaded in the truck. The original notice dated September 20, 1985 served on the driver has been submitted and marked as Annexure-1. It has been further submitted that on the next day i.e., on September 21, 1985 the petitioner Company's Manager Shri Manmohan Singh went to the office of the Assistant Commercial Taxes Officer to get the truck and the goods released from his custody. The Assistant Commercial Taxes Officer insisted for unloading of the truck and for verification of the goods along with

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Judicial Analysis

1985 Supreme(Raj) 754

RAJASTHAN HIGH COURTN.M.Kasliwal, J.Gill Sandhu Haryana Transport Co. - AppellantVersusState of Rajasthan and anr. - RespondentS.B.C.W.P. No. 1663 of 1985.Decided On : 18-10-1985

The provisions of Section 22A of the Rajasthan Sales Tax Act, 1954, empowering the seizure of goods from a transporter of goods vehicle, were not beyond the ambit of ancillary power of the Legislature under Entry 54 of List II of the Seventh Schedule of the Constitution of India.

Cases Referred (7)

Judicial Analysis

RAJASTHAN HIGH COURT
N.M.Kasliwal, J.
Gill Sandhu Haryana Transport Co. - Appellant
Versus
State of Rajasthan and anr. - Respondent
S.B.C.W.P. No. 1663 of 1985.
Decided On : 18-10-1985