V. Khalid, J.
1. This writ petition raises an interesting question regarding the scope of Section 45A of the Kerala General Sales Tax Act (for short, the Act) vis-a-vis the powers of an Intelligence Officer under the said Act. This question fell to be considered by Bhaskaran, J., in O. P. Nos. 464 and 505 of 1976. The learned Judge by his judgment dated 26th May, 1978, held that the Intelligence Officer was competent to pass an order under Section 45A of the Act. After that judgment, explanation II has been added to Section 45A by Section 13 of the Act 19 of 1980 with effect from 16th September, 1980. The introduction of this explanation has rendered the question complex. A similar question arose in another form in O. P. Nos. 822, 2096 and 2264 of 1976 before Chandrasekhara Menon, J. The learned Judge held that the power of imposing penalty under Section 45A could be exercised only in the course of assessment and not otherwise, that Section 45A cannot be projected back to an assessment year prior to its introduction in the statute book and that the term 'assessing authority' in Section 45A of the Act would not include an Intelligence Officer but only the regular assessing authorities under the Act. In appeal, in the decision reported in Intelligence Officer, Central Intelligence Squad, Agricultural Income-tax and Sales Tax, Ernakulam v. Hotel Ambassador [1980] 45 STC 425, the finding that the powers under Section 45A could be exercised only in the course of assessment was set aside. But the finding on the vice of retrospective operation was upheld. The detection of irregularity by the Intelligence Officer in that case took place prior to 26th October, 1975, when Section 45A was enacted. The Division Bench held that Section 45A had no application to the facts of the case. The Division Bench noticed the definition of 'assessing authority' in Section 2(iv) of the Act and referred to a Notification, S.R.O. No. 335 of 1963, but did not express itself on the question whether an Intelligence Officer would be an assessing authority in view of the finding that Section 45A did not apply to the facts of the case before. The submission made before me by the learned counsel for the petitioner in this petition is that the Intelligence Officer is not 'the assessing authority' under Section 45A, that he cannot exercise the powers under Section 45A and that the question was left open by the Division Bench. It is this question that has to be answered in this judgment.
2. The petitioner is a registered dealer in gold jewellery. On 30th August, 1980, the Intelligence Officer, Trichur, who is the first respondent, went to the petitioner's shop along with a posse of his subordinates accompanied by the Deputy Superintendent of Police, Vigilance, and the Inspector of Police, Vigilance. There were a few slips on the table in the shop. The petitioner represented that the slips related to unfinished stock-taking and did not represent any sales. The officers seized the records after getting the petitioner to sign a statement prepared by the first respondent in his handwriting. The petitioner requested for compounding the offence of non-maintenance of correct accounts. This request was turned down. The first respondent issued exhibit P2 notice on 22nd October, 1980, intimating the petitioner his proposal to levy penalty of Rs. 72,062 under Section 45A of the Act on the basis that the petitioner had committed an offence under Section 46(2)(c) of the Act. He was called upon to show cause within 7 days why the penalty should not be imposed. The petitioner sent a letter exhibit P3 on 1st November, 1980, requesting the first respondent to return the seized records or at least to permit him to take a copy thereof. This request was repeated in exhibit P4 dated 11th November, 1980. The first respondent sent exhibit P5 reply stating that the documents in question could not be returned. The petitioner has therefore moved this Court praying to declare Sections 28 and 45A of the Act as unconstitutional, to quash exhibit P2 and exhibit P5 and for other reliefs.
3. The grounds of attack are as hereunder: (1) An Intelligence Officer cannot exercise powers under Section 45A. Explanation II to the section postulates that the officer exercising powers under the section should be an officer not below the rank of a Sales Tax Officer specified in that behalf by a notification. None of these conditions are satisfied in the case of the first respondent. (2) Section 45A has only relation to assessment proceedings. Powers under Section 45A cannot be exercised de hors assessment proceedings. The initiation of proceedings in this case is not in the course of assessment proceedings and hence is bad. (3) The only provision that enables the first respondent to impose penalty is the one contained in Section 28(8). Section 45A is an independent section dealing with a different situation and is not available for an Intelligence Officer. (4) The inspection took place on 30th August, 1980. The offence is alleged to have been committed either on that day or prior thereof. Act 19 of 1980, by which explanation II was introduced, came into force only on 12th September, 1980. Therefore the first respondent was not competent to invoke Section 45A in respect of an offence which took place prior to 12th September, 1980. (5) The powers of inspection, search and seizure offend article 14 of the Constitution of India since it is left to the Intelligence Officers to pick and choose the assessees for the purpose of proceedings under the provisions of the section. The assessee has no right of appeal or second appeal. The only remedy available is by way of revision to a departmental authority acting on the administrative side. This robs the assessee of an opportunity to challenge orders of seizure and penalty. Sections 28 and 45A are violative of articles 14 and 19(1)(g) of the Constitution.
4. The case of the petitioner is met in the counter-affidavit as follows : The petitioner signed the statement prepared by the first respondent voluntarily. The petitioner's representative had taken extracts of seized records from the first respondent. The petitioner has approached this Court without filing objections as required by exhibit P2 notice. Section 45A as amended by Act 19 of 1980 authorises any officer not below the rank of a Sales Tax Officer to initiate proceedings under the said section. Until the Amendment Act of 1980, the power to impose penalty after inspection, search, etc., was restricted to the assessing authority or the Appellate Assistant Commissioner. After the inclusion of explanation II any person authorised by the Government not below the rank of a Sales Tax Officer could exercise powers under Section 45A. The proceedings initiated in this case are valid and within the jurisdiction of the first respondent. It is further stated that even before the introduction of the amending Act, any officer mentioned in Notification S. R. O. No. 335 of 1963 was competent to levy penalty and with effect from 16th September, 1980, any officer not below the rank of a Sales Tax Officer is competent to invoke the provisions under the said section. The petitioner has approached this Court without exhausting his statutory remedies. He has not made out sufficient grounds for getting the reliefs prayed for.
5. The submission that the powers under Section 45A can be exercised only in the course of assessment and not de hors such assessment is now concluded by what the Division Bench said in Intelligence Officer, Central Intelligence Squad, Agricultural Income-tax and Sales Tax, Ernakulam v. Hotel Ambassador [1980] 45 STC 425. But I think it necessary to refer to the submissions made by the petitioner's counsel on this aspect since the Division Bench has not considered this question in the manner in which it was presented before me. The relevant discussion of the Division Bench on this question is contained in paragraph 5 of the judgment, which can be usefully read :
5. Regarding the first of the grounds stated by the learned Judge, we are unable to agree that the imposition of a penalty can be done only in the course of assessment proceedings, as stated by the learned Judge. The learned Judge seems to have overlooked Section 45A, which we have already quoted. Section 19 of the Act provides for assessment of the escaped turnover. Clause (1) of Section 19 is the section which provides for an escaped assessment; and Clause (2) of the section enacts :
'19. (2) In making an assessment under Sub-section (1), the assessing authority may, if it is satisfied that the escape from assessment is due to wilful nondisclosure of assessable turnover by the dealer, direct the dealer to pay, in addition to the tax assessed under Sub-section (1), a penalty as provided in Section 45A :
Provided that no such penalty shall be imposed unless the dealer affected has had a reasonable opportunity of showing cause against such imposition.
Explanation.-Notwithstanding anything contained in the Indian Evidence Act, 1872, the burden of proving that the escape from assessment was not due to wilful non-disclosure of assessable turnover by the dealer shall be on the dealer.'
This is only an enabling power which allows the assessing authority even while making a reassessment of an escaped assessment to resort to the provisions of Section 45A and impose a penalty. That would afford no justification for linking Section 19(2) with Section 45A, and holding that the latter section has no independent existence and can be resorted to only in the course of the assessment proceedings. A reading of Section 45A is sufficient to show that it is a separate and independent section and that irrespective of whether the assessment has been completed or not, it is open to the requisite authority to take action under the said section provided the conditions for action are satisfied. We, therefore, cannot support the first of the grounds given by the learned Judge.
This judgment was rendered on 31st July, 1979.
6. The learned counsel for the petitioner tried to distinguish the above decision with the following submissions. He placed considerable stress on the expression 'the assessing authority' in Section 45A of the Act. According to him, 'the assessing authority' cannot be any officer who has the power to pass assessment orders but only that officer who can pass assessment orders in respect of the person who has been proceeded against under Section 45A. Under Section 13 every dealer has to get himself registered under the Act. Section 14 prescribes the procedure for application for registration. Rule 5 of the General Sales Tax Rules deals with the application for registration. An application for registration under this rule is to be submitted to the registering authority of the area in which his principal place of business is situated. Relying upon these provisions, the petitioner's counsel submits that the assessing authority contemplated in Section 45A is that particular officer with whom the dealer in question has got himself registered. He also brought to my notice Rule 11 which required a dealer to submit a return in form 8 to the concerned assessing authority. The officer who initiated proceedings in this case is not 'the assessing authority' for the petitioner in terms of the above provisions of law.
7. Assessment, collection and penalty are provided for in Chapter V. Section 16 provides for the procedure to be followed by the assessing authority. Section 18 deals with provisional assessment. Section 19 deals with escaped assessment and Section 25(1) and (2) with further mode of recovery. In all these sections, according to him, the expression used is 'the assessing authority' and that with a set purpose. If these powers can be exercised by any officer as the counsel for the revenue contends, that would create an anomaly and the working of the sales tax machinery would be rendered difficult. The only provision, according to him, which enables any officer under the Act to impose penalty is provided in Section 28(8) of the Act. The expression used in the section mentioned above is 'any officer'.
8. These submissions are entitled to considerable weight. But they cannot help the petitioner now after the introduction of explanation II to Section 45A. Section 2(iv) defines 'assessing authority' as follows :
'Assessing authority' means any person authorised by the Government or by any authority empowered by them to make any assessment under this Act.
The learned Government Pleader would contend that this definition enables the Government to bring within its ambit any officer including the Intelligence officer. The definition deals generally with assessing authorities. Government can by rules empower any particular officer to make any assessment under the Act. This appears to be so. But the question still remains whether the first respondent in this case answers to the requirements of Section 45A in the light of the new explanation. Before discussing this, I hold relying upon the Division Bench ruling reported in Intelligence Officer, Central Intelligence Squad, Agricultural Income-tax and Sales Tax, Ernakulam v. Hotel Ambassador [1980] 45 STC 425 that the action under Section 45A is permissible de hors assessment proceedings. I also hold that action under Section 45A can be taken by an officer other than 'the assessing authority', if explanation II to Section 45A is satisfied. That is the only question that needs to be decided.
9. The learned Government Pleader located the powers for the first respondent to initiate action under Section 45A on the following notification, the relevant portion of which is extracted below :
S. R. O. No. 335/63.-In exercise of the powers conferred by clauses (i), (iv), (x) and (xiii) of Section 2 and Sub-section (2) of Section 3 of the Kerala Genera 1 Sales Tax Act, 1963 (Act 15 of 1963), and Clause (b) of Rule 3 of the Kerala General Sales Tax Rules, 1963, the Government of Kerala hereby appoint and empower...
(iv) the Reserve Sales Tax Officers, the Intelligence Officers of Agricultural Income-tax and Sales Tax, the Sales Tax Officers, the Sales Tax Officers (Check Posts), the Intelligence Inspectors of Agricultural Income-tax and Sales Tax, the Sales Tax Inspectors and the Check Post Inspectors specified in the second column of the said schedule to exercise the powers of an assessing authority within the area specified against each in the fourth column of the said schedule ;...
From the schedule to this notification, it is seen that the Intelligence Officer and the Intelligence Inspectors of Agricultural Income-tax and Sales Tax with headquarters at Mattancherry and Cochin and Intelligence Officers with headquarters at Ernakulam and Trichur are the officers empowered by this notification for the revenue Districts of Trivandurm, Quilon, Alleppey, Kottayam, Idikki, Ernakulam and Trichur. The submission made is that this notification is a complete answer to the petitioner's case since it was issued under the powers vested in the Government under the relevant enabling provisions of the Act. It is useful to note that this notification was issued in the year 1963 and explanation II enacted in 1980. This notification was brought to the notice of the Division Bench in Intelligence Officer, Central Intelligence Squad, Agricultural Income-tax and Sales Tax, Ernakulam v. Hotel Ambassador [1980] 45 STC 425 and the Division Bench had this to say on this notification :
Our attention was invited to the notification printed at page 302 of Sugathan's book on the Law of Sales Tax, where S.R.O. No. 335/63 issued by the Government is seen printed. The schedule to that S.R.O. has been omitted. It was pointed out by the learned Advocate-General that the notification empowers the Intelligence Officer to function as assessing authority within the meaning of the Sales Tax Act. In the view that we have taken that Section 45A has no application to the facts, we do not propose to express ourselves on this question.
It is therefore evident that the question posed based on this notification was not decided by the Division Bench and that it is at large and is open for examination. In my view, the revenue cannot succeed on the strength of this notification for the reason that the said notification has virtually been replaced by explanation II to Section 45A. If this notification had been sufficient to clothe officers like the first respondent to exercise powers under Section 45A, introduction of explanation II was redundant. The legislature should not be deemed to have enacted explanation II without a purpose or unnecessarily. At this stage explanation II to Section 45A of the Act has to be read :
Explanation II.-For the purposes of this sub-section,the expression 'assessing authority' includes any officer not below the rank of Sales Tax Officer specified by the Government in this behalf by notification in the Gazette.
The notification aforesaid should be deemed to have yielded place to this explanation. In any case, the notification can operate only subject to this explanation. This explanation cannot relate back to the year of the notification, nor can it be said all officers mentioned in the notification could exercise powers under Section 45A.
10. The officer who can exercise powers under explanation II should be the officer not below the rank of Sales Tax Officer specified by the Government in that behalf by notification in the Gazette. The first respondent's action can be justified only if he answers to the requirements of this explanation. To attract explanation II, the necessary notification must have been issued under this explanation authorising the officers like the first respondent to exercise the powers under Section 45A. No such notification has been issued. In all cases where the Act provides for notification to be issued it could be seen that such notifications had been issued. By way of illustration, Section 29(3) deals with 'by any officer empowered by the Government in this behalf' and we find Notification S. R. O. No. 338/63 issued by the Government authorising officers mentioned in the schedule to exercise the powers and perform the functions specified in the said sub-section. Section 29A deals with the procedure for inspection of goods by any officer empowered by the Government in that behalf and by S.R.O. No. 172/72 Government of Kerala have empowered officers specified in the schedule appended to exercise and perform within the respective jurisdiction the powers and functions conferred under Section 29A. Section 30(2) deals with regulation of transports provided any officer authorised by the Government in this behalf followed by Notification S. R. 0. No. 244/64 conferring powers on officers of the sales tax department to exercise the said powers. Similarly Sections 39 and 41 followed by S. R. O. Nos. 346/63 and 345/63 regarding appeal to the Appellate Tribunal which provides any officer empowered by the Government in this behalf. It is not disputed that no notification has been issued under explanation II to Section 45A which means that the Intelligence Officer who initiated the proceedings in this case has not been specifically empowered to take any action under Section 45A by the issuance of a notification. The submission made by the learned counsel for the revenue that the notification issued in 1963 should be deemed to be a notification under explanation II has to be rejected.
11. Another limb of the argument of the petitioner's counsel is that there is no material before the court to hold that the Intelligence Officer in that case is an officer not below the rank of a Sales Tax Officer. According to him, the Sales Tax Act is silent about the hierarchy of officers under it. The notification of 1963 takes within its fold officers differing in rank and status and all of them are clubbed together. Section 3 of the Act deals with sales tax authorities and Section 4 with the Appellate Tribunal. The earlier section does not indicate the hierarchy of officers or any guide to determine their respective status. Section 15 of the Agricultural Income-tax Act, on the other hand, gives some indication in this behalf. Section 15(1) provides that there shall be the following classes of income-tax authorities and gives the list as (a) to (d), perhaps denoting their rank. Sections 116, 118 and 119 of the Income-tax Act give more insight into the hierarchy of the various officers under the Act. Section 116 enumerates the officers. Section 117 deals with appointment of income-tax authorities and Section 118, with the control of the income-tax authorities. From these sections it is clear to understand who is higher in rank to whom. Explanation 2 to Section 264 is also a pointer in this behalf regarding ranking between the Appellate Assistant Commissioner and; the Commissioner. The Act in question does not contain any provision by which the hierarchy of the officials under the Act could be understood. The notification in this case mentions the Check Post Inspectors, the Sales Tax Officers, the Reserve Sales Tax Officers, etc., together. In the absence of any guidance from the Act and the Rules as to the rank of an Intelligence Officer exercising powers under Section 45A, it would be difficult to uphold the action of the kind under challenge in this case. The counter-affidavit is silent about this aspect of the case. There is no other material placed before me from which I could gather whether the Intelligence Officer in this case is not below the rank of a Sales Tax Officer.
12. For the forgoing discussion I am inclined to hold that the contention raised by the petitioner's learned counsel that since the Act and the Rules and the notifications do not afford any guideline to determine whether the first respondent is an officer answering to the requirements of explanation II to Section 45A, the action taken by him in this case cannot be sustained. I hold that the notification issued in 1963 can have no application to the case on hand, for, reliance on the notification will be to equate a Check Post Inspector with the Intelligence Officer. In the absence of a notification under explanation II to Section 45A, it is not possible to fix the rank of the Intelligence Officer in this case. Under these circumstances I hold that the petitioner is entitled to succeed in his challenge against exhibits P3 and P5. I quash exhibits P3 and P5 and direct that no proceedings against the petitioner shall be taken pursuant to these orders. In view of this finding I do not think it necessary to decide the various other questions raised in the petition. I allow this petition and direct the parties to bear their costs.