1. In this application under Section 8 of the West Bengal Taxation Tribunal Act, 1987 the petitioner prayed for a declaration that the respondent No. 1 acted illegally and without any authority of law by retaining the books of accounts for more than one year and that the attachment of the bank accounts was illegal.
2. On September 27, 2001, the books of accounts of the petitioner, seized by the respondents under Section 66 of the West Bengal Sales Tax Act, 1994 have not yet been released although three years have elapsed.
Different bank accounts of the petitioner were also attached though there was no legal demand for payment of any outstanding tax.
3. In the affidavit-in-opposition, it is admitted that books of accounts of the petitioner were seized on September 27, 2001 and since then the petitioner was directed to appear before respondent No. 1 to explain those documents, but she failed. The proceedings had to be adjourned on nine occasions due to absence of the petitioner. The notices issued asking his appearance also came back unserved with the postal remark "left". Therefore, to secure the amounts of tax which the petitioner had escaped suppressing transactions, the bank accounts of the petitioner were attached. The accounts maintained by the petitioner in Syndicate Bank, Central Bank and State Bank of India were found with the negative balance. Those accounts were running in overdrafts.
Therefore, stop payment was ordered in respect of the account maintained in Canara Bank only. The said bank account was released on September 22, 2004 but on an undertaking given by the petitioner that she would co-operate with the respondent to complete the proceedings the account was released.
4. The learned lawyer for the petitioner submits that sanction of the Commissioner is necessary for retaining the books of accounts for more than one year as per the proviso of Section 66 of the West Bengal Sales Tax Act, 1994 (in short, "the Act, 1994"). No sanction was taken by respondent No. 1 after September 26, 2003 till this date. The sanction at the first instance for two years was taken from the Additional Commissioner for the period from September 27, 2001 to September 26, 2003. Therefore, retention of the books of accounts by the respondent No. 1, after September 26, 2003 is illegal and should be released at once. The sanction dated September 9, 2002 was communicated to the petitioner under Memo No. 3731 dated September 10, 2002.
5. The respondents have illegally also attached the bank accounts of the petitioner, though nothing is due towards tax and no demand notice as such was served upon the petitioner till this date. Therefore, all the actions of the respondents, according to the learned lawyer, being illegal the order of attachment should immediately be vacated and direction also should be given for release of the books of accounts.
6. On behalf of the respondents, it is submitted that the petitioner never appeared before the concerned officer as directed as such delay was caused to complete hearing of the proceeding. After obtaining necessary permission, from the learned Commissioner/ learned Additional Commissioner, the books of accounts were retained legally. The attachments for the bank accounts though were made but released subsequently on an undertaking given by the petitioner that she would co-operate with the respondents to complete the hearing. All the relevant orders were communicated but the petitioner intentionally avoided to accept the intimation sent by post. The application being frivolous is liable to be dismissed.
7. The only point for consideration is, if the respondents can legally retain the books of accounts for a further period after September 26, 2004. The fact of release of the bank account as disclosed in the affidavit-in-opposition has not been denied by the petitioner in her affidavit-in-reply. Therefore, no further decision is required on this issue.
8. Let us now examine, the relevant provisions of the Section 66 of the Act, 1994 as well as the cases decided by the Supreme Court, High Court and this Tribunal on identical issue in [1992] 87 STC 474 [J.D. Casting and Forging (Private) Limited v. Prodyot Roy Chaudhury, Inspector of Commercial Taxes] and [1995] 98 STC 155 (WBTT) (Chowdhury Waterproof Works v. M.L. Acharya, I.C. Taxes). The Section 66 provides that where there is reason to suspect that the dealer is attempting to evade payment of tax, the authorised officer can seize the accounts register, documents, etc., after recording the reasons in writing. The proviso (a) further states that such seized documents cannot be retained for a period exceeding one year by the Commissioner or Additional Commissioner without recording the reasons in writing therefor. The proviso (b) empowers such other officer appointed under Sub-section (1) of Section 3 to retain the documents for a period exceeding one year from the date of seizure after stating reason therefor and obtaining sanction in writing from the Commissioner.
9. Identical issue regarding retention of the documents exceeding the period for one year came for adjudication before this Tribunal in a case J.D. Casting and Forging (Private) Limited v. Prodyot Roy Chaudhury, Inspector of Commercial Taxes [1992] 87 STC 474 (WBTT) and three-Member Bench including Chairman held, "Retention of the seized books of accounts and documents beyond the prescribed period of one year, without proper sanction and communication of such sanction to the applicants, is improper and unauthorised. Failure to communicate the reasons in writing for obtaining sanction for retention will vitiate the sanction order".
10. In the case of Commissioner of Income-tax v. Oriental Rubber Works , the Supreme Court decided that for retention of seized books of accounts and other documents beyond statutory period, there was an obligation on the Revenue to communicate to the person concerned not only the Commissioner's approval but also the recorded reasons on which such approval had been obtained and that such communication must be made as expeditiously as possible after the passing of the order of approval by the Commissioner. It has been held in that case further that in default of such expeditious communication, any further retention of the seized books of accounts or documents would become invalid and unlawful and that such obligation would arise in respect of every approval of the Commissioner that might have been accorded from time to time.
11. In the case of State of West Bengal v. Sarda & Sons [1977] 40 STC 419 the High Court, Calcutta, it was held, "The provisions of Section 14(3A) of the Bengal Finance (Sales Tax) Act, 1941, are mandatory and non-compliance with them would be fatal. Consequently, the retention of the seized books of account beyond the prescribed period without proper sanction and communication of such sanction to the assessee would be improper, unauthorised, illegal and without jurisdiction". This Tribunal also held in the case of Ram Kumar Roshanlal v. C.T.O.reported in [1992] 87 STC 465 that "the reasons stated in writing for obtaining sanction for retention of the records beyond the period prescribed under Section 66 must be communicated to the dealer.
Non-communication of such reason would vitiate the sanction order." 12. In view of the ratio of decisions of the Supreme Court, High Court and this Tribunal, retention of books of accounts shall be legal and valid provided (a) sanction in writing must have been obtained from the Commissioner or Additional Commissioner by the concerned officer to whom power to seize documents was delegated and (b) the reasons stated in writing for obtaining sanction must be communicated. The question as to whether the communication made shortly after expiry of the period of one year if would be treated as a valid communication so as to protect the retention order was further decided by this Tribunal, in the case of Chowdhury Waterproof Works v. M.L. Acharya, I.C. Taxes [1995] 98 STC 155. It was held that the communication if not made within the prescribed period of one year, the retention order communicated thereafter should have no legal existence and would be invalid. Hence, the retention order if communicated even shortly but after expiry of the period of one year would be invalid and the documents or books of accounts could not be retained on the basis of such retention order.
13. In the present case, in paragraph 8 of the affidavit-in-opposition, it is admitted that the books of accounts were retained up to September 26, 2004 by an order dated September 12, 2003 and the intimation came back unserved with the postal remarks "left" on it. Thus, admitted position is that the sanction order obtained for retention of the books of accounts could not be communicated. Moreover, the period for retention up to September 26, 2004 has also expired. Therefore, further retention of books of accounts after September 26, 2004, as we find, is illegal and without any authority. The books of accounts and other documents seized by the respondents, therefore, should immediately be released.
14. Regarding the attachment of the bank accounts, the respondent in his affidavit-in-opposition stated that the attachment order have been withdrawn since the petitioner undertook to co-operate with the respondents to complete the hearing of the proceedings. Therefore, no further order is required to be passed at this stage. But it may clearly be noted that attachment of any bank account from a dealer cannot be made until and unless, there is a valid demand notice and this principle has been laid down in several cases decided by the High Court and by this Tribunal. Therefore, the order of attachment of bank account is illegal and unwarranted.
15. In view of the findings made above, we allow this application without order of costs. The books of accounts and other documents retained by the respondents shall be released at once. The attachment orders, if not withdrawn by this time, stand vacated.