Madhya Pradesh High Court
Speed Automobiles Ltd. And Anr. vs Assistant Commissioner Of Commercial ... on 24 March, 2003
Equivalent citations: 2003(3)MPHT148, [2003]132STC461(MP)
Author: A.M. Sapre
Bench: A.M. Sapre
ORDER A.M. Sapre, J.
1. Petitioner a limited Company is engaged in the business of purchase and sale of various automobile vehicles. They have their place of business at Indore as also several other places in M.P., Gujrat, Maharashtra, Chhattisgarh, etc.
2. By filing this writ the petitioner in substance seeks to challenge the action taken on the part of commercial sleuths on 30-1-2003 under Section 45 of M.P. Commercial Tax Act in raiding the petitioner's business premises. A consequential action in issuance of notices is also challenged. The challenge is essentially on the ground that no case whatsoever has been made out for invoking powers conferred under Section 45 ibid. It is also contended that in any event the exercise of powers was arbitrary in nature and not called for in the facts of the case. It is further contended that petitioner has neither indulged in any evasion of tax much less to the extent so as to empower taxing sleuths to invoke the extreme step of raiding the petitioner's premises by taking recourse to Section 45 ibid, nor there was any material to invoke such power. It is lastly contended that in any event, the action on the part of the taxing sleuths in sealing business premises is contrary to scheme of the Act as also it amounts violation of petitioner's fundamental right to trade which is guaranteed under the Constitution. Broadly on these grounds, the impugned action of commission of raid conducted by the respondent is assailed by the petitioner. The State on advance copy produced the record of the case for Court's perusal. A copy of the record was also given to petitioner's Counsel.
3. Heard Shri P.M. Choudhary, learned Counsel for the petitioner's and Shri Vivek Saran, learned Deputy Government Advocate for respondents.
4. Having heard the learned Counsel for the parties and having perused the record of the case, I am unable to accept any of the submissions urged by the learned Counsel for the petitioner, as in my view, none of them have any force. As a consequence, the petition deserves dismissal.
5. Section 45 of the Act empowers the specified commercial tax sleuths to investigate, enter and search any place of business of any dealer if there exists reason to suspect that he is attempting to evade payment of any tax. This power is conferred on a committee as defined under Section 45 (1) as also on Commissioner under Section 45 (2-A) ibid. The only embargo on the exercise of powers by the Commissioner is that he (Commissioner) can exercise the powers in emergent cases. In other words, if in emergent cases, Commissioner has reason to suspect that any dealer is attempting to evade payment of any tax, he may, for reasons to be recorded in writing, proceed to investigate the tax evasion by such dealer.
6. It is not in dispute as has been taken note of supra, in this case, that it is the Commissioner who has exercised his powers conferred under Section 45 (2-A) ibid for proceeding to investigate the tax evasion said to have been indulged by the petitioner in carrying on their business activity. The record submitted by the State clearly indicate that the Commissioner being conscious of his legal obligations as contemplated under Section 45 (2-A) ibid has first recorded the reasons in writing on 30-1-2003 for proceeding ahead in the matter against the petitioner. Perusal of the reasons indicate that probing inquiries in the affairs of the business deals and its manner were being made by the Commercial Sleuths by sending fake customers and information from petitioner's various sales offices from Gujrat and Indore were collected. The department is also reported to have collected specified cases of evasion of taxes in selling cars at Gujrat and Indore indicating vast price difference at these two places. It was found that though the cars are sold in M.P. but they are shown to have been sold at Gujrat because the sale of particular cars in which petitioner is engaged is exempted from payment of Sales Tax. It is after collecting several specific instances, and finding that no tax at M.P. is being paid by the petitioner by resorting to such illegal paper transactions, it was considered emergent to raid the petitioner's premises to stop evasion of taxes. Necessary information to highest executive authority in bureaucratic set up was also obtained before committing the raid on petitioner's premises. Since the tax evasion was suspected in huge money involvement, a case of emergent nature was called for by the Commissioner.
7. In my considered opinion, no flaw can be found in the order passed by the Commissioner under Section 45 (2-A) ibid. It satisfies the requirement of Section 45 (2-A) ibid. This Court is not called upon to examine the adequacy of reasons so recorded. In order to find out whether action impugned is bona fide or not, or whether it is a case of arbitrariness, this Court asked the State to produce the record relating to raid. It was done.
8. Even if, this Court were to examine the adequacy or relevancy of reasons, contained in the noting of Commissioner, dated 30-1-2003, I am of the view that the reasons do satisfy the requirement of Section 45 (2-A) ibid. It is a clear case where an inquiry and investigation was being done by the commercial sleuths, necessary information required for finding out evasion of tax was found out, and then the same was placed before the Commissioner for invocation of action contemplated under Section 45 (2-A) ibid. Such action can neither be termed as arbitrary or de hors the provisions of Section 45 (2-A) or in contravention of any of the requirements of Section 45 (2-A) ibid.
9. Coming to the submission of learned Counsel for the petitioner that respondent put the lock/seal on petitioner's premises and hence, the impugned action is bad in law is not acceptable. Firstly, Commissioner for accomplishing the action taken under Section 45 ibid has power to seal or break open the lock of any door, box, locker, safe etc. belonging to dealer under Section 45 (5) (a) ibid. In other words, Section 45 (5) (a) ibid expressly empowers the Commissioner to seal/lock any door so long as the raid is not over. The petitioner thus, has no right to contend that no seal can be put on any door. Perusal of Panchnama and other documents filed by the petitioner themselves shows that lock was being put so long as the raid proceedings were going on. It is not the case of petitioner that the action of respondent had any malafide intention or malice on the part of any particular officer in harassing the petitioner. This submission has, therefore, no force. Moreover, it is not the case of petitioner that once the raid is over, yet the lock/seal continues in the business premises. .
10. The next submission of learned Counsel for the petitioner was that petitioner is not being afforded an opportunity to defend the cases initiated against them pursuant to impugned notices issued. It is also complained that all the books of accounts are seized by the department and therefore, petitioner is not in a position to defend them. I do not agree to this submission in view of what is observed infra.
11. Reliance placed by the petitioner on cases reported in 196 ITR 243, 119 STC 52, 74 ITR 836 and 16 VKN 10, need not be dealt with in detail as they only lay down general principles relating to raid cases under the Income Tax Law and Sales Tax Law. There can be no quarrel with the proposition of law laid down in these cases. Every case has to be seen and decided first with reference to the facts of the case. It is for this purpose, this Court had called the State to file the record for recording its satisfaction, it was done.
12. In view of aforesaid discussion, I find no merit in the writ. It is accordingly, dismissed.
13. However, it may be relevant here to observe that assessing officer who has initiated the proceedings for determination of liability, if any, must ensure that his actions in assessment proceedings should be fair, unbiased, reasonable and strictly in accordance with law while dealing with the case of petitioner. In other words, there should be no element of harassment or vengeance exhibited to the dealer. The petitioner must be afforded adequate opportunity to defend in the assessment proceedings. All documents which are material and relied on against the petitioner must be made available to the petitioner in terms of Rules with a view to find out whether a case of tax evasion is made out or not ? The role of tax collector should never be like harassing man to any tax payer. It is equally the duty of Commissioner to ensure that all the locks/seals be removed, if not so far removed from the business premises of petitioner forthwith to enable them to carry on their day to day business activity.
14. It is also made clear that assessing authority would not in any manner be influenced by any of the observations made by this Court while upholding the action under Section 45 (2-A) at the time of assessment proceedings and the orders shall be passed strictly in accordance with law and explanation offered by the petitioner and on the basis of record collected and tendered by the petitioner.