I) M.c.jacob v. Intelligence Officer, Agricultural Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE V.CHITAMBARESH THURSDAY, THE 27TH DAY OF JUNE 2013/6TH ASHADHA, 1935 WP(C).No. 25376 of 2012 (V) ---------------------------- PETITIONER(S):---------------- SHEEN GOLDEN JEWELS (INDIA) PRIVATE LTD. 21/1016(2), COLLEGE ROAD, PATHANAMTHITTA REPRESENTED BY ITS DIRECTOR K.P.VEERAN KUTTY. BY ADVS.SRI.V.V.ASOKAN SRI.V.SURESH (TRIVANDRUM) RESPONDENT(S):---------------------------- 1. INTELLIGENCE OFFICER SQAUD NO.1, COMMERCIAL TAXES, PATHANAMTHITTA 691 523. 2. INSPECTING ASSISTANT COMMISSIONER (INTELLIGENCE) COMMERCIAL TAXES, PATHANAMTHITTA 691 523. 3. INSPECTING ASSISTANT COMMISSIONER COMMERCIAL TAXES, PATHANAMTHITTA 691 523. 4. COMMISSIONER COMMERCIAL TAXES, THIRUVANANTHAPURAM 695 001. R1 BY ADV. GOVERNMENT PLEADER SRI.SHAIJ RAJ.T.K. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 27-06-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: PETITIONER(S) EXHIBITS EXHIBIT P1.TRUE COPY OF THE NOTICE ISSUED BY THE IST RESPONDENT DATED 10.11.2011.DATED 10.11.2011. EXHIBIT P2.TRUE COPY OF THE SHOP INSPECTION REPORT PREPARED BY THE IST RESPONDENT DATED 10.11.2011.IST RESPONDENT DATED 10.11.2011. EXHIBIT P2(a).TRUE COPY OF THE STOCK DETAILS OF THE PETITIONER DATED 10.11.2011. 10.11.2011. EXHIBIT P3.TRUE COPY OF THE RECEIPT GIVEN BY THE IST RESPONDENT DATED 10.11.2011.DATED 10.11.2011. EXHIBIT P4.TRUE COPY OF THE REQUEST OF THE PETITIONER GIVEN TO THE IST RESPONDENT DATED 26.7.2012.IST RESPONDENT DATED 26.7.2012. EXHIBIT P5.TRUE COPY OF THE REPLY GIVEN BY THE IST RESPONDENT DATED 31.7.2012.31.7.2012. EXHIBIT P6.TRUE COPY OF THE REQUEST OF THE PETITIONER GIVEN TO THE IST RESPONDENT DATED 22.8.2012.IST RESPONDENT DATED 22.8.2012. EXHIBIT P7.TRUE COPY FO THE REPLY GIVEN BY THE IST RESPONDENT DATED 4.8.2012.4.8.2012. EXHIBIT P8.TRUE COPY OF THE REQUEST OF THE PETITIONER GIVEN TO THE IST RESPONDENT DATED 6.9.2012.IST RESPONDENT DATED 6.9.2012. EXHIBIT P9.TRUE COPY OF THE REPLY GIVEN BY THE IST RESPONDENT DATED 20.09.2012.20.09.2012. EXHIBIT P10. TRUE COPY OF THE REPRESENTATION FILED BY THE PETITIONER BEFORE THE 4TH RESPONDENT DATED 22.10.2012.BEFORE THE 4TH RESPONDENT DATED 22.10.2012. EXHIBIT P11. TRUE COPY OF THE NOTICE ISSUED BY THE IST RESPONDENT DATED 20.10.2012.DATED 20.10.2012. //TRUE COPY// P.S. TO JUDGE. V.CHITAMBARESH, J. ------------------------------- W.P (C) No.25376 of 2012 ------------------------------- Dated this the 27[th] day of June, 2013 “C.R.” J U D G M E N T How long can the accounts, registers, records or otherdocuments seized under the provisions of the Kerala ValueAdded Tax Act, 2003 ('the Act' for short) be retained by theofficer seizing them ? I shall refer to the provisions of law firstbefore adverting to the factual aspects in the peculiarcircumstances of the case though it ought to be vice versa whilepronouncing a judgment. 2. Section 44 (6) of the Act reads as under:- 44. Power to order production of accounts andpowers of entry, inspection etc.-powers of entry, inspection etc.- (1)xxxxxxx (2)xxxxxxx (3)xxxxxxx (4)xxxxxxx (5)xxxxxxx (6)The accounts, registers, records or other documentssized under sub-section (5) shall not be retained bythe officer seizing them beyond a period of onehundred and eighty days from the date of the seizureexcept with the permission of the next highersized under sub-section (5) shall not be retained bythe officer seizing them beyond a period of onehundred and eighty days from the date of the seizureexcept with the permission of the next higher authority, unless they are required for anyprosecution under this Act.Provided that the next higher authority shall not givepermission to retain such accounts, registers,records or other documents beyond a period of oneyear from the date of the seizure. (emphasissupplied) The decision as to whether the accounts, registers, records or authority, unless they are required for anyprosecution under this Act.Provided that the next higher authority shall not givepermission to retain such accounts, registers,records or other documents beyond a period of oneyear from the date of the seizure. (emphasissupplied) The decision as to whether the accounts, registers, records or other documents are required for any prosecution under the Acthas necessarily to be arrived at by the officer within the periodof one hundred and eighty days from the date of seizure. Theofficer should apply his mind and arrive at the decision that aprosecution should be launched against the dealer and that theretention of the documents is essential for the purpose.Otherwise the documents should be returned to the dealer bythe officer if the permission of his next higher authority had notbeen obtained for its retention (who too cannot grant permissionfor a period beyond one year from the date of seizure). Aprosecution which is still in contemplation without the officerarriving at a definite conclusion about its necessity within theperiod of one hundred and eighty days does not justify the retention of the documents seized. 3. I draw support from three decisions of this Court interpreting a similar provision contained in the Kerala GeneralSales Tax Act, 1963 and Section 28(6) thereof is identicallyworded to Section 44(6) of the Act. The following are thedecisions: (i)M.C.Jacob v. Intelligence Officer, AgriculturalIncome Tax and Sales Tax, Ernakulam [(1976) 37STC 14 (DB)]Income Tax and Sales Tax, Ernakulam [(1976) 37STC 14 (DB)] (ii)Sree Rajvel & Company v. State of Kerala andothers [(1993) 88 STC 551]others [(1993) 88 STC 551] (iii)Joseph Antony & anotherv. DeputyCommissioner of Agricultural Income Tax andSales Tax & others [(1994) 95 STC 146]Commissioner of Agricultural Income Tax andSales Tax & others [(1994) 95 STC 146] Mr.Justice P.A.Mohammed in the last of the decisions afore-quoted has highlighted the necessity to return the documents tothe dealer without keeping him on tenterhooks and the followingobservations therein are apposite: “6. ....... After seizing the documents the dealer shallnot be kept in suspense without knowing as to whathappened to the documents seized from him. Even thoughthe seizure of documents is a reasonable restriction in the interest of general public, continued retention of the sameby the officer without taking a decision for prosecution orobtaining permission from the next higher authority withinthe period of thirty days, cannot be said to be reasonable.The documents seized by the officer may be required bythe dealer in the day-to-day business. Sometimes it ispractically impossible for a dealer to arrange new accountbooks in the place of seized one, without adverting to theentries in the accounts seized by the officer. Thedocuments seized by the officer sometimes may includecash book, ledger, way bill etc., which are ordinarily usedfor daily transactions. If the documents happen to be theregular accounts the dealer may face with seriousimpediments in carrying on daily business transactions. Itcan even amount to a restriction in the enjoyment of thedealer's right guaranteed under article 19(1)(g) of theConstitution.” 4. The documents in the instant case (numbering about 23) including purchase bills, stock register, retail invoicesetc. were seized from the business premises of the petitionerunder Ext.P3 receipt dated 10.11.2011. The petitioner is aregistered dealer under the Act engaged in the business of goldjewellery with the trade name 'Malabar Gold' and the businesspremises was its branch at Pathanamthitta. The intelligence 4. The documents in the instant case (numbering about 23) including purchase bills, stock register, retail invoicesetc. were seized from the business premises of the petitionerunder Ext.P3 receipt dated 10.11.2011. The petitioner is aregistered dealer under the Act engaged in the business of goldjewellery with the trade name 'Malabar Gold' and the businesspremises was its branch at Pathanamthitta. The intelligence squad of the Department of Commercial Taxes also took physicalstock of the jewellery available in the premises and preparedExt.P2 Shop Inspection Report on the same day. Ext.P4 requestdated 26.7.2012 was put in by the petitioner for the first timewell beyond the period of 180 days for return of the documentsretained by the Intelligence Officer. This was followed byrepeated requests evidenced by Exts.P6 letter dated 22.8.2012and Ext.P8 letter dated 6.9.2012 all of which met with evasivereply by the Intelligence Officer. The crux of the reply offered tothe petitioner is that the documents retained would be required'for taking prosecution proceedings under the Act' about whichthe details were wholly absent. 5. There is of course a vague statement in thecounter affidavit filed by the Intelligence Officer to the effectthat 'the prosecution proceedings in the instant case wereincepted on 16.11.2011'. I am at a loss to understand themeaning of the term 'incepted' and the counter affidavit isconspicuously silent as to whether any decision to retain thedocuments seized was taken within a period of 180 days from the date of seizure. No details are forthcoming about thecriminal prosecution launched - either the case number or thecourt in which it is pending - even during the hearing of the writpetition. I should note that more than 18 months (540 days)have now expired after the seizure of the documents and itsretention by the Intelligence Officer without any demonstrablereason. It is however fairly conceded by Mr.V.V.Asokan,Advocate on behalf of the petitioner that a notice dated 7.3.2013under Section 67(1) of the Act proposing to impose a penalty hasbeen received. But the proceedings for the imposition of penaltyunder Sections 67, 68, 69 and 70 of the Act are altogetherdifferent from prosecution covered by Sections 71, 72 and 73 ofthe Act. I cannot therefore agree with the contention of Mr.ShaijRaj.T.K., Government Pleader on behalf of the respondents thatproceedings for penalty tantamount to proceedings forprosecution. 6. The upshot of the above discussion is that the firstrespondent Intelligence Officer is liable to be directed by theissue of a writ of mandamus to return the documents seized under Ext.P3 receipt to the petitioner and I do so. The firstrespondent is at liberty to take extracts therefrom as may beconsidered necessary including its photocopy in the light of Rule63(8) of the Kerala Value Added Tax Rules, 2005. Thedocuments shall be returned to the petitioner on properacknowledgment which shall mention the details of the recordsreturned after affixing signature or seal wherever required. Theentire exercise shall be completed within a period of one monthfrom the date of production of a copy of the judgment by thepetitioner before the first respondent. Nothing said in thisjudgment will hamper the criminal prosecution if any launchedby the respondents against the petitioner provided the same isotherwise lawful. The Writ Petition is allowed. No costs. V.CHITAMBARESH,Judge. nj.