Rama Jois, J. - The legality of search and seizure of certain account books made by the Commercial Tax Officer (Intelligence), Belgaum the respondent in the petition, is challenged in this writ petition by a registered dealer under the provisions of the Karnataka Sales tax Act (hereinafter referred to as the Act).
2. The impugned order made by the respondent being relevant is extracted below :
'Order of Seizure U/s. 28(A)(3) of the K.S.T. Act, 1957 :
I visited the business premises of M/s. SY. Modagekar and Sons, Ganeshwar Galli, Shahapur, Belgaum, on 10-3-1976 at about 6-30 P.M. and conducted the inspection along with C.T.P. (Enf) III, N.Z., Belgaum and the C.T.Is of the Office. At the time of my inspection Shri Shasikant Shamrao Modagekar, the Partner was present and he produced the current books of account and sale bills for inspection. On examination it was found that the assessee had written the day book upto 5-3-1976 on which the closing balance was not struck and I have signed the same on page 27. Katcha cash book was written upto 6-3-1976 in which closing balance was not struck and the regular cash book was written upto 9-2-1976, in which the closing balance was Rs. 105-04 and I have signed the same on pages 124 and 150 respectively, and have also signed on the last labour bill No. 2714 dated 8-3-1976 for Rs. 1,000-00 and the last sale bill No. 242 dated 20-1-1976 for Rs. 795-00 for sale of brass lotas.
In the course of my inspection I noticed a small pocket note book written from 1-9-1975 to 1-11-1975, three tip pen books, six diaries and one letterhead book containing certain transactions kept along with the regular books of accounts. On test check it was noticed that some of the transactions contained in the above books have not been accounted for in the regular books of account. An opportunity was given to the partner present to explain the discrepancies noticed, which he failed to do. There fore I have every reason to suspect that the dealer has been suppressing some of the transactions recorded in the above books. There fore I consider it necessary to secure the same along with katcha cash books for the current day book for the further detailed verifications.
I. B. Krishnaswamy, Commercial Tax Officer (Int), Belgaum, under the powers vested in me u/s. 28(2) of the K.S.T. Act, 1957 seize the following books of account. The details of which are as under.
(1) Katcha cash book for the current Deepawali year written upto 6-3-1976.
(2) Regular day book written upto 5-3-1976.
(3) One small pocket notebook written from 1-9-1975 to 1-11-1975.
(4) Three tip pen books written respectively from 12-12-1973, 26-10-1973 and 16-11-1974 onwards.
(5) Six diaries written respectively from 1-1-1976, 27-10-1963, 1-1-1974, 2-12-1972, 1-1-1973 and 14-11-1974 onwards.
(6) One letterhead book written from 9-11-1973 onwards.
A separate receipt has been issued to the partner present for having seized the above books of account. As no search is made no mahazar is drawn. The partner present has been instructed to attend the office on 15-3-1976 for verification of the transactions contained in the above books account.'
The material allegation made by the petitioner in the writ petition reads as follows :-
'On 10-3-1976, the Respondent raided the business premises of the petitioner at 6-30 P.M. along with a number of their officials including Commercial Tax Officers and Commercial Tax Inspectors and conducted a most unreasonable search, ransacked the entire business premises and thereafter seized a number of documents and books of accounts and loose sheets. The search of the premises, cup boards, inspite of objections made, went ahead. The II Respondent had neither brought any local inhabitants to witness the search not has made any record of search. No reasons are recorded before resorting to the search. Thus, the entire search has been in sheer disregard of the law. The II Respondent did not examine any of the books or the documents, but simply seized the available loose sheets collected from the waste paper basket, cup boards, rough calculation slips, etc. There was no warrant of search brought by the II Respondent. The search is there fore an illegal act and violative of the provisions contained in S. 28(2) of the K.S.T. Act and the Provisions of the Code of Criminal Procedure'.
3. As stated above, it is not in dispute that the date of the impugned action is 10-3-1976. Apart from question the legality of the search and seizure, the petitioner has also questioned the competence of the respondent before whom admittedly no assessment proceedings relating to the petitioners firm were pending, to make the search and also the legality of the retention of the books for such a long period. The petitioner has prayed for the issue of a writ of mandamus to the respondent to return to the petition all the seized articles, documents and all copies or notes made from the seized documents.
4. No statement of objection has been filed in the case. A memo was filed on 22-9-1877 on behalf of the respondent which is signed by the High Court Government Pleader who is the advocate for the respondent which was also not supported by any affidavit of the respondent. After the case was part heard and after the above infirmity was pointed out an affidavit dated 6th January 1978 is filed swearing to the contents of the memo. This affidavit is also not sworn to by the respondent. The same is sworn to by one Smt. K. Ramamani as Assistant Commercial Tax Officer working in the Office of the Commissioner of Commercial Taxes Bangalore. Para 5 of the memo which deals with the allegations made by the petitioner, set out earlier, reads as follows :
'The respondent has not conducted any search on 10-3-1976 as has been alleged by the petitioner. The documents were found and seized during the course of the inspection of petitioner business premises u/S.28 of the Act and no search conducted on 10-3-76, there was no need to follow the procedure as contemplated under provisions of the Criminal Procedure Code.'
In the above para there is no assertion that the conditions precedent for the making of search and seizure as laid down in the proviso to sub-S. 2 of S. 28 of the Act has been compiled with. But what is stated is that there was no search but documents found during inspection were seized.
5. The petitioners counsel urged the following contention :
(1) Search and seizure of the account books is illegal as being in contravention of sub-S. 2 of S. 28 of the Act.
(2) The respondent was not authorised to conduct the search and seizure as no assessment proceedings of the petitioners firm were pending before him.
(3) Retention of the account books for such a long period was contrary to law.
(4) The permission said to have been granted by the Deputy Commr. of Commercial Taxes, Belgaum, is illegal as he is not the next higher officer contemplated by sub-S. 3 of S. 28 of the Act and in any event, the permission granted on a few occasions was after a few days after the expiry of the period for which permission was granted on an earlier occasion.
6. In support of the first contention the learned counsel for the petitioner submitted, that what the respondent did was really search and seizure and as such action was taken by the respondent without following the mandatory safeguards prescribed in proviso to sub-S. 2 of S. 28 of the Act, the consequence of such illegal action is sought to be averted by restoring to explain away the impugned action as only an inspection and seizing of the books without any search. He submitted that irrespective of the name sought to be given by the respondent, to his impugned action, it was a clear case of search and seizure, and as admittedly the procedural safeguards set out in the proviso to sub-S. 2 of S. 28 of the Act have been violated, the petitioner is entitled to the relief claimed for in the petition.
7. Elaborating the point, he submitted that but for the procedural safeguard provided in the proviso of sub-S. 2 of S. 28 of the Act, the section itself would have suffered the vice of unconstitutionality viz., violation of Article 19(1)(f) and (g) of the Constitution, as observed by the Supreme Court while considering the constitutional validity of a similar provision in Madras General Sales Tax Act : Board of Revenue Madras vs. R. S. Thaver. He pointed out that the safeguard provided in that provision as well as S. 28 of our Act is the same viz. provision of S. 165 of the Criminal Procedure Code is made applicable and the refore without first forming an opinion as to the necessity of search and seizure on the basis of relevant kind reliable information there is no competence to make search and seizure. As already pointed out, it is not the case of the respondent that any such condition precedent for the exercise of search and seizure was present in the case.
8. As regards the contention of the respondent that this was only a case of inspection, the petitioner made alternative submission. Firstly he submitted that clause (i) of sub-S. of S. 28 of the Act confers power of inspection and clause (ii) of sub-S. 2 of thereof confers power of search for purposes of inspection and the safeguard in the proviso is in respect of all searches. His contention is that the word inspection includes search, as the power of search is conferred for the purpose of inspection. He relied on the following observations of the Supreme Court in the decision cited earlier at page 62 in para 6 while considering analogous provisions of the Madras General Sales Tax Act, which reads as follows :-
'It is true that generally speaking a power to inspect does not necessarily give power to search. But where, as in this case, the power has been given to inspect not merely accounts, registers, records and other documents maintained by a dealer but also to inspect his officers shops, godowns, vessals or vehicles it follows that the empowered officer should have the right to enter the offences etc., for purposes of inspection. Naturally his inspection will be for purposes of the Act i.e., for the purposes of seeking that there is no evasion of tax. If there fore during his inspection of offices etc., the empowered officer finds any accounts, registers, records or other documents in shop, these accounts etc., will also be open to inspection. Reading there fore these two provisions together, it is clear that the empowered officer has the right to enter the offices etc., and to inspect them, and if no such inspection he finds accounts etc., he has also to power inspect them and to see if they relate to the business. These two powers taken together in out opinion mean that the empowered officer has the power to search the office etc., and inspect accounts etc., found therein. Though there fore the word 'search' has not been used in sub-S. (2) these two powers of entering the offices etc., for inspection and of inspecting every kind of account maintained by a dealer with respect to his business together amount to giving the officer concerned the powers to enter and search the offices etc., and if he finds any account in the offices, shops etc., to inspect them. Otherwise we can see no sense in the legislature giving power to the empowered officer to enter the offices etc., for the [purpose of inspection as the officer concerned would only do so for the purpose of finding out all accounts etc., maintained by the dealer and if necessary to inspect them for the purposes of the Act. We cannot there fore agree with the High court that there is no power of search whatsoever in sub-S. (2) because the sub-section in terms does not provide for search.'
On the above basis, he submitted that the so called inspection said to have been done in this case is clearly a search of the business premises of the petitioner and seizure of the account books as a result of such search. Alternatively it was urged that in view of the facts of this case and the specific averments made by the petitioner in the writ petition, which have not been controverted, it has to beheld that the seizure of account books in the present case only the result of search even accepting the distinction between inspection and search. The petitioner relied on a Division Bench decision of this court in Harikisandas Gulabdas and Sons and Another, vs. The State of Mysore And Another. In the said case in which also a similar search and seizure was challenged, the stand taken by the respondents was that it was only a case of inspection and during the course of such inspection, the petitioner therein voluntarily handed over some accounts books which were seized. A statement also was taken from the party to the effect that he voluntarily handed over the books. Notwithstanding the appearance of 'Inspection' sought to be given by the authority, the court came to the conclusion that it was in fact and in truth a clear case of search and as the procedural safeguards did not precede the search, the relief sought for was granted.
9. Smt. P. G. Gouri, learned High Court Government Pleader, appearing for the respondent strenuously urged for the acceptance of the stand of the respondent. She strongly relied on the contents of the impugned order itself which according to her, shows that the action impugned in the writ petition is only inspection in the unmistakable terms. She pointed out that there is clear distinction between inspection and search and it is only for search or inspection including search the procedural safeguards prescribed in the proviso of sub-S. 2 of S. 28 of the Act applies. She received support for the submission from the observations in another Division Bench decision of our court in G. M. Agadi And Brothers v. The Commercial Tax Officer Enforcement N. A. Belgaum The observation at page 245 reads as follows :-
'All searches are inspections but all inspections are not searches. A search is a through inspection of a mans 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. It implies a prying into hidden places for that which is concealed. 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.'
It is unnecessary to examine in this case as to whether there can be inspection and seizure of account books without search. There fore I proceed to examine this case accepting the difference between inspection and search as pointed out for the respondent and supported by the observations in the judgment aforesaid. In the said case also on the question of fact, the court recorded a finding that it was case of search rejecting the contention of the department that it was only a case of inspection. As as referred to earlier in the first case also (27 S.T.C.P. 234), the court refused to accept the stand of the department that it was a case of voluntary handing over of account books in the course of an inspection.
10. Coming to the present case, it is no doubt true as pointed by the Advocate for the respondent that in the impugned order which is extracted earlier, the respondent has stated that he conducted inspection and during the course of inspection he noticed the account books in question he noticed the account books in question and seized them as he found some inconsistency between the entries in these books and regular account books. But it should be pointed out that it is the correctness of the statements made in the writ petition. The petitioner has specifically averred that the respondent raised the business premises of the petitioner at 6.30 P.M. on 10-3-1976 along with several other officers and ransacked the entire business premises and searched the cupboards inspite of protest and seized some of the account books. The petitioner has also averred that there was no search warrant and the procedural safeguards which are condition precedent for the search were not complied with. No statement of objection has been filed by the allegations made by the petitioner, have not been specifically denied or traversed, and there is only a statement in para 5 that books were seized in the course of inspection.
This memo is also not supported by an affidavit of the respondent or any other officer who was present at the time of alleged inspection. An affidavit of an Assistant Commercial Tax Officer working in the head office at Bangalore is filed who has no personal knowledge as to what happened on 10-3-1976 when the respondent went to the business premises of the petitioner along with other officers of the department. Hence it has to be held that the allegation made by the petitioner remain uncontroverted by the respondent. In the case of an order which was similar in nature, the claim made that it was a result of inspection only and not search, was rejected by this court in W.P. 5424/77, decided on 10-10-1977, and the seized documents were directed to be returned together with notes taken from the seized documents.
11. In the circumstances, I have no hesitation in holding that there is no substance in the stand taken on behalf of the respondent that what was done on 10-3-1976 at the business premises of the petitioner was only as inspection. The fact that the respondent, before whom no assessment proceedings of the petitioners firm were pending went to the business premises of the petitioner at the closing of the hours of business at 6.30 P.M. and he had taken a few other officers along with him and seized some of the account books together with the absence of contradiction of the serious allegations made by the petitioner by the respondent through a proper statement of objections supported by his affidavit as also affidavits of other officers present at that time, lead to the inevitable conclusions that the impugned action is a clear case of search and seizure and the camouflage of inspection is sought to be given by the respondent with the object of scaping the consequences of law as admittedly, the procedural safeguards guaranteed by the proviso to sub-S. 2 of S. 28 of the Act was not followed.
12. The powers given to the officers in S. 28 of the Act and in the other provision of the Act authorising the officers to take action against registered dealers for violation of the law are certainly intended for the proper enforcement of the sales tax law and designed in public interest. At the same time it should be remembered that the procedural safeguards are also of equal importance because the fundamental rights of individuals under Article 19 could only be subjected to reasonable restriction in public interest and the procedural safeguards are meant to protect individuals right without affecting the public interest. There fore while the officers have a duty to exercise their power conferred by law and safeguard the public interest, they must also respect the restrictions imposed by the very law which gives them the power. In the present case the respondent even accepting that he was the competent Officer to make the inspection including search has failed to comply with the mandatory procedural safeguards to which the petitioner is entitled to under the proviso to sub-S. 2 of S. 28 of the Act. There fore my conclusion is that the impugned action was really search and seizure, and there fore the petitioner is entitled to the relief claimed in the petition. As I am accepting the first contention urged for the petitioner and it is sufficient for the disposal of the case, it is unnecessary to deal with the other contentions.
13. Before concluding it has to be observed that I gave time to the respondent on 20-12-1977 suggesting that the seized books may be returned to the petitioner after receiving an undertaking from the petitioner that the petitioner would produce those books at any time, the respondent wanted the production of those books at any time, the respondent wanted the production of those books to which the counsel for the petitioner was agreeable. But when the case came up for hearing on 5-1-1978 it was submitted on behalf of the respondent that he is not agreeable to return the seized books etc., even on such undertaking by the petitioner and it is thereafter I proceeded to hear the writ petition.
14. For the reasons stated above, the rule is made absolute. Respondent is directed to return all the seized articles which are set documents within fifteen days from today.
Petitioner is entitled to the costs of the petition. Advocates fee Rs. 100/-.