D.N. Chowdhury, J.
1. This writ application is directed and arises out of seizure of the books of accounts by the Inspector of Taxes, Bureau of Investigation.
2. The materials facts--A team of officers consisting of Superintendent of Taxes and the Inspector of Taxes attached to the Bureau of Investigation along with the Superintendent of Police and Inspector of Police of Bureau of Investigation (Economic Offences) and others visited business premises of the petitioner on January 12, 1995. After conclusion of search the respondent No. 4, the Inspector of Taxes, issued the seizure list and seized the purchase voucher for issue, sales bills files, sales register and cash book for the year 1994-95 on the ground that the dealer charged taxes at instead of 8 per cent for some sales of tyres under the Assam General Sales Tax Act, 1993. After the search of the premises the respondent No. 4 in exercise of power conferred under Section 44(3) of the Assam General Sales Tax Act, 1993 seized the books of account from the petitioner firm and served a copy of the seizure list to the petitioner. The petitioner thereafter was issued with a notice No. BIEO/ST/190 dated February 20, 1995 to produce the books of account in respect of the seized documents as specified in the seizure list for verification along with seized documents on February 28, 1995. By letter dated February 28, 1995 the petitioner sought for time to produce books of accounts and thereafter the petitioner was again served with a notice dated April 1, 1995 for production of books of accounts in support of the seized documents at 11 AM on April 24, 1995. Instead of producing the records as per application on February 28, 1995 and April 24, 1995 the petitioner moved this Court by way of writ petition assailing the legality of the seizure of books of account.
3. The respondent contested the writ petition and submitted its affidavit, in its affidavit the respondent stated that the books of account were seized by the Inspector of Taxes by virtue of power delegated by the Commissioner, Taxes under Section 3(3) of the Act read with rule 8 of the Rules, framed under the Act. Inspection was conducted by the Superintendent of Taxes and Inspector of Taxes on January 12, 1995 at the business premises of the dealer and in course of inspection the Inspector of Taxes issued a notice under Section 44(1) of the Act to the dealer for production of the books of account and other documents for the purpose of inspection. Since it was mere inspection no search warrant was obtained for the purpose. The Inspector of Taxes found some discrepancy in the books of accounts and documents which disclosed that the dealer charged less rate of tax in respect of the sales of goods made by him and apparently such under charging of tax would lead to under-payment of tax and seized the books of accounts under Section 44(3) of the Act as he had reasons to suspect of evasion of taxes under the Act. The respondents further stated that the verification of the books of account seized by the Inspector of Taxes was essential for charging as well as realisation of tax, viz-a-viz, the volume of evasion of tax. The respondent also stated when the petitioner made available to the respondents the accounts, documents, etc., the unrecorded sales and sales in contravention of the Act and the Rules, the plea of the petitioner that the Inspector of Taxes had no reason to suspect cannot be accepted in its face value. According to the respondents under the law ail accounts, registers and documents relating to the financial transaction of a dealer, the profit derived from such transactions and all goods kept in any place of business of any dealer shall at all reasonable times, be open for inspection by any authority appointed under Sub-section (1) of Section 3 and the dealer shall render all possible assistance to such authority in carrying out the inspection. Therefore the question of conducting any search of business premises of the petitioner can not be faulted. The respondent also stated in its affidavit that the Superintendent of Taxes and the Inspector of Taxes are the taxing authorities within the meaning of Rule 7 of the Rules framed under the Act and they were appointed to assist the Commissioner under Section 3(1) of the Act and those officers posted in the Bureau of Investigation (Economic Offence) arc the members of the taxation department and are responsible to the Commissioner of Taxes for proper administration of the provisions of the Act. They were deputed to the Bureau of Investigation (Economic Offence) an organisation set up by the Government of Assam with the conglomeration of the officers of various department, like supply, transport, excise, taxation, forest, weights and measures, even though they are functioning under the Bureau, they are to submit their reports of action to the Commissioner of Taxes under whose delegated power they are functioning and it is the Commissioner of Taxes, who entrusts the officers appointed to assist him in the respective territorial jurisdiction to dispose of such report in accordance with provisions of law. The officers deputed to the bureau are the part and parcel of the taxation department.
4. Dr. A.K. Saraf, the learned counsel appearing on behalf of the petitioner put forward the following submissions before this Court:
1. The seizure of books of accounts without fulfilment of the mandatory requirement of recording of the reasons of suspicion that the dealer is to evade payment of any tax is illegal, without jurisdiction and not tenable in law.
2. That the respondents by issuing a notice under Section 44(1) of the Assam General Sales Tax Act, 1993 directing the petitioner to produce books of account, conducted search in the business premises of the petitioner-firm, without any search warrant, which is illegal, arbitrary and not tenable in law.
3. That the power under Section 44 of the Act is not arbitrary and uncanalised. Before issuing of a notice under Section 44(1), the officer must apply his mind to the facts of the case and must give due regard to the necessity of not disturbing the business of the dealer or his staff any more than that is necessary for the purpose of ascertaining the required information. The respondent No. 4 having issued the notice under Section 44(1) of the Act without giving any reasons, the same is an omnibus, notice which is illegal and not tenable in law.
5. Dr. Saraf, the learned counsel for the petitioner in support of his contention referred to Bench decision of this Court in Civil Rule Nos. 878 and 879 of 1972 (Mercantile Stores & Agency Company Pvt. Ltd., Balimara Tea Company Pvt. Ltd. v. A. Rahman, Inspector of Taxes, Dibrugarh disposed on April 1, 1975).
6. Mr. H.N. Sarma, the learned Additional Senior Government Advocate, appearing on behalf of the respondents on the other hand submitted that the action of the respondents is lawful and relied upon records which were produced before me. Mr. Sarma, the learned counsel also relied upon a decision of the single Bench in Civil Rule No. 2147 of 1995 in Assam Agency v. Commissioner of Taxes, Assam disposed on February 25, 1997.
7. Before adverting and evaluating the respective contentions of the parties it would be pertinent to refer to the following provisions of the Act and the Rules :
3(1) For carrying out the purpose of this Act, the State Government may by notification appoint a person to be the Commissioner of Taxes, together with such other persons to assist him as it thinks fit and may specify the area or areas over which they shall exercise jurisdiction.
(2) Persons appointed under Sub-section (1) shall exercise such powers as may be conferred, and perform such duties as may be required, by or under this Act.
(3) Subject to such restrictions and conditions as may be prescribed, the Commissioner may, by order in writing, delegate any of his powers under this Act to any person appointed to assist him under sub-section.
7. There shall be following taxing authorities to assist the Commissioner :
(i) Additional Commissioner of Taxes ;
(ii) Joint Commissioner of Taxes ;
(iii) Deputy Commissioner of Taxes ;
(iv) Assistant Commissioner of Taxes ;
(v) Senior Superintendent of Taxes ;
(vi) Superintendent of Taxes ;
(vii) Inspector of Taxes ;
(viii) Any other persons appointed as such by the State Government.
8. Subject to the provisions of the Act and the Rules made thereunder, the Commissioner may, by notification in the official gazette, delegate the powers to be exercised by above classes of officers and shall, by like notification, specify the area in which powers are to be exercised by each of the above classes of officers.
Provided that the Commissioner shall not delegate his powers under Sub-section (1) of Section 36 to any officer below the rank of Deputy Commissioner of Taxes.
44. Production, inspection and seizure of accounts, documents and goods and search of premises :--
(1) Subject to such rules as may be made by the State Government under this Act, any authority, appointed under Sub-section (1) of Section 3, may either before or after assessment, require any dealer to produce before it or him any accounts, registers or documents or to furnish any information relating to the financial transactions of the dealer, the profit derived from such transactions and the stocks of goods produced, raised, processed, manufactured bought, sold or delivered by such dealer and the dealer shall comply with such requirement.
(2) Subject as aforesaid, all accounts registers and documents relating to the financial transaction of a dealer, the profit derived from such transactions and all goods kept in any place of business of any dealer shall at all reasonable times, be open for inspection by any authority appointed under Sub-section (1) of Section 3 and the dealer shall render all possible assistance to such authority in carrying out the inspection.
Explanation.--Such authority may take or cause to be taken such copies of, or extracts from the accounts, registers or documents as such authority may consider necessary.
(3) If any authority appointed under Sub-section (1) of Section 3 has reason to suspect that any dealer is to evade the payment of any tax or any clearing or forwarding agent or a person transporting goods or any owner of a warehouse or a godown is keeping or has kept his account in such a manner as is likely to cause evasion of tax payable under this Act, such authority may for reasons to be recorded in writing, seize such accounts, registers or documents of the dealer or the clearing or forwarding agent or the persons transporting goods or the owner of a warehouse or godown as may be, necessary and shall grant a receipt for the same, such seized accounts, registers or documents shall be retained for so long as may be reasonably necessary for examination thereof or for a prosecution under Section 57 and shall thereafter be returned to the person concerned in the prescribed manner :
Provided that if the seized accounts, registers or documents are retained by any authority other than the Commissioner for more than one hundred and twenty days, the reasons for so doing shall be recorded in writing and the approval of the Commissioner shall be obtained by the authority so retaining them.
(4) For the purpose of Sub-section (2) or Sub-section (3), any authority appointed under Sub-section (1) of Section 3 may enter and search any place of business of any dealer.
(5)(a) Any authority referred to in Sub-section (1) shall have the power to enter into and search any office, shop, godown or any other place of business or any building or any place of the dealer, or of a dalal or of an owner of a warehouse, or of a clearing, booking or forwarding agent, or of a person transporting goods or vessels or goods carrier and seize any goods which are found therein but not accounted for by the dealer or the dalal, or the owner of the warehouse, or the clearing, booking or forwarding agent, or the person transporting goods in his books, accounts, registers and other documents :
Provided that a list of all the goods seized under this sub-section shall be prepared by such officers and be signed by the officer, the dealer or the person-in-charge of goods or the person-in-charge of the premises, and not less than two witnesses.
(b) The authority referred to in Clause (a) shall, in a case where the dealer or the person-in-charge of goods as mentioned in Clause (a) fails to produce any evidence or satisfy the said authority regarding the proper accounting of goods, impose a penalty, after giving an opportunity of being heard in the prescribed manner to the dealer or such person which shall be equal to three times the amount of tax calculated on the value of such goods and the goods shall be released as soon as the penalty is paid.
(c) If the dealer or the person-in-charge of goods as mentioned in Clause (a) demands time for production of necessary documents in support of proper accounting, the authority referred to in Clause (a) shall release the goods on the condition that the dealer or such a person deposits a security equivalent to three times the amount of tax calculated on the value of the goods.
(d) If penalty imposed under Clause (b) is not paid forthwith or no security is furnished as provided in Clause (c) or the goods are not claimed by any person, the authority referred to in Clause (a) shall arrange for the safe custody of the goods.
(e) In case the penalty imposed under Clause (b) is not paid or the goods remain unclaimed for a period of fifteen days from the date of seizure, the goods so seized shall be sold by auction in the prescribed manner and the sale proceeds shall be appropriated towards the amount of penalty imposed under Clause (b) ; the balance of the sale proceeds, if any, shall be deposited in the Government treasury and shall be refunded to the lawful claimant in the prescribed manner.
(f) In a case where the goods have been released on the deposit of a security as mentioned in Clause (c) and evidence regarding proper accounting of goods to the satisfaction of the authority referred to in said Clause (a) is not produced within fifteen days from the date on which security is deposited, the amount of security shall stand forfeited to the State Government. If, however, evidence or document to the satisfaction of the authority mentioned in Clause (a) regarding the proper accounting of goods is produced within the said period of fifteen days, the security shall be released and the amount shall be refunded in the prescribed manner.
(6)(i) The power conferred by Sub-sections (4) and (5) shall include the power to break open the lock or door of any box or receptacle or any other place or premises where any accounts, registers or other documents or goods may be kept or are reasonably suspected to be kept ;
(ii) The power conferred by Sub-clause (i) shall also include the power to seal any box or receptacle, godown or building where any accounts, registers or other documents or goods may be kept or are reasonably suspected to be kept.
(7) An authority appointed under Section 3 may require the assistance of any public servant or police officer in making search and seizure or for safe custody of goods under the section and such public servant or police officer shall render necessary assistance in the matter.
Section 44(1) empowers any authority appointed under, Sub-section (1) of Section 3 to produce before him any accounts, documents, etc., or furnish any information specified therein. This can be done even after the completion of the assessment.
8. Chapter IX of the Act deals with the provision of accounts, inspections, search and seizure, etc. Section 40 of the Act enjoins the dealer to keep a true and complete account in respect of goods produced, raised, manufactured, processed, bought, sold or delivered or transferred by him. Section 41 of the Act entrusted with the duty to the dealer to preserve book of accounts, documents referred to in Sub-section (1) of Section 40 and all declarations and other documents laid down under Sub-section (2) of Section 10 shall be preserved for a period of not less than eight years from the end of the year to which they relate.
9. From the brief review of the provisions contained in Section 44 of the Act it is seen that any authority, appointed under Section 3(1) of the Act may either before or after assessment, require any dealer to produce before it or him any accounts, registers or documents or to furnish any information relating to the financial transactions of the dealer, the profits derived from such transactions and the stock of goods produced, raised, processed, manufactured, bought, sold or delivered by such dealer and the dealer shall comply with such requirement.
10. Any authority in terms of the section mentioned above may at any time either before or after assessment ask the dealer to produce the account etc., or to furnish any information relating to the financial transaction. Sub-section (2) of Section 44 enjoins upon the dealer to keep open for inspection by authorised officer all accounts register, register and documents relating to the financial transactions of a dealer, the profit derived from such transaction and all goods kept in any place of business. On the strength of this provision, the authorised officer is clothed with the power to enter in any place of business for the purpose of inspection for ascertaining that there is no evasion of tax. All goods accounts, registers and documents relating to the financial transaction of a dealer, the profit, derived from such transactions and all goods kept in any place of business of any dealer shall at all reasonable times, be open to inspection of the authorised officer. The power of entry into the place of business for inspection as well as the power of inspecting all accounts and documents relating to financial transaction of a dealer, with respect to business therefore authorised the officer concerned to enter and search the place of business, Sub-section (3) of Section 44 of the Act clothed the authority appointed under Sub-section (1) of Section 3 the power of seizure of such accounts, registers or documents of the dealer if he has reason to suspect that any dealer is to evade any payment of tax or in clearing or forwarding agent or the persons transporting goods of the owner of a warehouse or godown as may be, necessary recording reasons in writing (sic). Sub-section (3) empowered the authority to search to the concerned officer to seize all accounts, etc., when the authorised officer has reasons to suspect that any such dealer is attempting to evade the tax payable under the Act. The officer concerned is authority to seize such accounts etc., if he has such reason after recording reason in writing. Whereas Sub-section (2) of Section 44 conferred on the officer concerned the power of search and Sub-section (3) of the said section provided the power to seize the accounts which are found on such search. Sub-section (3) is therefore complementary to Sub-section (2) of the Act. Under Sub-section (3), therefore, the authority appointed under Sub-section (1) of Section 3 is invested with the power to seize such accounts on his reason to suspect that the dealer is to evade any payment of tax, such authority may for reasons to be recorded in writing seize such accounts, registers or documents of the dealer. The officer assumes jurisdiction on the ground of his suspicion for such seizure of accounts a dealer is to evade the payment of tax. Suspect means to have slight or even vague idea concerning necessarily involving knowledge or belief or likelihood. The officer gets his jurisdiction on forming of suspicion.
Sub-section (2) of Section 44 empowers the authorities to inspect all accounts, registers and documents relating to the financial transaction of a dealer, the profit derived from such transaction and all goods kept in any place of business of any dealer. The power granted under Sub-section (2) is the power of inspection.
Inspection means the action of inspecting, looking narrowly into, careful scrutiny or survey, close or critical examination ; while 'watch' would indicate that it is an alert state, being on the look out, vigilant, constant observation, attention what may come. A power to inspect does not necessarily give power to search. For search separate provisions have been made under Sub-sections (4) and (5) which give power for search. The meaning of the term search according to Webster's New International Dictionary Vol. 1, second edition, is to subject to thorough inspection for an article or articles presumably concealed. The Corpus Juris Secundum 79 CJS 775 gives a neat definition of the word 'search' and it is useful to set out the same.
The term 'search', as applied to searches and seizure, is an examination of a man's house or other buildings or premises, or of his person, with a view to the discovery of contraband or illicit or stolen property, or some evidence of guilt to be used in the prosecution of a criminal action for some crime or offence with which he is charged. As used in this connection, the term implies some expletory investigation, or an invasion and quest, a looking for or seeking out. The quest may be secret, intrusive, or accomplished by the force, and it has been held that a search implies some sort of force, either actual or constructive, much or little. A search implies a praying into hidden place for that which is concealed and that the object searched for has been hidden or intentionally put out of the way. While it has been said that ordinarily searching is a function of sight, it is generally held that the mere looking at which is open to view is not a 'search'.
The passage quoted above made it is clear that all searches are inspections but all inspections are not searches. A search is a through inspection of a man's house, building or premises or of his person, with the object of discovering some material which would furnish evidence of guilt for some offence with which he is charged. If the object sought for is always in plain sight, then there is no search. If the private account books had been kept in the counter openly at all times and they could have been found on inspection at any time of the day, then the seizure of such account books cannot be said to have been made after a search.
Sub-section (3) gives power for seizure of the accounts and documents. The legal position is very clear that before seizure under Sub-section (3) of Section 44 is made, the officer concerned must have reasons to suspect that the dealer is attempting to evade the payment of any tax or any clearing or forwarding agent or a person transporting the goods on the owner of a warehouse or a godown is keeping or has kept his accounts in such manner as is likely to cause evasion of tax payable under the Act. The authority concerned has to record the reasons for suspicion in the mind of the officer concerned about the evasion of taxes and secondly, if he wants to seize any accounts, register or documents, he must record the reason in writing therefor and then only he may seize such accounts register of documents : Commissioner of Commercial Taxes v. Ram Kishan Shri Kishan Jhaver : [1968]1SCR148 and Mercantile Stores & Agency Company Pvt. Ltd., Balimara Tea Company Pvt. Ltd. v. A. Rahman, Inspector of Taxes (Civil Rule Nos. 878 and 879 of 1972, Gauhati High Court, dated April 1, 1975).
However, the seized documents, accounts, register cannot be detained by any authority other than Commissioner for more than one hundred and twenty days except with the approval of the Commissioner for the reasons to be recorded in writing.
Since the power of search and of seizure involve a serious invasion of rights and freedom of an individual, they should be exercised only according to the strict letter of law and only for the purposes authorised by it. Malicious exercise of the power or its exercise for collateral purpose is illegal--Income-tax Officer v. Seth Brothers : [1969]74ITR836(SC) .
11. In the instant case an inspection was conducted by the Superintendent of Taxes and Inspector of Taxes on January 12, 1995 at the business premises of the dealer and Inspector of Taxes issued a notice under Section 44(1), of the Act to the dealer for production of books of accounts and other documents for the purpose of inspection. In course of inspection the Inspector of Taxes found some incriminating books of accounts/documents etc., which discloses that a dealer charged less rate of tax in respect of sale of goods made by him and apparently under charging of tax would lead non-payment of tax as due under the Act. The Inspector of Taxes accordingly seized the books of account under Section 44(3) of the Act. As he has reason to suspect of evasion of tax under the Act. In the instant case the concerned officer recorded the reason in the seized books of account and reason for seizure also duly recorded.
12. Citation of the learned counsel for the petitioner in Mercantile Stores & Agency Company Pvt. Ltd., Balimara Tea Company Pvt. Ltd. v. A. Rahman, Inspector of Taxes, Dibrugarh (Civil Rule Nos. 878 and 879 of 1972, Gauhati High Court, dated April 1, 1975) is not applicable in the instant case. In the aforesaid case there was an obvious failure on the part of the department in complying with the provisions of the Act in recording reasons in conformity with the Act. But in the instant case since reasons were duly recorded in the books of account there was full compliance of the provision of Section 44(3) of the Act. In the instant case the books of accounts of the petitioner were seized on specific grounds of evasion of tax which transpires after inspection of accounts. The recording of the sales by the assessee in the manner as recounted persuaded the officer the ground to suspect that the tax was being evaded or there was attempt to avoid the taxes and accordingly documents were seized and the same was recorded in the presence of the petitioner who put his signature at the pages containing such reasons.
13. Conferment of power in express terms naturally suggests for making the power effective and operative. The courts while constructing a statute is to translate the legislative edict. 'The office of the judge is, to make such construction as will suppress the mischief, and advance the remedy, and to suppress all evasions for the continuance of the mischief' Magdalen College Case (1616) 11 Rep. 66b. Maxwell on the Interpretation of Statutes (Twelvth Edition) restated in the following passages :--
'To carry out effectually the object of a statute, it must be so construed as to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited or enjoined: Quando aliquid, prohibetur, prohibetur et omne per quod devenitur ad illud... This manner of construction has two aspects. One is that the courts, mindful of mischief rule, will not be astute to narrow the language of a statute so as to allow persons within its purview to escape its net. The other is that the statute may be applied to the substance rather than the mere form of transactions, thus defeating any shifts and contrivances which parties may have devised in the hope of thereby falling outside the Act. When courts find an attempt at concealment, they will, in the words of Wilmot C.J., 'brush away the cobweb varnish, and shew the transactions in their true light'.'.
According to the Sutherland's statutory construction, that an express statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective.
No question of strict construction arises when the statutory provision is open to only one meaning 'It is the duty of the judges to apply the laws, not only to what appears to be regulated by their express dispositions, but to all the cases where a just application of them may be made, and which appear to be comprehended either within the consequences that may be gathered from it'. Recalled from Domat's Civil Law (Cushing's edition) Volume 1, page 88.
14. Considering all aspects of the matter, I do not find any infirmity or illegality in the impugned actions of the respondents requiring interference from this Court. Writ Petition is accordingly dismissed with cost Rs. 5,000 (five thousand).
Interim order passed earlier by this Court shall automatically stands vacated.
Rule stands discharged.