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The Transport Corporation of India Ltd. Vs. State of Andhra Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petition Nos. 5560, 6460, 6623, 14063, 14069, 14086, 14492 and 14508 of 1984
Judge
Reported in[1985]60STC14(AP)
ActsAndhra Pradesh General Sales Tax Act, 1957 - Sections 2, 7(1), 12, 14, 14B, 14B(6), 14B(7), 16A, 22(6), 27, 28, 28(6), 28A, 29, 29(1), 29(3), 29(6), 29(7), 30, 30(3), 30(5), 30(8), 41, 41(4), 42, 42(1), 42(2), 42(3) and 43
AppellantThe Transport Corporation of India Ltd.
RespondentState of Andhra Pradesh and ors.
Appellant AdvocateY. Sivaramasastry in W.P. No. 5560 of 1984, ;S. Dasaratharama Reddi in W.P. Nos. 6460, 6623, 14063, 14069 and 14086 of 1984 and ;A.V.S. Ramakrishnaiah in W.P. Nos. 14492 and 14508 of 1984, Advs.
Respondent AdvocateGovernment Pleader for ;Commercial Taxes, ;Y. Sivaramasastry in W.P. Nos. 14086, 6460, 14063, 14069 and 14086 of 1984, ;A.V.S. Ramakrishnaiah in W.P. No. 5560 of 1984 and ;S. Dasaratharama Reddi in W.
Excerpt:
sales tax - detention - sections 2, 7 (1), 12, 14, 14b, 14b (6), 14b (7), 16a, 22 (6), 27, 28, 28 (6), 28a, 29, 29 (1), 29 (3), 29 (6), 29 (7), 30, 30 (3), 30 (5), 30 (8), 41, 41 (4), 42, 42 (1), 42 (2), 42 (3) and 43 of andhra pradesh general sales tax act, 1957 - petitioner transport corporation engaged in business of goods transport - petitioner received goods from tyre companies (consignee) for transportation - concerned authority made a surprise check of petitioner's office and directed him not to release tyres - some undelivered tyres were found as they were not claimed by any of alleged consignees - show cause notice issued to petitioner as to why penal action should not be initiated against petitioner for violation of provisions of act - petitioner echoed his voice against show.....sardar ali khan, j.1. in these batch of writ petitions certain common questions of fact and law arise. however, the facts of each case are at variance to a certain extent which deserve to be mentioned in brief separately. the preponderance of facts and law as given in writ petition no. 5560 of 1984 is applicable to the rest of the writ petitions nos. 6460, 14063, 14086, 6623 and 14069 of 1984. therefore, it is proposed to deal first with the factual aspects of w.p. no. 5560 of 1984 and then with the facts of the other writ petitions also to the extent it is necessary for the determination of the disputes raised in these writ petitions. 2. w.p. no. 5560 of 1984 : in w.p. no. 5560 of 1984 the salient facts are as follows : the petitioner is the transport corporation of india limited which.....
Judgment:

Sardar Ali Khan, J.

1. In these batch of writ petitions certain common questions of fact and law arise. However, the facts of each case are at variance to a certain extent which deserve to be mentioned in brief separately. The preponderance of facts and law as given in Writ Petition No. 5560 of 1984 is applicable to the rest of the Writ Petitions Nos. 6460, 14063, 14086, 6623 and 14069 of 1984. Therefore, it is proposed to deal first with the factual aspects of W.P. No. 5560 of 1984 and then with the facts of the other writ petitions also to the extent it is necessary for the determination of the disputes raised in these writ petitions.

2. W.P. No. 5560 of 1984 :

In W.P. No. 5560 of 1984 the salient facts are as follows :

The petitioner is the Transport Corporation of India Limited which is a public limited company engaged in the business of goods transport as a public carrier within the meaning of the Carriers Act of 1865. The petitioner prays for the issue of a writ of certiorari or any other appropriate writ to call for the records relating to notice Rc. No. B3/62/84 dated 9th March, 1984 issued by the second respondent herein, i.e., the Commercial Tax Officer, Lad Bazar Circle, Hyderabad, and to quash the same. The case put forward by the petitioner-corporation is that it is having a long standing in the business of transport for over 25 years. It has a network of offices throughout the country and operates large fleet of goods transport vehicles. The petitioner-corporation receives consignments from various parties for purposes of transport from one place to another in the country and in the course of their business they receive goods from respondents Nos. 4 to 9 herein, who are reputed tyre manufacturers for transportation of their material to different places in India.

3. Silvaasa is a Union territory forming part of Dadra and Nagar Haveli and is located on the coast of Gujarat. There has been no incidence of sales tax on a variety of goods in this Union territory including truck tyres and accessories. The respondents Nos. 4 to 9 who are tyre companies, have got their manufacturing units a various places in India, but taking advantage of the tax haven in Silvaasa they are moving their goods to Silvaasa and from there they have been despatching the goods to various States. This is apparently done with a view to avoid tax liability, which would otherwise have to be incurred in case the goods are despatched from some other place apart from Silvaasa. A brief resume of the procedure adopted for booking is also relevant to be mentioned here. It is alleged that tyre companies tender their goods to the petitioner's office at Silvaasa for despatch to various destinations in the country. At the time of tendering of goods the petitioner-corporation issues a consignment note in five copies. The first and fourth copies are given to the consinor. The second copy is despatched along with the vehicle to be shown at the check posts, if so required. The third copy is despatched to the head office of the tyre company at Silvaasa. The last and the 5th copy is retained at the office at Silvaasa. Thereafter the goods are loaded into the trucks of the petitioner-corporation and despatched to the respective destinations. At the destination the goods are delivered to the consignees or to the persons to whom the consignment notes are endorsed. It seems no copy of the consignment note is forwarded to the consignees in advance. The consignments are booked in two broad categories, viz., (1) consignments on self basis, and (2) consignments to a particular consignee at the destination. In the method adopted for consignment on self basis, the consignment note is issued by the consignor who negotiates the same through a bank. On discharge of the consignment note from the bank it is tendered to the petitioner-corporation at the point of delivery on payment of freight charges which are indicated in the consignment notes. The consignment note is thus treated as a negotiable instrument and after checking the endorsements the deliveries are effected by the petitioner-corporation. Deliveries so effected are recorded in the books of the petitioner-corporation. The consignees are required to take delivery of the goods within seven days from the date of arrival of the consignment at the destination and thereafter the goods attract demurrage. If the consignments remained unclaimed for a period of 90 days, a notice of non-clearance is issued to the consignor, followed by a second reminder after 120 days. Thereafter if the consignment still remains unclaimed or undelivered it is transferred to the 'unclaimed property section' for disposal to realise the freight and demurrage. This, in brief, is the procedure followed by the petitioner-corporation for the delivery of goods to the consignees and for realisation of freight and demurrage from the consignees, as the case may be.

4. The head office of the petitioner's corporation is situated at Chelpura Mahaboob-Ki-Mehnoi, Hyderabad. On 29th December, 1983 the third respondent, i.e., the Asst. Commercial Tax Officer, Lad Bazar-1, made a surprise check of the head office of the petitioner-corporation and issued detention orders directing the petitioner-corporation not to release 583 tyres of various brands covered by 150 L.Rs. until further orders. It was also directed by the respondent No. 3 that the petitioner-corporation shall direct the consignees, if any, to the office of the third respondent for further investigation of the matter. Some of the consignees visited the office of the 3rd respondent, produced the relevant documents, and got their goods released. Nevertheless, the bulk of the consignment seized still remains undelivered and unclaimed by any of the alleged consignees. Again on 10th February, 1984, the third respondent visited the petitioner's godown and issued detention orders, in respect of 1211 truck tyres of various brands with a direction that the consignees may be asked to contact him at his office. On 14th February, 1984 a representative on behalf of the 2nd respondent who is the Commercial Tax Officer, Lad Bazar, Government of Andhra Pradesh, Hyderabad, visited the head office of the petitioner-corporation and made some enquiries. He obtained the statements from some of the employees of the petitioner-corporation with a view to find out the details of the consignment of tyres lying in the godowns of the petitioner-corporation. On 3rd March, 1984 and 2nd respondent conducted a panchanama in respect of the goods lying in the godowns and which were still undelivered, as they were not claimed by any of the alleged consignees.

5. The above facts of the case, as given in Writ Petition No. 5560 of 1984, constitute the general background in which the impugned show cause notice in Rc. No. B3/62/84 dated 9th March, 1984 has been issued by the 2nd respondent to the petitioner-corporation calling upon them to show cause as to why penal action should not be taken against the petitioner-corporation for violation of the provisions of the A.P.G.S.T. Act and Rules (Act 6 of 1957), hereinafter referred to as the 'Act'.

6. The petitioner-corporation challenges the legality and validity of the said show cause notice and prays that it may be quashed by the issue of a writ of certiorari in this case.

7. It is evident that the petitioners herein are challenging the show cause notice issued by the authorities and it is to be seen whether there are any valid reason existing for the challenge of a show cause notice. In the counter-affidavit filed on behalf of the respondents 1 to 3 the maintainability of the writ petitions is challenged on the ground that the petitioners cannot invoke the jurisdiction of this Court under article 226 of the Constitution of India for the issue of a writ of certiorari against a show cause notice, especially when there are other effective alternative remedies available to the petitioner-corporation to agitate its claim, if any. It is equally clear beyond any doubt that the respondents 4 to 9 who are reputed tyre manufacturing companies having their manufacturing units at various places in India are trying to take advantage of the tax-free locality of Silvaasa. These tyre manufacturing companies, having their offices throughout the country, have been reportedly moving their goods to Silvaasa from where they are despatching the goods to various States in India. Moreover, even though the tyre companies have got their own local branch offices with godowns at Hyderabad and other places in the State of Andhra Pradesh, the goods despatched to these places are not being stocked in the godowns of the tyre companies but continue to remain in the godowns of the transport companies. The deliveries to various persons are effected from the godowns of the transport companies themselves. Thus, by putting up a facade to show that the sales have already taken place at Silvaasa which is a tax-free area, those companies are evading the payment of sales tax on goods. It is stated by respondents 1 to 3 that a major portion of these transactions are fictitious. It is stated that there is every reason to believe that in many cases fictitious names of the consignees are given and no orders have been placed for delivery of tyres by any such persons. The tyres are being despatched from Silvaasa without any payment of advance money on the part of the consignees which is not normally does in the course of such a trade. It is further stated that most of the transport companies having a fleet of trucks and lorries are shown as consignees. Some of those transport companies do not have a compliment of such vest number of vehicles to justify the placing of such huge orders. In short, there are suspicious circumstances surrounding the transactions in question which need to be investigated and cleared. It is precisely for this reason that the impugned show cause notice has been issued to the petitioner-corporation. It is further stated that normally a transporter or a carrier of goods cannot be a dealer under the A.P.G.S.T. Act. But there may be circumstances in which the provisions of the said Act can be made applicable to the carrier also. Under section 27 of the A.P.G.S.T. Act and the Rules issued thereunder the transporters or the carriers of the goods have also to discharge certain obligations cast upon them. It is, therefore, necessary to examine the situation with an eye on the role of a transporter or a carrier in the despatch and movement of consignments from one place to another and to determine the legal obligations and duties of a carrier in this regard. The question of realisation of taxes on the sale of a particular commodity, which in the course of trade, has to be moved from a place to place is to be viewed not merely from the point of view of consignor and the consignee, but also in the light of the crucial role played by the carrier of the goods as well. In a situation like this the three links which have to be joined with each other are the consignor of the goods, the carrier of the goods and ultimately the consignees who invariably happens to be the purchasers of the goods also. It is further stated in the counter that if the transporter or the carrier does not declare the goods in the manner provided under section 27 of the Act and the Rules made thereunder, he is liable to be punished under section 30(5) for evasion of tax and also as an aider and abetter of tax evasion under section 30(8) of the Act. In the show cause notice as well as in the counter-affidavit it is stated that the enquiries revealed that ascertainment of goods has taken place at Hyderabad only. The petitioner-corporation has transgressed its limits as a carrier and delivered the goods which have not been identified to persons who have come to purchase such goods. In short, the allegation against the petitioner-corporation is that they are delivering the goods to unidentified consignees from among a lumpsum of tyres which have been brought from Silvaasa and which have not been earmarked to any particular consignee as such at the point of departure in Silvaasa. The petitioners are not delivering the consignments to the consignees merely on payment of freight charges but are indulging in actual sale of the tyres in Hyderabad, Andhra Pradesh, to persons who are coming forward to purchase the same from their godowns. Another significant point to be noted is that even though considerable delay has already occurred in the delivery of goods, the petitioner-corporation has not taken any action for the realisation of demurrage from the consignors or from the consignees. The respondents 1 to 3 came to know that after delivery of tyres to certain persons they have been sold in turn to regular tyre traders in Hyderabad and other places in Andhra Pradesh. To conceal such transactions the bills are not prepared for individual consignments and the petitioner has failed to furnish the copies of goods vehicle records to the concerned C.T.O. which is a clear violation of the provisions of section 27 of the A.P.G.S.T. Act. Hence, the conclusion arrived at by respondents 1 to 3 is that the petitioner-corporation is not functioning merely as a transporter or carrier of the tyres but as an agent of non-resident principals who happen to be the tyre companies having their offices at Silvaasa. In this view of the matter collusion is alleged between the petitioner-corporation and respondents 4 to 9, which has resulted in cheating the State Government to the tune of Rs. 6 lakhs, in the recovery of sales tax over such goods. Therefore, it is contended that the order of detention has been passed by the respondents on valid and tenable grounds directing the petitioner not to release the truck of various brands until further orders and to direct the consignees to the office of the third respondent to conduct further inquiry into the matter. Such of the consignees, who have come forward with valid documents and contained the respondents, have been allowed to take delivery of the goods consigned to them. Nevertheless a large number of tyres are still lying in the godowns of the petitioner-corporation which have neither been claimed by any person nor any one has come forward to take delivery of such tyres on behalf of others.

8. In the show cause notice dated 9th March, 1984 it is stated that the tyre manufacturing companies have opened their branches at Silvaasa, which is a Union territory on the south coast of Gujarat State, where the levy of sales tax was not in force till 1st January, 1984. Taking advantage of this situation these companies had been despatching truck tyres in the names of individual customers to various parts of Andhra Pradesh. This clandestine trade of tyres has to be investigated to prevent evasion of sales tax in the interests of public revenue. A surprise check was made on 29th December, 1983 when the suspected trade came to light. The Asst. Commercial Tax Officer, Lad Bazar-1 issued detention order on 29th December, 1983 not to release 583 truck tyres of various brands covered by 150 L.Rs. until further orders to the Transport Corporation of India Limited and also directed the said corporation to send the consignees to the office of respondent No. 3, Lad Bazar-1, Hyderabad, with relevant documents so that the goods may be released to them, if they produce valid documents. On 10th February, 1984 when the A.C.T.O., Lad Bazar-1, Hyderabad, again visited the godown of the petitioner-corporation 391 L.Rs. relating to 1211 truck tyres of various brands including those found on 29th December, 1983 were found not supported with valid documents, about the identity of the consignees, etc., and therefore, detention order in respect of the said 1211 truck tyres also was issued with the direction to the petitioner-corporation to send the consignees to the office of the 3rd respondent herein, as and when they approach the office of the petitioner. Uptill now few consignees have come forward to claim the goods covered by the documents in their possession. A large bulk of the tyres is still lying unclaimed in the godowns of the petitioner-corporation. This factor itself goes to show that the transactions are not genuine and have been manipulated with a view to avoid the payment of sales tax.

9. The modus operandi of the petitioner-corporation and respondents 4 to 9 was unearthed as a result of the enquiry held on 14th February, 1984. It has come to light that the tyre companies at Hyderabad were booking orders for transportation of various truck tyres and tubes from their branches situated at Silvaasa, in the fictitious names of parties in Hyderabad. The truck tyres and tubes in loose form were being booked from Silvaasa, without any markings or identification of goods. The deliveries were effected to the customs on their production of the branch office copy of consignment note after verifying he size and number of tyres as given in the invoice copy. The tyres and tubes were being delivered to the parties, who produced the consignee copy of the L.R. and no delivery was made according to any individual or specific markings on the tyres, which were not earmarked at the point of despatch at Silvaasa. The petitioner-corporation is not maintaining any separate stock, in accordance with the names of so-called consignees and also does not maintain any record of the consignee copies. After the delivery of the goods, the copies of the documents covering the consignment are despatched to their head office at Secunderabad for record. The petitioner-corporation has admitted that they are not in a position to identify the consignees, as most of the goods are taken delivery of by the agents of the consignees. The main conclusion to be drawn from the enquiry is that the contract of sale is taking place only in Andhra Pradesh, as ascertainment of goods and their appropriation in pursuance of the contract of sale is being done at the hands of transport companies while delivering the goods at Hyderabad. It is, therefore, the view of the respondents that the transactions are not genuine and the petitioner-corporation at Hyderabad is involved in the clandestine trade of truck tyres. The carriers have thus acted beyond their limits of being transporters and bailee of the goods in question and are in fact acting as agents of non-resident principal tyre companies in the State of Andhra Pradesh. The contention raised in the show cause notice is that, according to the provisions of the A.P.G.S.T. Act and Rules, i.e., section 2 of the A.P.G.S.T. Act read with rules 28 and 29 of the A.P.G.S.T. Rules, every agent of a non-resident principal irrespective of the quantum of turnover shall apply and get himself registered as a dealer under section 12 of the A.P.G.S.T. Act. The petitioner-corporation has violated the provisions of the A.P.G.S.T. Act and the Rules and has rendered itself liable for action under section 30 read with section 7(a) of the A.P.G.S.T. Act of 1957. The show cause notice is, therefore, issued to the petitioner-corporation asking them to explain as to why penal action should not be taken against them for violation of the provisions of the A.P.G.S.T. Act and the Rules made thereunder for failure to get themselves registered as dealers under the provisions of the A.P.G.S.T. Act and for acting as an agent of the non-resident principal in the State of Andhra Pradesh. The petitioner-corporation is requested in the show cause notice to file their written objections, if any, against the gross turnover assessment made against them and file their written objections, if any, within 7 days from the date of receipt of the said show cause notice. It is against this show cause notice that the petitioner-corporation has filed this writ petition seeking a writ of certiorari for quashing the same.

10. It would be in the fitness of things to mention a few facts about the other writ petitions also with the various legal contentions raised by the parties, concerned in all these matters, which are of a common nature.

11. W.P. No. 6460 of 1984 :

This writ petition has been filed by the Dunlop India Limited for the issue of a writ of mandamus or any other appropriate writ declaring the action of the respondents 1 and 2 in detaining the 1103 tyres, 743 tubes and 622 flaps worth about Rs. 35 lakhs on 14th February, 1984 at the Transport Corporation of India godowns, Hyderabad, and also challenging the direction given by the respondents to the said Transport Corporation of India not to release the goods without the permission of the respondents. A brief resume of facts in this case are that the petitioner is a public limited company with its head office at Calcutta and sales offices all over the country including Hyderabad and Silvaasa. The sales office at Silvaasa has been opened on 20th October, 1983 and has been catering to the needs of the persons who wanted to buy tyres and tubes. In the course of such transactions at the sale office at Silvaasa a consignment of tyres and tubes was sent to various consumers at Hyderabad and other placed of Andhra Pradesh through the Transport Corporation of India Limited, which is the carrier of goods. The documents are mostly negotiated through banks and the goods are accompanied by the copy of the sale invoice in the name of the buyers. Necessary permits are obtained from the civil supplies authorities for effecting sales and such permits have to be surrendered at the time of crossing the Silvaasa boundaries. The lorries are regularly checked at the check-posts and the goods are cleared if accompanied by valid documents.

12. On 29th December, 1983 the A.C.T.O., Lad Bazar-1, Hyderabad, visted the godown of the Transport Corporation of India Limited and gave instructions in writing to the carriers instructing them to direct the consignees to see the A.C.T.O. with documentary evidence for the release of the goods. A representation was made by the petitioner-company on 7th January, 1984 to the A.C.T.O. along with photostat copies of the orders and other relevant documents requesting him to instruct the carriers to release the goods which apparently has been of no avail. On 13th February, 1984 the Commercial Tax Officer, Lad Bazar, issued proceedings directing the Transport Corporation of India Limited not to release the goods. On 14th February, 1984 the A.C.T.O. issued orders directing the carriers not to deliver 1211 tyres and bundles of tubes and flaps in their godown to the consignees until they get release orders from him. In spite of repeated requests, the goods have not been released and as a result of this action of the respondents, goods worth about Rs. 35 lakhs sent to 31 buyers are lying in the godown of the Transport Corporation of India Limited incurring heavy demurrage. Similar action has been taken by the respondents in detaining petitioner's tyres and tubes at other places, viz., Nellore, Warrangal, Visakhapatnam, Guntakal and Cuddpah, where 300 tyres are lying in the godown of the Transport Corporation of India Limited. The petitioner, therefore, challenges the order of detention which has been passed by the respondents herein as being illegal and high-handed and it is also alleged that no sale has taken place in the State of Andhra Pradesh and hence the question of evasion of sales tax due to the sales tax authorities does not arise. It is also contended that the transactions between Silvaasa office of the petitioner-company and the consumers in Andhra Pradesh are inter-State sales. The appropriate State being the Union Territory of Dadar and Nagar Haveli, the goods are not liable even for Central sales tax also. It is further contended that the seizure of the goods, so effected by the respondents 1 and 2 under section 28 of the Act must be declared as unconstitutional and illegal, in accordance with the Division Bench decision of the High Court in (Kotha Rama Doss v. Deputy Commercial Tax Officer) W.P. No. 3515 of 1970 dated 10th November, 1971 (printed at page 53 infra) and the goods may be released forthwith.

13. The main contention raised in the counter-affidavit filed by the respondents in this writ petition is that the tyres are being despatched without any definite purchase orders to the consignees. The tyre companies wanted to take advantage of the no tax liability in Silvaasa up to 31st December, 1983 and have despatched the tyres and tubes in huge numbers without any normal purchase orders from the so-called purchasers or the consumers. The rest of the material contentions are common between this writ petition and the earlier one in W.P. No. 5560 of 1984. However, it may be mentioned here that in this writ petition what is challenged primarily is the power of detention and confiscation of the goods exercised by the authorities under section 28 of the A.P.G.S.T. Act. It will, therefore, have to be seen, while considering the legal contentions of the respective parties, as to how far the power of detention and confiscation is legal and valid under the provisions of the A.P.G.S.T. Act.

14. W.P. No. 14063 of 1984 :

In this writ petition filed by Dunlop India Ltd., the order of detention of 147 tyres, 40 tubes and 116 flaps worth about Rs. 4,81,905 at the godown of the Transport Corporation of India Limited at Nellore is challenged on the same grounds as have been raised in W.P. No. 6460 of 1984.

15. W.P. No. 14068 of 1984 :

In this writ petition, the Dunlop India Limited is the petitioner and prays for a writ of mandamus or any other appropriate writ declaring as unconstitutional and illegal the action of the first respondent in detaining the 10 years worth Rs. 32,630 in the first week of January, 1984 at the godown of the Transport Corporation of India Limited at Visakhapatnam. The grounds raised in this writ petition are common to those mentioned in W.P. Nos. 6460 and 14063 of 1984.

16. W.P. No. 14069 of 1984 :

This writ petition has been filed by the Dunlop India Limited for issue of a writ of mandamus or any other appropriate writ declaring as unconstitutional and illegal, the action of the first respondent in detaining 90 tyres, 34 tubes and 4 flaps worth about Rs. 2,90,000 in the first week of January, 1984 at the godown of the Transport Corporation of India Limited at Warrangal. It is obvious that the grounds raised in all these four writ petitions are the same and the legal contentions also which have been raised against the power of the respondents 1 to 3 for detention and confiscation of goods can also be dealt with in a common judgment.

17. W.P. No. 6623 of 1984 :

In this writ petition filed by J. K. Industries a writ of mandamus or any other appropriate writ is prayed for declaring as unconstitutional and illegal, the action of the respondents 1 and 2 in detaining Truck No. G.R.R. 3984 together with goods i.e., 220 tyres and 220 tubes from 5th March, 1984 to 14th March, 1984 at Madnoor Check Post, Nizamabad District, and for detention of the goods from 14th March, 1984 in the godown of M/s. Freight Carriers of India and to declare the instructions dated 15th March, 1984 given by the second respondent and third respondent as illegal.

18. The grounds raised in this writ petition are the same as those which have been raised in the earlier cases. A separate narration of facts need not be given in this case, as the preponderance of facts and the legal questions involved are common with those of the earlier cases.

19. The principal contentions raised in W.P. No. 5560 of 1984, and the other cases, viz., W.P. Nos. 6623, 6460, 14063 and 14086 of 1984 is that the power of seizure exercised by the authorities is unconstitutional and illegal and that the directions given to the Transport Corporation of India Limited in W.P. No. 5560 of 1984 to direct the consignees to contact the Commercial Tax Officer, Circle-1, as and when they come to take delivery of the goods consigned in their name is also illegal. The further contention raised in W.P. No. 5560 of 1984 which was filed by the Transport Corporation of India, is that they are merely carriers and cannot be subjected to the restrictions of detention or seizure of the goods from their godowns. The other writ petitions, i.e., W.P. Nos. 6623, 6460, 14063, 14086 and 14069 of 1984 have all been filed by the tyre manufacturing companies, which have raised common questions of law and fact and are primarily concerned with the power of seizure exercised by the authorities.

20. The main argument advanced by the petitioner in this case on the question of seizure is based upon a decision of this Court in (Kotha Rama Doss v. Deputy Commercial Tax Officer) W.P. No. 3515 of 1970 dated 10th November, 1971 (printed at page 53 infra) in which it was held by a Division Bench of this Court that the power of seizure and confiscation exercised under section 28(6) of the A.P.G.S.T. Act of 1957 is ultra vires of the powers conferred upon the Deputy Commercial Tax Officer and has to be struck down as such. In this connection the Division Bench of this Court placed reliance upon a decision of the Supreme Court in Check Post Officer v. K. P. Abdulla and Bros. [1971] 27 STC 1 (SC) and came to the conclusion that since sub-section (3) of section 42 of the Madras General Sales Tax Act was struck down as being beyond the scope and ambit of entry 54 of List II of the Seventh Schedule of the Constitution of India by the Supreme Court, and hence sub-section (6) of section 28 of the A.P.G.S.T. Act shall also be declared to be illegal and unconstitutional for the reasons mentioned in the judgment of the Supreme Court. Before considering the decision of the Division Bench in (Kotha Rama Doss v. Deputy Commercial Tax Officer) W.P. No.3515 of 1970 (printed at page 53 infra) and the relevant case law on the subject it would be pertinent to examine the relevant provisions of the A.P.G.S.T. Act which have a bearing on the matter. The two sections with which we are primarily concerned in this case are sections 28 and 29 of the A.P.G.S.T. Act. Section 28 of the A.P.G.S.T. Act is the section which deals with the powers of the authorities to order production of accounts and powers of entry, inspection, etc. Section 28(6) of the A.P.G.S.T. Act reads as follows :

'28. (6) Any such officer shall have power to seize and confiscate any goods which are found in any office, shop, godown, vehicle, vessel or any other place of business or any building or place of the dealer, but not accounted for by the dealer in his accounts, registers and other documents maintained in the course of his business :

Provided that before taking action for the confiscation of goods under this sub-section, the officer shall give person affected an opportunity of being heard and make an inquiry in the prescribed manner.

Explanation. - It shall be open to the State Government to authorise different classes of officers for the purpose of taking action under sub-section (1), (2) and (3).'

21. It is clear from a reading of the section 28(6) that it is concerned with the production of accounts and power of entry, inspection, seizure and confiscation of the goods which are found 'in any shop, godown, vehicle, vessel or any other place of business or building or place of the dealer'. In every limb of this section the person against whom such powers are to be exercised are the dealers of the goods concerned. The section is not concerned with the transit of goods nor has it anything to do with the seizure or confiscation of goods which are effected at the check posts. In contradistinction to this, under section 29 of the A.P.G.S.T. Act the authorities have been vested with a power to establish check posts or barriers for inspection of goods while in transit. It is clear beyond any doubt that section 29 of the A.P.G.S.T. Act is concerned only with the inspection and checking of the goods at the various check posts or barriers set up by the State Government. Section 29(1) and (2) read as follows :

'29. Establishment of check post or barrier and inspection of goods while in transit. - (1) If the State Government or the Commissioner of Commercial Taxes consider it necessary that with a view to prevent or check evasion of tax under this Act in any place or places in the State, it is necessary so to do, the State Government or the Commissioner of Commercial Taxes may by notification direct the setting up of a check post or the erection of a barrier, or both, at such place or places as may be notified.

(2) At every check post or barrier mentioned in sub-section (1), or at any other place when so required by any officer empowered by the State Government in this behalf, the driver or any other person in charge of a goods vehicle or boat shall stop the vehicle or boat, as the case may be, and keep it stationary as long as may reasonably be necessary, and allow the officer in charge of the check post or barrier, or the officer empowered as aforesaid, to examine the contents in the vehicle or boat and inspect all records relating to the goods carried, which are in the possession of such driver or other person in charge, for the purpose of ascertaining whether there has been any sale or purchase of the goods carried and in case there was sale or purchase of the goods carried, whether such sale or purchase is liable to tax under this Act, and if so -

(a) whether such tax has been paid; or

(b) whether the sale or purchase of the goods carried has, for the purpose of the payment of tax under this Act, been properly accounted for in the bills of sale, or delivery notes or such other documents as may be prescribed.'

22. The basic difference of sections 28 and 29 of the A.P.G.S.T. Act is evident from a mere reading of the said two sections, that section 28 of the Act is concerned with the powers to order production of accounts and power of entry, seizure and confiscation of the goods at the premises of the dealer or at any other place where the dealer is storing the goods. On the other hand the whole ambit of section 29 of the Act is about the inspection of goods at the check posts while of section 29 of the Act is about the inspection of goods at the check posts while in transit. It would be pertinent to contrast the provisions of section 42 of the Madras General Sales Tax Act which were a subject-matter of the decision in [1971] 27 STC 1 (SC) (Check Post Officer v. K. P. Abdulla and Bros.) cited supra, by the Supreme Court. Section 42 of the Madras General Sales Tax Act reads as follows :-

'Section 42. (1) If the Government consider that with a view to prevent or check evasion of tax under this Act in any place or places in the State, it is necessary so to do, they may, by notification, direct the setting up of a check-post or the erection of a barrier or both, at such place or places as may be notified.

(2) At every check post or barrier mentioned in sub-section (1), or at any other place when so required by any officer empowered by the Government in this behalf, the driver or any other person in charge of any vehicle or boat shall stop the vehicle or boat, as the case may be, and keep it stationary as long as may reasonably be necessary, and allow the officer in charge of the check post or barrier, or the officer empowered as aforesaid, to examine the contents in the vehicle or boat and inspect all records relating to the goods carried, which are in the possession of such driver, or other person in charge, who shall, if so required, give his name and address and the name and address of the owner of the vehicle or boat as well as those of the consignor and the consignee of the goods.

(3) The officer in charge of the check post or barrier, or the officer empowered as aforesaid shall have power to seize and confiscate any goods which are under transport by any vehicle or boat and are not covered by.

(i) a bill of sale or delivery note,

(ii) a Goods Vehicles Record, a Trip Sheet or a Log Book, as the case may be, and

(iii) such other documents as may be prescribed under sections 43 and 44 :

Provided that before ordering confiscation the officer shall give the person affected an opportunity of being heard and make an inquiry in the prescribed manner :

Provided further that the officer ordering the confiscation shall give the person affected option to pay in lieu of confiscation -

(a) in cases where the goods are taxable under this Act, in addition to the tax recoverable, a sum of money not exceeding one thousand rupees or double the amount of tax recoverable, whichever is greater; and

(b) in other cases, a sum of money not exceeding one thousand rupees.'

23. A reading of the above section 42 of the Madras General Sales Tax Act of 1959 clearly reveals the point that under that section also the power of seizure and confiscation to be exercised is at the check-post or barrier set up by the Government. The provisions of section 42(1) and (2) of the Madras General Sales Tax Act are pari materia in all respect with section 29(1) and (2) of the A.P.G.S.T. Act. Similarly, the provisions of section 42(3) of the Madras General Sales Tax Act deal with the power of seizure and confiscation of goods which are in transit in any vehicle or boat which are not covered by valid documents are comparable with the provisions of section 29(3) of the A.P.G.S.T. Act. Section 29(6) of the A.P.G.S.T. Act deals with the question of detention of goods in case the tax directed to be paid or the security directed to be furnished under sub-section (3) is not paid or not furnished. In that event under section 29(7) of the A.P.G.S.T. Act, in case the goods detained under section 29(6) are subject to speedy and natural decay or in case of the goods are not claimed by any one within the prescribed period, the concerned officer shall, subject to such conditions as may be prescribed, sell such goods in open auction and remit the proceeds thereof in a Government Treasury. The object of producing the above section here is to make it clear that the comparable provisions with section 42 of the Madras General Sales Tax Act, 1959 with the A.P.G.S.T. Act are in section 29 of the Act and not section 28 of the Act. As stated earlier, it is under section 29 of that the power of detention or seizure of the goods and confiscation in certain cases is exercisable at the check posts and not at the premises of the dealer. Moreover, the power under section 28 is essentially to be exercised only against the dealers and the power of seizure and confiscation under section 29 of the Act is primarily aimed at the carrier of the goods or for that matter, any other person who undertakes to transport the goods from one place to another. In the light of the above provisions it is to be examined as to how far the decision of the Division Bench of this Court in W.P. No. 3315 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra) is applicable to the case before us and under what circumstances or set of facts, that judgment was delivered by the Division Bench of this Court.

24. It would be necessary in this connection to mention about two earlier Bench decision, which were apparently not brought to the notice of the learned Judges delivering judgment in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page ....infra). The first such decision is K. S. Papanna v. Deputy Commercial Tax Officer [1967] 19 STC 506. In this case a Division Bench of this High Court was concerned with the same question as that arising in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra), the validity of sections 28(6) and 29(3) of the A.P.G.S.T. Act, 1957 was assailed in this case. The question was whether the sales tax authorities have power to seize and confiscate the goods under the relevant provisions of the A.P.G.S.T. Act and the Rules made thereunder, and if so whether such power of seizure and confiscation is ultra vires the State Legislature as it falls beyond the scope of entry 54 in List II of Seventh Schedule of the Constitution of India. It was also alleged that the power of search, seizure and confiscation purported to be exercised under section 28(6) and 29(3) of the A.P.G.S.T. Act of 1957 was an infringement of articles 14 and 19(1)(g) of the Constitution of India. It was held by the Division Bench of this Court that the power to levy tax includes all incidental powers to prevent the evasion of such tax. The power to seize and confiscate goods is only by way of punishment or penalty which is intended to operate as the most effective deterrent against tax-evaders and it is therefore ancillary or incidental to the power to levy tax on the sale of goods and falls within the ambit and scope of the legislative power, conferred on the State Legislature under entry 54 of List II of the Seventh Schedule of the Constitution of India. So long as the steps or measures taken by the State Legislature are directed towards the achievement of the object of prevention of evasion of tax, they come within the scope of ancillary powers irrespective of the question whether it may be necessary or not for the Legislature to impose a drastic provision or only a lenient punishment. Therefore section 28(6) and section 29(3) of the Andhra Pradesh General Sales Tax Act, 1957 were held to be not ultra vires the State Legislature. It was further observed that the procedure laid down under the Andhra Pradesh General Sales Tax Rules, 1957, for seizure and confiscation of goods does not imposed any unreasonable restrictions or confer any unreasonable or unguided power in the hands of the officers of the department and therefore does not infringe articles 14 and 19(1) and (g) of the Constitution. The rules provide for an elaborate procedure including opportunity of hearing to the assessee before confiscation order is passed. The fact that the officers in charge of the duty of seizure and confiscation are likely to abuse their powers is not a ground for invalidating the statute. In Kalangi Krishna Murty & Co. v. Commercial Tax Officer [1982] 22 STC 540 another Division Bench of this High Court considered the validity of the provisions of sections 28(6) and 29(3) and (4) of the A.P.G.S.T. Act of 1957. In this case also the argument was that the power of seizure and confiscation exercised under sections 28(6) and 29(3) and (4) of the A.P.G.S.T. Act violates the provisions of articles 14 and 19(1)(g) of the Constitution of India. The Division Bench held that the provisions of sections 28(6) and 29(3) and (4) of the A.P.G.S.T. Act are not violative of article 14 or article 19(1)(g) of the Constitution of India. It was further held that the power under sections 28(6) and 29(3) and (4) of the A.P.G.S.T. Act providing for confiscation of goods are regulatory provisions designed to prevent actual or attempted evasion of tax and is a class by itself distinct from section 14 and therefore they do not violate article 14 of the Constitution of India. The power of seizure and confiscation was considered to be ancillary and incidental to the power to levy tax and in the nature of a punishment and bears no relation to the actual evasion of tax. A reading of the judgment in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra) clearly reveals that these two decisions were not brought to the notice of the learned Judges deciding the matter.

25. The effect of the decision in Check Post Officer v. K. P. Abdulla and Bros. [1971] 27 STC 1 (SC) was considered in Kamal Kumar Goyal v. State of Orissa [1975] 35 STC 343. The question arising for consideration in that case was whether section 16-A of the Orissa Sales Tax Act and rule 94 of the Orissa Sales Tax Rules of 1947 are within the legislative competence of the State Legislature under entry 54 of List II of the Seventh Schedule of the Constitution of India and hence intra vires. In this context it was necessary to define precise limits of the decision of the Supreme Court in Check Post Officer v. K. P. Abdulla and Bros.'s case [1971] 27 STC 1 (SC). It was held that under the Orissa Sales Tax Act of 1947, unless there has been a sale the incidence of taxation would not arise and there would be no confiscation of goods, which are not liable to payment to tax. In other words the confiscation of goods carried in a vehicle under the Orissa Act could be made only in case of sale of the said goods under the scheme of the Orissa Act. Therefore, the mischief which was contemplated by the Supreme Court in Check Post Officer's case [1971] 27 STC 1 (SC) wherein it was held that even a person carrying his own goods as personal luggage from one State to another for his own consumption and if he is unable to produce the documents specified in clause (i), (ii) and (iii) of sub-section (3) of section 42 of the Madras General Sales Tax Act of 1959, stands in danger of having his goods forfeited, cannot exist under the Orissa Act. In this view of the matter, section 16-A of the Orissa Sales Tax Act and rule 94 thereunder were held to be valid and intra vires the power of the State Legislature. It may be mentioned here that, under section 16-A of the Orissa Sales Tax Act of 1947 also, the power to check and seize the goods is to be exercised by the officers at the check post or barriers set up by the State Government. The power of seizure and confiscation, therefore, visualised under section 16-A of the Orissa Act is pari materia with the provisions of section 29 of the A.P.G.S.T. Act which deals with the power of seizure and confiscation of goods at a check post in the custody of the carrier or any other person in charge of such goods.

26. In Mool Chand Lal v. Shri Manmohan Singh [1977] 40 STC 238 (FB) sub-sections (7) and (8) of section 14-B of the Punjab General Sales Tax Act, 1948 as amended by the Punjab General Sales Tax (Amendment) Act of 1974 (Act 9 of 1974) were challenged, as beyond the competence of the State Legislature. Under section 14-B(1) of the said Act, the State Government is authorised to establish check posts or barriers with a view to prevent or to check the evasion of tax under the Act. Sub-sections (2), (3), (4) and (5) of section 14-B of the Act provide for the documents, which should accompany the goods carried in a goods vehicle, for the examination by the officer-in-charge of the check post or barrier, as the case may be. Under sub-section (6) of section 14-B of the Act, any officer not below the rank of an Assistant Excise and Taxation Officer while acting under this section shall have the power to seize any goods, not covered by the documents mentioned in sub-section (2) and sub-section (3). Under sub-section (7) of section 14-B the dealer or any person, including a carrier of goods acting on behalf of the dealer shall not take delivery of, or transport from, any vessel, station, air port or any other place, whether of similar nature or otherwise any consignment of goods, the sale or purchase of which is taxable under this Act except in accordance with such conditions as may be prescribed with a view to ensure that there is no evasion of the tax imposed by or under the Act. Under sub-section (8) of section 14-B of the said Act where the declaration made under sub-section (3) is false in respect of any particulars mentioned therein, the officer-in-charge of the check post or the barrier or any other officer not below the rank of an Assistant Excise and Taxation Officer shall have the power to seize the goods in respect of which the declaration is false, provided the officer acting under sub-section (6) or sub-section (8) may, before or after such seizure, give to the person affected an option to pay, in lieu of seizure and in addition to the tax recoverable, a sum of money not exceeding one thousand rupees or double the amount of tax recoverable, whichever is greater. These sub-sections, which have been briefly referred to above under-went amendments in 1960, 1963, 1965 and 1974, and after the amendments it has been provided under sub-section (6) that if the officer-in-charge of the check post or barrier or other officer, as mentioned in sub-section (2), has reasons to suspect that the goods under transport are meant for trade and are not covered by proper and genuine documents as mentioned in sub-section (2) or sub-section (4), as the case may be, or that the person transporting the goods is attempting to evade payment of tax, he may, for reasons to be recorded in writing, and after hearing the said person, order the unloading and detention of the goods for such period as may reasonably be necessary and shall allow the same to be transported only on the owner of the goods or his representative or the driver or other person in charge of the goods vehicle furnishing to his satisfaction a security or executing a bond for securing the amount of tax. After a detailed examination of the provisions of the sections referred to above, it was held that the prevention of evasion of sales tax is a power incidental or ancillary to the levy of sales tax and falls within entry 54 of List II of the Seventh Schedule of the Constitution of India. Section 14-B(7) which provides for detention of goods and levy of penalty if there has been an attempt to evade tax under the Act cannot, therefore, be said to be within constitutional sanction. It was further observed that there is also no repugnancy between the provisions of levy of penalty under section 14-B(7), when an attempt to evade the tax is discovered and the general scheme of the Act which provides for the levy of tax at the point of first sale within the State. The amended section 14-B(7) for levy of penalty is not based on any assumption that the goods were transported after sale within the State. Its basis is the attempt to evade tax and it prescribes a condition precedent for the levy of penalty. The condition precedent is that the authorised officer should record a finding that there has been an attempt to evade the tax due under the Act. The goods which are to be detained are also specified in section 14-B(6) as goods meant for trade and not covered by proper and genuine documents. A scheme or device to evade the tax may start operating long before the actual liability to pay the tax arises. As soon as the scheme of device is set in motion there is an attempt to evade the tax due under the Act and it will not be necessary to wait till the liability to pay the tax actually arises. It an attempt to evade tax is discovered earlier, the liability to be subjected to penalty is straightaway attracted.

27. In the light of the case law discussed above, it can be seen that the ratio of the decision in Check Post Officer v. K. P. Abdulla and Brothers [1971] 27 STC 1 (SC) is that section 42(2) of the Madras General Sales Tax Act of 1959 which empowers the Check Post Officer to confiscate the goods and levy penalty in lieu of confiscation, when in respect of the goods found in a vehicle, the driver of the vehicle is not carrying with him the documents specified therein is not a provisions which is ancillary or incidental to the power to tax sale of goods under entry 54 of List II of the Seventh Schedule of the Constitution of India. The first and foremost thing to be noted in this regard is that section 42(3) of the Madras General Sales Tax Act of 1959 is primarily concerned with the power of seizure and detention of the goods by the Check Post Officer at the check posts. The section cannot be allowed to traverse beyond its own limits and construed as investing the authorities with the power of seizure and confiscation of goods anywhere else, except at the check posts. Secondly, the seizure of the goods even at the check posts or barriers is to be made only when the driver of the vehicle is not carrying with him the documents specified in that section. Viewed from this angle, the provisions of sections 28 and 29 of the A.P.G.S.T. Act clearly reveal the fact that in any case section 28 of the Act is not the concerned section, with regard to the power of the Check Post Officer to effect seizure or confiscation of the goods. It is only under section 29 of the Act that such a power of seizure or confiscation of goods can be made at the check posts or barriers set up by the State Government.

28. While discussing the question of seizure and confiscation of goods to prevent evasion of tax payable on such goods, it is necessary to appreciate that without such powers the authorities cannot be in a position to enforce the provisions of law, requiring the persons in custody of the goods or those who are the seller or buyer of the goods, to pay the necessary tax before they indulge in dealing with the goods either by transportation or by way of sale. In Bishamber Dayal Chandra Mohan v. State of U.P. : [1982]1SCR1137 the Supreme Court had occasion to consider the necessity to set up the check-posts and barriers on the borders of any State to prevent evasion of sales tax and other dues. It was observed in this case, while dealing with section 28 of the U.P. Sales Tax Act of 1948 that the check posts and barriers on the borders of the State of Uttar Pradesh set up under that section are designed and meant to prevent evasion of sales tax and other dues. The constitutional validity of section 28 and its provisions under sections 28-A to 28-C was in the opinion of the Court rightly not challenged as such. Then, the Supreme Court went on to observe that from the point of view of either entry 54 of List II or article 301 of the Constitution of India, there is no question of lack of competence in the State Legislature to set up the check posts and barriers on the State's borders. These provisions, read with the requirements of rule 83(4) of the U.P. Sales Tax Rules, 1948 require that the owner, driver or any other person in charge of the vehicle or vessel shall in respect of such goods carried in the vehicle or vessel as are notified under sub-section (1) of section 28-A carry with him declaration in a prescribed form. The set up of these check posts or barrier was held to be not a restriction on the freedom of trade, commerce and intercourse guaranteed under article 301 of the Constitution of India. Just as inter-State trade, commerce must play its way and be subject to taxation of persons engaged in such inter-State trade or commerce are equally subjected to all recovery measures. Thus, the power of seizure and confiscation is a necessary concomitant for the utilisation of the machinery which is set up under the relevant provisions of the Act to prevent evasion of sales tax and other dues. The abovementioned dictum of the Supreme Court thrown light on the question of the setting up to the barriers and check posts and incidentally high lights the fact that the power of seizure and confiscation is a necessary measure, with which the authorities concerned must be armed to enable them to discharge their duties expeditiously and effectively, so that there may not be any evasion of sales tax or other dues by the person concerned. It is well known that millions of tonnes of goods are transported from one State to another or within a State through roadways. The question, therefore, is how to control effectively the sale of these merchandise rolling down the highways of India and to recover the sales tax and other amounts from the persons in charge of such consignment of goods in the interests of public revenue. It goes without saying that the public interests by way of recovery of the necessary amount of sales tax due from the traders or from other persons, as the case may be, is inextricably bound up with the functioning of well-oiled and efficient machinery, devised by the State Governments or such other authorities, as may be empowered thereof to ensure that the liability to pay taxes is enforced and implemented in an effective manner.

29. Every 54 in List II of the Seventh Schedule of the Constitution of India empowered the State Legislature to enact legislation, with regard to the imposition of taxes on the sale or purchase of goods, other than newspapers, subject to the provisions of entry 92-A of List I. It has been held in the cases which have been referred to above that the powers of confiscation of goods under section 28(6) and 29(3) of the A.P.G.S.T. Act exercised by the authorities are regulatory provisions designed to prevent actual or attempted evasion of tax and do not violate article 14 of the Constitution of India. In the earlier Bench decisions of this Court in Papanna v. Deputy Commercial Tax Officer [1967] 19 STC 506 and Kalangi Krishna Murty & Co. v. Commercial Tax Officer [1968] 22 STC 540 discussed supra, the matter was considered at great length and the validity of section 28(6) of the A.P.G.S.T. Act was upheld. It is quite obvious that these decisions were not brought to the notice of the learned Judges, who delivered the judgment in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra). In fact, the learned Judges in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra) have based their judgment exclusively on the observations of the Supreme Court in Check Post Officer v. K. P. Abdulla and Bros. [1971] 27 STC 1 (SC). Nevertheless the point of distinction which emerges clearly is that the Check Post Officer's case [1971] 27 STC 1 (SC), as it has come to be known is an authority only in regard to the power exercisable by the authorities under section 42(3) of the Madras General Sales Tax Act of 1959, which empowers the Check Post Officer to confiscate the goods and levy penalty in lieu of confiscation. The seizure and confiscation of goods at the check posts is obviously different from that which is exercised under section 28(6) of the A.P.G.S.T. Act, which is a power of seizure exercised by the authority not at the check posts, but in regard to any goods which are found in any office, shop, godown, vehicle, vessel or any other place of business or any place or places of a dealer, but not accounted for by the dealer in his accounts, registers and other documents maintained in the course of his business. Hence, it is clear that the question of inconvenience that may be caused to some of the genuine transporters of goods who may be transporting their own personal luggage as visualised by the Supreme Court in the Check Post Officer's case [1971] 27 STC 1 (SC) cannot, by the very nature of things, exist under a situation which may come within the catch of section 28(6) of the A.P.G.S.T. Act. On a similar reasoning, the Orissa High Court in Kamal Kumar Goyal v. State of Orissa [1975] 35 STC 343 have distinguished the provisions of section 16-A of the Orissa Sales Tax Act and rule 94 of the Rules made thereunder and held that the facts existing in the Check Post Officer's case [1971] 27 STC 1 (SC) decided by the Supreme Court, do not exist in that case, and therefore, there could be no question of preventing the mischief which the Supreme Court has pointed out in its decision.

30. For all the reasons stated above, we are inclined to take the view that the decision in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra) cannot be taken to have struck down the provisions of section 28(6) of the A.P.G.S.T. Act for the simple reason that the decision of the Supreme Court in Check Post Officer's case [1971] 27 STC 1 (SC) is primarily concerned with the power of seizure and confiscation exercised places, owned by the dealer, as envisaged under section 28(60 of the A.P.G.S.T. Act. Moreover, the other two Bench decisions of this Court were not brought to the notice of the learned Judges deciding the case in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra). It is necessary to draw a line between the powers exercised by the authorities under section 28 and 29 of the A.P.G.S.T. Act. It is section 29 of the A.P.G.S.T. Act, which deals with the question of powers of the authorities to effect seizure and confiscation of goods at the check posts. Such a general power of seizure and confiscation of goods has been consistently held to be a regulatory measure to prevent the evasion of sales tax and other dues by the persons, in charge of the goods. It may be true that the exercise of such a power may create some difficulties, in some rare cases, for the genuine transporters of goods also, who may be faced with a situation that may not be to their liking. But, it is obvious that, in every scheme for recovery of taxes to safeguard the public revenues such inherent risks of causing inconvenience to an infinitesimal minority of persons will have to be overlooked. Just because there is a risk of an honest man being harassed the whole scheme of effective supervision at the check posts or the barriers or other places where the goods are stored cannot be given up. Such regulatory measures are necessary for the purpose of implemention of the legislative enactments, which have been promulgated by the State Legislature to recover sales tax and other dues from the concerned persons.

31. In view of the foregoing discussing it is clear that there is no ground to quash the show cause notice in Rc. No. B3/62/84 dated 9th March, 1984 issued by the second respondent, i.e., Commercial Tax Officer, Lad Bazar Circle, Hyderabad in W.P. No. 5560 of 1984. The show cause notice called upon the petitioner to file their written objections, if any, for consideration of the same by the authorities. It is evident that there are other effective alternative remedies available to the petitioner, in this case, even after the determination of the matter by the authorities concerned. Moreover, we have discussed in detail the legality of the power of seizure and confiscation exercised under section 28(6) and section 29 of the A.P.G.S.T. Act and are of the view that the powers so exercised are neither illegal nor unconstitutional and do not suffer from any legal infirmity. Taking into consideration the facts and circumstances of the cases and the principle of law applicable, we dismiss W.P. No. 5560 of 1984, but in the circumstances of the case, there will be no order as to costs.

32. The common question that has been raised in W.P. Nos. 6460, 14063, 14086, 6623 and 14069 of 1984 is that the orders of detention, issued by the authorities in these cases, are illegal and unconstitutional. We have already taken the view that the decision in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Office) (printed at page 53 infra) cannot be taken to have any bearing on the issue when the goods are detained under section 28(6) of the A.P.G.S.T. Act. That decision is primarily based upon the case in Check Post Officer v. K. P. Abdulla and Bros. [1971] 27 STC 1 (SC) and is only concerned with the seizure and confiscation of the goods at the check posts. In any case there are earlier two Bench decisions of this Court which have that the power of seizure exercised under sections 28 and 29 of the A.P.G.S.T. Act is a regulatory measure and is incidental to the power to prevent evasion of payment of sales tax and other dues recoverable from the persons, who are in charge of the goods. In this view of the matter, all the writ petitioners are dismissed, but in the circumstances of the cases there will be no order as to costs.

33. W.P. No. 14492 of 1984 :

In this writ petition, the petitioner alleged that he is doing business with the active co-operation of his working partner, Sri P. J. Jain, at Hyderabad. Both the partners planned to start business in 'Luna Motor Cycles' at Hyderabad and for that purpose, the petitioner sent 8 lunas on 10th February, 1984 and 9 lunas on 8th March, 1984 to Hyderabad from Maharashtra State. His partner at Hyderabad is named as the consignee of the goods. Subsequently, 15 lunas on 18th April, 1984, 12 lunas on 25th April, 1984, 5 lunas on 28th April, 1984 have been sent in the same manner. Therefore, in all about 45 luna two wheelers have been purchased in Bombay State by the petitioner and despatched to Hyderabad in the name of the consignee who is alleged to be his partner in business. The petitioner says that they have not yet set up a good business place to serve as a show room for sales and service of such vehicles and no sales have been effected up till now. All the 49 vehicles are in stock for sale. The batch of first 17 vehicles was received by the consignee without any difficulty. It is significant to note, however, that the consignments were booked in the names of different consignors, while the name of the consignee for all the consignments is that of this partner Sri P. J. Jain. It is explained that different names have been given for the consignors, due to the railway booking difficulties. It is not explained, however, as to how the change of the name of consignors facilitated them to get railway wagon bookings for the luna two wheeler motor cycles. When the batch of 32 lunas arrived at Kachiguda Railway Station, the respondents' officials i.e., the Deputy Commercial Tax Officer, Sultan Bazar, Hyderabad City, served two orders of 12th and 13th April, 1984 on the parcel clerk of the railways, directing that the goods shall not be delivered to the consignee except on his order in writing. The petitioner says that he is incurring an expenditure of Rs. 500 for the 32 vehicles every day payable on account of demurrage. However, on authorisation by the partner who was engaged in business on behalf of the petitioner, a chartered accountant of the petitioner executed a bond, as directed by the D.C.T.O. and he was allowed to take delivery of the goods from the railway station. This delivery was allowed, after payment of Rs. 5,640 towards the demurrage charges to the railway. The consignment of 32 luna two wheeler motor cycles has been delivered to the said chartered accountant and is now in his custody, as per the bond executed by him on 10th May, 1984.

34. While the batch of 32 luna two wheeler motor cycles is still lying with the chartered accountant, on 15th April, 1984 the respondents passed seizure orders with allegations against the petitioner and directed the chartered accountant to deliver all the 32 luna two wheeler motor cycles to him, within 24 hours. The order dated 15th April, 1984 is passed under section 28(6) of the A.P.G.S.T. Act which, according to the contention of the petitioner, has been declared as ultra vires by the High Court in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra). The petitioner says that the article termed as 'Luna vehicle' at item 1 in the First Schedule is liable to tax only at first sale in the State. The stage for sale is not yet reached and they only hope to effect the sales, in future. In fact, the goods have been seized in transit by the respondents and it is premature to fix the tax liability on the goods and to take steps for seizure of the goods in question. It is evident that the petitioner has not taken out any sales tax registration certificate in advance, and therefore, he says that he has not contravened any provisions of the Act or the Rules made thereunder as he is a new entrant in the business and has not yet effected any sales as such. The petitioner, therefore, prays that, in these circumstances, an appropriate writ may be issued specially in the nature of a certiorari to quash the proceedings of the respondents, including the seizure order dated 15th October, 1984 issued under section 28(6) of the A.P.G.S.T. Act.

35. In the counter-affidavit filed on behalf of the respondents, it is pointed out that the petitioner does not figure anywhere in any of the documents relating to the transaction of 32 luna motor cycles seized and that the petitioner has no locus standi to file the writ petition. The total consignment of 32 luna two wheeler motor cycles has been broken into 5 parts and has been booked in different names, while the name of the consignee for all the 32 vehicles is shown as Sri P. J. Jain. According to the contentions raised in the counter-affidavit, the petitioner has no locus address at Hyderabad nor has he got any place of business here and the transactions involved are being carried on from January, 1984. Apart from that the identity of Sri P. J. Jain, the alleged consignee's existence, is also in doubt. While it is the contention of the petitioner that the consignee is a resident of Hyderabad, Sri P. J. Jain, who figured in an enquiry conducted by the D.C.T.O. Sultan Bazar, Hyderabad, has stated that he is a resident of Aurangabad. The identity of the consignor and the consignee is therefore in doubt, as indicated above, on more than one count. The petitioner has neither met any of respondents' officials nor he has made any representations for the release of the seized goods. It is stated in the counter-affidavit that the petitioner is liable for tax on the sale of the said vehicles and is also liable for penalty and that he cannot question the orders of seizure, passed by the respondents, which has been passed to ensure the recovery of tax due on the said vehicles. Moreover, it is also submitted that there is no substance in the assertion made by the petitioner that a new person starting business need not take registration under the A.P.G.S.T. Act. The petitioner has indulged in shady deals and is manipulating in such a manner that his identity or the identity of the consignee is not revealed. In view of the benami transactions indulged by the petitioner it is prayed that the writ petition may be dismissed with costs and also to declare the order dated 15th October, 1984 as valid and binding on the petitioner.

36. The facts in this case clearly reveal the point that the petitioner has been trading in the goods while, at the same time, remaining in the background. He does not figure in any of the documents relating to the transactions of 32 luna two wheeler motor cycles seized by the authorities. No valid reason is given as to why the consignments were booked in the names of different consignors, except saying that this was done with a view to secure railway wagon accommodation for transport of the goods. Admittedly, the petitioner and his consignee in Hyderabad have no fixed place of business. In fact, the very existence of the consignee itself is in doubt. We have held in the earlier cases that the powers of seizure and confiscation exercised by the authorities under the provisions of section 28 and 29 of the A.P.G.S.T. Act are legal and constitutional and do not suffer from any legal infirmity. The impugned order dated 15th October, 1984 issue under section 28(6) of the A.P.G.S.T. Act, therefore, cannot be quashed as being illegal and ultra vires the authority of the officer issuing the same. The writ petition is accordingly dismissed, but in the circumstances of the case, there will be no order as to costs.

37. W.P. No. 14508 of 1984 :

In this writ petition, the case of the petitioner is that he went to a place called Palasa in Srikakulam District of Andhra Pradesh and purchased 11 tins of cashew-nuts from M/s. Rathna Cashew Industries. A seller cash bill dated 8th August, 1984 was obtained from M/s. Rathna Cashew industries for 11 tins of cashew-nuts. Similarly M/s. Sri Laxminarayana Cashew Products Company have issued two cash bills dated 6th August, 1984 for 24 tins of cashew-nuts. The tins so purchased were sent in a lorry owned by M/s. Associated Traders and Engineers Ltd., transport company having one of its branches at Hyderabad. The sellers in Srikakulam District are all supposed to be well known dealers with sales tax registration there. All the three seller have issued to the petitioner printed declarations clearly mentioning that those transactions are included in their turnover and the tax was already paid by them. The article cashew-nuts, is item No. 12 in the Second Schedule, and is liable to tax at first purchase only at 6 paise in a rupee. The main contention of the petitioner is that he is a second purchaser, within the State of Andhra Pradesh, and is not liable for payment of any tax under the A.P.G.S.T. Act.

38. On 29th August, 1984 the respondent visited the transport company office at Hyderabad, where the goods were stocked, and served a letter that the goods shall not be delivered to the petitioner without his permission. On 1st September, 1984 the respondent visited the transport company again and served a confiscation order and took away the goods. The confiscated goods were to be put to auction on 25th October, 1984. It is the case of the petitioner that the order and proceedings dated 1st September, 1984 had been passed by the respondent under section 28(6) of the A.P.G.S.T. Act, which has been struck down as being ultra vires of the powers of the respondent in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra) and also in (1984) 11 STL 44 (Ajay Trading Co. v. Commercial Tax Officer) (printed at page 56 infra), dated 24th February, 1984.

39. Sometime in the second week of August, 1984 after his return from Nagpur the petitioner made a representation to the respondent with necessary documents, i.e., (1) purchase cash bills of Palasa dealers, (2) lorry receipts and consignee copies, and (3) declarations by the sellers about the payment of sales tax by them and requested for release of the goods. He also issued telegrams to the Commissioner, Deputy Commissioner and Commercial Tax Officer to the same effect, which have been in vain. The petitioner, therefore, states that his fundamental rights under articles 14 and 19(1)(g) and his rights under article 300-A of the Constitution of India have been infringed. Therefore, it is prayed that the seizure order dated 1st September, 1984 passed under section 28(6) of the A.P.G.S.T. Act regarding the 59 tins of cashew-nuts may be set aside and the consignment may be released to the petitioner forthwith.

40. In the counter-affidavit, it is stated that, on a complaint received by the Joint Commissioner, Commercial Taxes of the Enforcement Wing. Hyderabad, the D.C.T.O., Osman Gunj visited the premises of the transport company, i.e., M/s. Associated Traders and Engineer Pvt. Ltd., on the same day. The transport company staff were not in a position to give the details about the purchaser and the consignee of the tins of cashew-nuts, and therefore, they were requested not to give delivery of the goods to the consignee until further orders from the D.C.T.O. A notice dated 29th August, 1984 was duly served on the transporter to the same effect. An enquiry was conducted in the vicinity of the transport office which revealed that there is no identifiable dealer of the description given for the consignee. Moreover, M/s. Seetharam Sunderlal is not one of the dealers in that line of trade in Hyderabad. In all the documents such as sale-bills, way bills, etc., the registration number of the consignee was noted as 3693/79-80. The registration number is of M/s. Shivnath Sunderlal at Begum Bazar, Hyderabad. Hence the conclusion reached by the tax authorities was that this is a case of impersonation of the name and style of the above business dealer, by using their registration number under the A.P.G.S.T. Act, with an intention to mislead the tax authorities. The transporter was not in a position to identify the purchaser, and in a situation like this there was no option left but to take possession of the goods, in the interests of the revenues of the State and accordingly the goods were seized on 1st September, 1984. On 29th September, 1984 another notice was issued to the transport company asking them to produce the concerned persons within 7 days to release the goods, if valid documents were produced by such persons. However, no one turned up and nothing was heard from the transport company and since cashew-nuts happen to be a perishable commodity it was felt necessary to sell the commodity in public auction on 25th October, 1984 by issuing an auction notice dated 9th October, 1984.

41. It was only on 29th August, 1984 a telegram and a notice were received from an Advocate alleging that the seizure of goods is illegal and informing the respondent that a writ petition is going to be filed in the High Court of A.P., and demand the auction sale proposed to be held on 25th October, 1984 may be stopped. A letter dated 22nd October, 1984 was addressed to the said Advocate to appear before the authorities concerned which was served on him on 25th October, 1984. Evidently, on one has appeared before the officers concerned to facilitate a proper investigation of the matter. Nevertheless, on 25th October, 1984 a letter was received by the respondent from the Advocate on behalf of the petitioner informing them that the auction proceedings were stayed by the High Court in this writ petition, i.e., W.P. No. 14540 of 1984. The further contention of the respondent in this writ petition is that the dealer in Palasa in Srikakulam District generally claiming examination on the ground that they have made the purchase in the neighbouring Orissa State and thus they are not the first purchasers, who can be liable for tax under the A.P.G.S.T. Act. In most of the cases, it has been found that the dealers at Hyderabad, who purchase from such dealers, are liable to be taxed as first purchasers in the State of Andhra Pradesh. The petitioner has utilised the name of M/s. Seetharam Sunderlal, which is akin to the name of the petitioner M/s. Shivnath Sunderlal, and by wantonly and capriciously using the registration No. of Shivnath Sunderlal has obviously indulged in a dealing, incurring the liability to pay sales tax under the provisions of the A.P.G.S.T. Act. It is further contended in the counter-affidavit that the power to seize and confiscate the goods arises under section 28(6) of the A.P.G.S.T. Act. The department proposed to keep the goods under seizure for security for the tax and penalty to be realised from the so-called dealer in this case. It is also contended that the power of seizure is incidental and ancillary to the power of taxation, and if the goods were not seized, it would have been difficult for the department to trace the person by the time the payment of tax and penalty are raised. It is further stated that the statement that the petitioner went to Nagpur to see his uncle who was seriously ill and could not come back till the second week of October, 1984 is invented to explain the delay caused by him in approaching the authorities. The petitioner is not a registered dealer under the A.P.G.S.T. Act and has used the registration of other for purchase and transport of the goods. Therefore, the goods are liable for confiscation.

42. The petitioner in this case has presented the purchase cash bill of Palasa dealers, lorry receipts and consignee copies, as well as the declarations by the sellers about the payment of sales tax by them and requested that the goods seized under order issued under section 28(6) of the A.P.G.S.T. Act be released. He has also produced the certificates issued by the vendors in Srikakulam District in his favour stating that the turnover has been included in their gross and net turnovers. It is further clearly stated in the said certificates of the vendors that they have paid the necessary sales tax on the turnover of such goods. It is nowhere stated by the respondent that these certificates evidencing the payment of sales tax by the vendor in Srikakulam District, Andhra Pradesh, have been considered by them. It is not the case of the respondent that these are fake certificates issued to hoodwink the authorities or to cheat the State Government in the matter of recovery of sales tax due by the petitioner. In the absence of any such finding by the authorities, the consignment of goods cannot be seized or confiscated and put up for sale by public auction. If the taxes have already been paid on the said goods at the first selling point in Srikakulam District within Andhra Pradesh, they cannot be subjected to any further taxation by the authorities concerned. The alleged impersonation by the petitioner of the name and style of M/s. Shivnath Sunderlal and the use of a fictitious registration number by the petitioner are matters which cannot be taken into consideration for the purpose of this writ petition which is directed against an order of seizure passed under section 28(6) of the A.P.G.S.T. Act on the ground that the sales tax at the point of first purchase has not been paid by the petitioner. The petitioner has produced the certificates issued by the vendors in Srikakulam District stating that the goods have already suffered the tax which has been paid by them. There is nothing on record in this case to show that these certificates had been found to be incorrect or not genuine, as such. In this view of the matter, it is held that the seizure effected by the Deputy Commercial Tax Officer, Osman Gunj, Hyderabad, under section 28(6) of the A.P.G.S.T. Act is not warranted under the provisions of law and is accordingly set aside. The writ petition is allowed, but in the circumstances of the case, there will be no order as to costs.

43. In the result W.P. Nos. 5560, 6460, 6623, 14063, 14069, 14086 and 14492 of 1984 are dismissed and W.P. No. 14508 of 1984 is allowed, but in the circumstances of the case, there will be no order as to costs in all these writ petitions. Advocates fee Rs. 200 in each.

Jeevan Reddy, J.

44. I agree with the judgment prepared by my learned brother, Sardar Ali Khan, J. But, having regard to the importance of the questions arising herein, I thought it fit to add a few words on certain important aspects. Facts in each of the writ petitions are stated by my learned brother, and it is not necessary to repeat them. I will mention them only to the extent they are strictly necessary for the discussion.

45. W.P. No. 5560 of 1984 is directed against the show cause notice dated 9th March, 1984 issued by the Commercial Tax Officer, Lad Bazar Circle, Hyderabad. Under this notice, the petitioner is called upon to show cause why it should not be treated as an agent of a non-resident principal tyre company. For the several reasons stated in the notice, it is alleged that the sale of tyres transported by the petitioner is really being effected at Hyderabad; the allegation is that the petitioner has exceeded its role as a mere transporter and is acting in collusion with the tyre companies. The petitioner is also called upon to show cause as to why action should not be taken against it for not registering itself as a dealer under section 12 of the Andhra Pradesh General Sales Tax Act, 1957 and should not be made liable to the appropriate sales tax.

46. The department's case in brief, is this : Silvaasa is a place on the Gujarat coast, which was formerly a Portuguese territory, where there was no local sales tax till 1st January, 1984 with the result that the Central sales tax was also not exigible. Several tyre companies, with a view to take advantage of the said fact, have opened branch offices in Silvaasa; they transfer their goods, i.e., tyres, from the place of manufacture all the way to their branch offices at Silvaasa. They are treated as branch to branch transfers. At Silvaasa, it is shown that the tyres are sold to various consignees, mostly transport companies, in Andhra Pradesh. Tyres are transported in bulk quantities in the lorries of the petitioner, to Hyderabad. They are unloaded in the godown of the petitioner, but for months together the alleged consignees do not take delivery of goods; the petitioner does not collect demurrage charges, which it ought to in the normal course, for such delay. Enquiries reveal that the so-called consignees are not real consumers. They do not require tyres in such bulk quantities for their own purposes; indeed tyres are really sold to tyre traders in Andhra Pradesh. Even where some goods were released to the alleged consignees, they did not take delivery of goods for a long time, till they were detained. Ascertainment of goods takes place only at the time of the delivery. The tyres of each consignee are not ascertained at Silvaasa, where the sale is said to have taken place, but only at Hyderabad. Investigations are in progress to unravel the racket that is going on in tyre trade and other high-priced goods. When the sales tax authorities inspected the petitioner's premises on 29th December, 1983 a huge stock of tyres was found. Notices were given to the consignees to come forward and claim the goods, and the petitioner was instructed not to release the goods, except under the orders of the Commercial Tax Officer. Only two consignees came forward with relevant documents. Goods were released to them, but they did not take delivery of goods till 10th February, 1984 when the authorities again visited and inspected the premises of the petitioner. What is really happening, it appears, is that the tyres are sold to tyre traders in Andhra Pradesh, without disclosing the sales, and thus evading he sales tax, which is due to the State on the first sale of tyres in Andhra Pradesh. The tyre manufacturers, their branch offices, the transporters and the so-called consignees are all colluding in this racket, which is resulting in loss of substantial revenue to the State. (In the counter-affidavit, an instance is pointed out where the consignee, a transport company, is having two lorries, but is said to have purchased as many as sixty tyres). The goods are not ascertained at Silvaasa; they are ascertained only at Hyderabad, at the time of delivery. For the above and several other reasons stated in detail in the show cause notice, and the elaborate particulars mentioned in the extensive annexures to the show cause notice, it is alleged that the petitioner is liable to be treated as an agent of the non-resident principal and is liable to pay tax on the sales effected by it in Andhra Pradesh, and is also liable to appropriate penalty and action for not registering itself as a dealer.

47. The petitioner, without submitting an explanation, rushed to this Court challenging the show cause notice.

48. The writ asked for by the petitioner is in the nature of a prohibition, which will issue only in the case of a total want of jurisdiction. That cannot be said to be the case here. The allegations made in the show in the show cause notice are essentially questions of fact. It is open to the petitioner to file its explanation and satisfy the authorities that the several allegations made in the show cause notice are not true and correct and that, therefore, it is not liable for any of the actions proposed against it. At any rate, the show cause notice raises several mixed questions of fact and law, which require an enquiry into facts; hence writ petition is not the proper remedy. Even in public interest, it is desirable that, if any racket is going on resulting in huge loss of public revenue, it is fully investigated. There is no question of harassment in such a case. It cannot also be said that the facts alleged in the show cause notice, if proved, do not warrant the action proposed. Fullest particulars are given; investigation is still in progress; more and more facts are coming to light; naturally all of them would be supplied to the petitioner, if they are sought to be relied upon against it. There would be an enquiry, where the petitioner would be given due opportunity to meet and rebut all the allegations levelled against it. There is, therefore, no ground for interference at this stage.

49. The writ petition is liable to fail accordingly.

50. Writ Petitions Nos. 6460, 14063 and 14069 of 1984 are filed by Dunlop India Ltd., and W.P. No. 6623 of 1984 is filled by J. K. Industries Ltd., another manufacturer of tyres. Their case, in short, is that they had sold and consigned tyres to several consignees at Silvaasa, which was transported to Hyderabad, in the lorries of the transporter. While the tyres were lying in the godown of the transporter, the sales tax authorities served orders detaining them and calling upon the consignees to come to the authorities, produce relevant documents, and obtain release orders from them. Because of the difficulties created by the sales tax authorities, the consignees refused to take delivery of the goods. The demurrage charges are mounting. The petitioners are, therefore, obliged to take delivery of the same. The relief sought for in W.P. No. 6460 of 1984 is, for the issuance of a writ of mandamus or any other appropriate writ, order or direction, declaring the action of the respondents 1 and 2 in detaining the tyres, tubes, etc., at the godown of the Transport Corporation of India Ltd., as unconstitutional and illegal. The further directions given by respondents 1 and 2 to the Transport Corporation of India Ltd., not to release the goods without their permission, is also requested to be declared as illegal. Practically, the same is the prayer in the other three writ petitions.

51. The main contention urged in these writ petitions is that, under the Andhra Pradesh General Sales Tax Act and the Rules made thereunder, the respondents have no power to detain the goods on the suspicion that they have been sold, or that they are likely to be sold without paying the tax, and therefore, the detention is bad. The impugned orders of detention, it is contended, cannot be supported under section 29(6) because, under that provision, the authorities have the power to detain goods valued at not more than the tax due. In any event, that power can be exercised only at the check posts, and not anywhere else. It is further contended :

'7. 3 : The action of the respondents 1 and 2 in effect amounts to seizure of goods under section 28 of the Act which has been declared unconstitutional by the Division Bench of this Honourable Court in W.P. No. 3515 of 1970 dated 10th November, 1971 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra). The authorities have conveniently not referred to any provision of the Act .....'

52. It is, therefore, contended that the action of the respondents 1 and 2 is illegal, high-handed and beyond their authority.

53. In the counter-affidavit, which has been filed on behalf of respondents 1 and 2, it is stated that their counter-affidavit in W.P. No. 5560 of 1984 may be read as part and parcel of this counter-affidavit. It is further submitted : even though all the tyre companies are having their local branch offices and godowns at Hyderabad, the goods are not stocked in their godowns, but are being stocked in the godowns of transport companies and deliveries are being effected therefrom, thus trying to evade local tax liability. A large number of tyre manufacturers have opened their offices at Silvaasa and despatched large quantities of tyres, in the names of various consumers before 1st January, 1984; the enquiries revealed that a major portion of these transactions are not bona fide and genuine; the so, called consignees are not real purchasers; in many cases, on enquiry, they denied having placed any order or having purchased any tyres. Several instances are given of consignees in whose names the goods were despatched but who have denied having placed any order, or having ever purchased any tyres at Silvaasa. The tyre companies have not insisted upon any payment whatsoever, or even a token advance, while selling and despatching the goods in the names of those consignees. After the goods were detained, pending further enquiry and the consignees were issued notices to come and obtain the release of the goods, only two consignees came forward and the goods claimed by them were released; but, for about a month, they did not take delivery of the goods. All the goods have been lying in the godowns of the transporters for long periods. From the several facts stated in the counter-affidavit, it is stated, 'it is clear that the tyres were despatched without any definite purchase orders to the consignees, since there was no tax liability in Silvaasa up to 31st December, 1983. The tyre companies wanted to take advantage of that and despatched tyres and tubes in huge numbers and even without any formal purchase orders from the so-called consignees/consumers. The pattern of the sale appears to be as follows : The goods will be despatched from Silvaasa and they will be stocked in the transport company and local consumers will be contacted by the local branch offices of the tyre companies or agents of the tyre companies, including the transporters, and the sale will be completed in Andhra Pradesh. After investigation, the provisions of A.P.G.S.T. Act under section 30(3) and 30(8) may have to be invoked in case of instituting prosecution ....' It is then stated that the goods in question were first detained to enable the department to conduct further enquiry; during the course of investigation, it was found that the Transport Corporation of India Ltd., is acting as an agent of the non-resident principals, and is delivering the goods, after ascertainment, at Hyderabad; they are, therefore, bound to be treated and registered as a dealer. The goods lying in the godowns of the said transport company become unaccounted for goods, and are liable for seizure under section 28(6) of the A.P.G.S.T. Act. It is submitted that, the judgment in W.P. No. 3515 of 1970 dated 10th November, 1971 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra), declaring sub-section (6) of section 28 as ultra vires the powers of the State Legislature, is not correct for the several reasons mentioned in the counter-affidavit, which I shall refer to in the course of discussion. Finally, it is stated that the goods were detained in the first instance to enable the department to conduct further enquiry in the matter; that, during the course of investigation, it came to light that the transport Corporation of India Ltd. (petitioner in W.P. No. 5560 of 1984) has acted as an agent of the non-resident principal, and has sold the goods without reporting the turnover to the department and hence, the goods become unaccounted goods and are liable for seizure under section 28(6) of the Act, to prevent evasion of tax.

54. The question, therefore, squarely arose whether sub-section (6) of section 28 of the A.P.G.S.T. Act is ultra vires the powers of the State Legislature, and whether the decision of this Court W.P. No. 3515 of 1970 dated 10th November, 1971 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra), is correct and should be followed If the power of seizure is goods, then the power to detain pending the formation of satisfaction to seize must necessarily be concerned as preliminary to, or incidental to the power of seizure.

55. The expression 'dealer' is defined in clause (e) of section 2 of the Act. In so far as it is relevant, the definition reads as follows :

(e) 'dealer' means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, and includes -

(i) ...........................

(ii) ...........................

(iii) ..........................

(iv) a commission agent, a broker, a del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal or principals.

Explanation I : Every person who acts as an 'agent of a non-resident dealer', that is, an agent on behalf of a dealer residing outside the State, and buys, sells, supplies or distributes goods in the State or acts on behalf of such dealer as -

(i) a mercantile agent as defined in the Indian Sale of Goods Act, 1930 (Central Act III of 1930); or

(ii) an agent for handling goods or documents of title relating to goods; or

(iii) an agent for the collection or the payment of the sale price of goods or as a guarantor for such collection or payment, and every local branch of a firm or company situated outside the State,

shall be deemed to be a dealer for the purposes of this Act .....'.

56. Section 28 confers powers upon the assessing authority, in the interest of proper and effective administration of the Act and the collection of tax. Sub-section (1) provides that, any officer not below the rank of an Assistant Commercial Tax Officer authorised by the State Government in this behalf, may require any dealer to produce before him the accounts, registers and other documents, and to furnish any information relating to his business. Sub-section (2) says that all accounts, registers and other documents maintained by a dealer in the course of his business, as also the goods in his possession, and his offices, shops, godowns, vessels or vehicles shall be open to inspection by such officer at all reasonable times. Sub-section (3) says :

'(3) If any such officer has reason to suspect that any dealer is attempting to evade the payment of any tax or other amount due from him under this Act, he may, for reasons to be recorded in writing, seize such accounts, registers or other documents of the dealer as he may consider necessary, and shall give the dealer a receipt for the same. The accounts, registers and documents so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act ...'

57. Sub-section (4) says that, for the purposes of sub-section (2) or sub-section (3), any such officer shall have the power to enter and search, any office, shop, godown, vessel, vehicle or any other place of business or any building or place where such officer has reason to believe that the dealer keeps or is keeping any goods, accounts, registers or other documents of his business. Sub-section (5) empowers such officer to break open any box or receptacle in which any goods, accounts, registers or other documents of the dealer may be kept. Then occurs sub-section (6), which reads as follows :

'(6) Any such officer shall have power to seize and confiscate any goods which are found in any office, shop, godown, vehicle, vessel or any other place of business or any building or place of the dealer, but not accounted for by the dealer in his accounts, registers and other documents maintained in the course of his business :

Provided that, before taking action for the confiscation of goods under this sub-section, the officer shall give the person affected an opportunity of being heard and make an inquiry in the prescribed manner.

Explanation. - If shall be open to the State Government to authorise different classes of officers for the purpose of taking action under sub-sections (1), (2) and (3).'

58. It is thus clear that the power, under sub-section (6) is one of the several powers conferred upon the assessing authority to check evasion of tax, and to take all necessary steps for a proper assessment and collection of tax. It is for this purpose that, sub-section (6) empowers any officer, not below the rank of an Assistant Commercial Tax Officer, authorised by the State Government in this behalf, to seize and confiscate any goods, which are found in the office, shop, godown vessel, vehicle, or any other place or business, or any building of the dealer but not accounted for by the dealer in his accounts, registers and other documents. The proviso, however, says that, before confiscating such goods, the officer shall give the person affected an opportunity of being heard, and shall make an enquiry in the prescribed manner.

59. Rule 48 of the A.P. General Sales Tax Rules, 1957 prescribes the procedure contemplated by the proviso to sub-section (6). According to sub-rule (1) of this rule, if any officer authorised under section 28 of the Act finds any goods in any office, shop, etc., of any dealer to be not accounted for in his accounts or registers, he may, for reasons, to be recorded in writing, seize such goods; a copy of the order shall have to be served upon the dealer or the person in charge of such goods. Sub-rule (2) says that, if the dealer furnishes cash security for the goods seized, the officer may order their release subject to the condition that, if the goods are finally confiscated, they shall be produced within such time as may be required, failing which the cash security shall stand forfeited to the State Government. Sub-rule (3) says that, if the goods seized are of a perishable nature, they may be sold in public auction. Sub-rule (4) is important. It reads thus :-

'(4) Any such officer, after making such enquiry as he deems fit and after giving the owner of the goods, if he is ascertained, an opportunity of being heard, may confiscate the whole or any part of the goods seized, if he is satisfied that there is evasion or an attempt to evade tax thereon in any manner whatsoever. If the owner is not ascertained even after an enquiry, the officer shall order confiscation of the goods. A copy of the order of confiscation shall be served on the owner of the goods if he is ascertainable.'

60. Sub-rule (6) says that, if on enquiry under sub-rule (4), it is considered by the officer that the confiscation is not warranted, or if the order of confiscation passed by him is set aside in appeal or revision, he shall return such goods to the owner, and if they have been sold meanwhile, their cash value.

61. Reference may also be made to section 29 of the Act, which provides for establishment of check posts or barriers, and inspection of goods, which in transit. It empowers the State Government, or the Commissioner of Commercial Taxes, to set up check posts or barriers at such place or places as they may notify. The driver or any other person in charge of a goods vehicle is obliged to stop the vehicle at such check post and keep it stationary as long as may reasonably be necessary, and allow the officer in charge of the check post or barrier, to examine the contents in the vehicle and inspect all records, relating to the goods carried therein. This inspection is for the purpose of ascertaining whether there has been any sale or purchase of the goods carried in the vehicle; and if there has been a sale or purchase, whether the tax has been paid and the goods sold have been properly accounted for in the bills of sale or delivery notes, or such other documents as may be prescribed. If, on such examination and inspection, it appears that the tax has been paid and the sale or purchase of the goods has been properly accounted for in the documents, he shall allow the goods to proceed; if the tax is not paid, the officer is given the power to collect it and if the tax is not paid, to detain the goods of a value equal to the amount of tax payable and if necessary, to sell such goods ultimately, for realisation of tax.

62. In Papanna v. Deputy Commercial Tax Officer, Guntakal [1967] 19 STC 506, a Bench of this Court consisting of Chndrasekhara Sastry and Krishna Rao, JJ., upheld the constitutionality of sub-section (6) of section 28. The Bench held that the power to levy a tax includes all incidental powers to prevent evasion of tax, and that the power to seize and confiscate goods is only by way of punishment or penalty, which is intended to operate as the most effective deterrent against tax-evaders, and therefore, it is ancillary or incidental to the power to levy tax on the sale of goods, and thus falls within the ambit and scope of the legislative power conferred on the State Legislature by entry 54 of List II of the Seventh Schedule of the Constitution. It was held that the procedure prescribed by the Rules for seizure and confiscation of goods does not impose any unreasonable restrictions, nor does it confer any unreasonable or unguided power upon officers of the department and therefore, does not infringe article 14 and/or article 19(1) (f) and (g) of the Constitution. It was observed that the Rules provide an elaborate procedure, including an opportunity of hearing before the confiscation order is passed and that, there is also a provision for appeal and revision against such order.

63. In Kalangi Krishna Murty & Company v. Commercial Tax Officer, Guntur [1968] 22 STC 540, another Bench of this Court, consisting of P. Jaganmohan Reddy, C.J., and Alladi Kuppuswami, J., again repelled the attack on the validity of section 28(6) based on articles 14 and 19(1) (f) and (g). It was held that section 28(6) providing for confiscation of goods is a regulatory provision designed to prevent whether actual or attempted evasion of tax, and is a class by itself and therefore, not violative of article 14. It was also held that the power of seizure and confiscation is incidental and ancillary to the power to levy tax and is in the nature of a punishment and that, it bears no relation to the actual evasion of tax. It was observed that the power of confiscation is subject to appeal and revision and is not unguided; that, the confiscation is by way of imposition of penalty and that, this power is different from the power to levy penalty, conferred by section 14 of the A.P.G.S.T. Act.

64. In Commissioner of Commercial Taxes v. R. S. Jhaver [1967] 20 STC 453 (SC) arising under the Madras General Sales Tax Act, the validity of sub-sections (2) and (3) of section 41 of the Madras General Sales Tax Act, 1959 was upheld as constituting reasonable restrictions on the fundamental right, guaranteed by article 19(1) (f) and (g) of the Constitution. It was held that, the provision for search and seizure is incidental and ancillary to the power of taxation. No opinion was, however, expressed on the validity of the power of confiscation in in this case. Clause (a) of the second proviso to section 41(4), which empowered the authorities to recover sales tax on goods found in the dealer's office even before they were sold i.e., even before the taxable event occurred, was held to be repugnant to the entire scheme of the Act, and thus bad.

65. In Nathulal Fatehpuria v. State , section 22(6) of the Rajasthan Sales Tax Act, which is practically identical to section 28(6) of the Andhra Pradesh Act [indeed, the proceeding sub-sections also are practically in the same terms as sub-sections (1) to (5) of section 28 of the Andhra Pradesh Act], was upheld by a Bench of the Rajasthan High Court. It was held that the power conferred thereby is not arbitrary and that, it is incidental and ancillary to the power of taxation, and also that, the procedure prescribed thereby is neither unreasonable nor arbitrary.

66. In W.P. No. 3515 of 1970 dated 10th November, 1971 (Kotha Rama Doss v. Commercial Tax Officer) (printed at page 53 infra), again an attack was mounted on the validity of sub-section (6) of section 28 before another Bench of this Court, consisting of Vaidya and P. Sriramulu, JJ., based on the decision of the Supreme Court in Check Post Officer v. K. P. Abdulla & Brothers [1971] 27 STC 1 (SC) on this occasion, the attack succeeded. The Bench did not refer to the earlier two decision of this Court in Papanna v. Deputy Commercial Tax Officer, Guntakal [1967] 19 STC 506 and Kalangi Krishna Murty & Company v. Commercial Tax Officer, Guntur [1968] 22 STC 540. Merely purporting to follow the decision of the Supreme Court in Abdulla's case [1971] 27 STC 1 (SC), the learned Judges struck down sub-section (6) of section 28 as being outside the legislative field conferred by entry 54 of List II of the Seventh Schedule to the Constitution. Since it is contended by the learned Government Pleader that the Bench has not correctly understood the decision of the Supreme Court in Abdulla's case [1971] 27 STC 1 (SC), and also because it is submitted that other Courts have understood the said decision of the Supreme Court in a different manner, it has become necessary to examine the precise ratio of the decision in Abdulla's case [1971] 27 STC 1 (SC). In this connection, it is also brought to our notice that the decision in W.P. No. 3515 of 1970 was followed by this Court in W.P. No. 3849 of 1984 (Ajay Trading Co. v. Commercial Tax Officer) (printed at page 56 infra), against which the department approached the Supreme Court in S.L.P. No. 3090 of 1984 and that, the Supreme Court has granted special leave to appeal and has also stayed the release of the goods. Be that as it may, I shall now examine the precise ratio of the decision in Abdulla's case [1971] 27 STC 1 (SC).

67. The case arose under the Madras General Sales Tax Act. Sub-sections (1), (2) and (3) of section 42 read, at the relevant time, as follows :

'42. (1) If the Government consider that with a view to prevent or check evasion of tax under this Act in any place or places in the State, it is necessary so to do, they may, by notification, direct the setting up of a check post or the erection of a barrier or both, at such place or places as may be notified.

(2) At every check post or barrier mentioned in sub-section (1), or at any other place when so required by any officer empowered by the Government in this behalf, the driver or any other person in charge of any vehicle or boat shall stop the vehicle or boat, as the case may be, and keep it stationary as long as may reasonably be necessary, and allow the officer in charge of the check post or barrier, or the officer empowered as aforesaid, to examine the contents in the vehicle or boat and inspect all records relating to the goods carried, which are in the possession of such driver, or other person in charge, who shall, if so required, give his name and address and the name and address of the owner of the vehicle or boat as well as those of the consignor and the consignee of the goods.

(3) The Officer in charge of the check post or barrier, or the officer empowered as aforesaid shall have power to seize and confiscate any goods which are under transport by any vehicle or boat and are not covered by.

(i) a bill of sale or delivery note,

(ii) a goods vehicle record, a trip sheet or a log book, as the case may be, and

(iii) such other documents as may be prescribed under sections 43 and 44 :

Provided that before ordering confiscation, the officer shall given the person affected an opportunity of being heard and make an inquiry in the prescribed manner :

Provided further that the officer ordering the confiscation shall give the person affected option to pay in lieu of confiscation -

(a) in cases where the goods are taxable under this Act, in addition to the tax recoverable, a sum of money not exceeding one thousand rupees or doubt the amount of tax recoverable, whichever is greater; and

(b) in other cases, a sum of money not exceeding one thousand rupees.'

68. The Supreme Court first observed that a taxing entry must be construed as including all ancillary and incidental powers, which may fairly and reasonably be said to be comprehended in the substantive power of taxation, and observed that sub-sections (1) and (2) of section 42 intended to set up a machinery for preventing the evasion of sales tax are within that power. However, in so far as sub-section (3) is concerned, this is what the Court observed :

'But, in out judgment, the power to confiscate goods carried in a vehicle cannot be said to be fairly and reasonably comprehended in the power to legislate in respect of taxes on sale or purchase of goods. By sub-section (3) the officer in charge of the check post or barrier has the power to seize and confiscate any goods which are being carried in any vehicle if they are not covered by the documents specified in the three sub-clauses. Sub-section (3) assumes that all goods carried in a vehicle near a check post are goods which have been sold within the State of Madras and in respect of which liability to pay sales tax has arise, and authorises the Check Post Officer, unless the specified documents are produced at the check post or the barrier, to seize and confiscate the goods and to give an option to the person affected to pay penalty in lieu of confiscation. A provision so enacted on the assumption that goods carried in a vehicle from one State to another must be presumed to be transported after sale within the State is unwarranted. In any event, power conferred by sub-section (3) to seize and confiscate and to levy penalty in respect of all goods which are carried in a vehicle whether the goods are sold or not is not incidental or ancillary to the power to levy sales tax. A person carrying his own goods even as personal luggage from one State to another or for consumption, because he is unable to produce the documents specified in clauses (i), (ii) and (iii) of sub-section (3) of section 42, stands in danger of having his goods forfeited. Power under sub-section (3) of section 42 cannot be said to be ancillary or incidental to the power to legislate for levy of levy of sales tax ....'

69. It is necessary to notice certain features both of sub-section (3) of section 42, as also the reasoning of the Supreme Court. Firstly, section 42 provides for steps to check evasion of tax at the check post or the barrier, as the case may be. Secondly, the power under section 42 is not confined to dealers; it extends to any and every person carrying any goods outside the limits of the State Madras. That is why, the Supreme Court observed that sub-section (3) is based upon an assumption that all goods carried in a vehicle near a check post or barrier are goods, which have been sold within the State of Madras and in respect of which the liability to pay sales tax has arisen, and on the basis of that assumption, it authorised the Check Post Officers to seize and confiscate the goods. It was accordingly held that a provision enacted on such an assumption is unwarranted. They observed that a person carrying his own goods even as personal luggage from one State to another, or for consumption, would stand in danger of having his goods forfeited, if he is unable to produce the documents specified in clause (i), (ii) and (iii) of sub-section (3). It was, therefore, held that the power of confiscation conferred by sub-section (3) cannot be said to be ancillary or incidental to the power to legislate for levy of sales tax. The sentence 'in any event power conferred by sub-section (3) to seize and confiscate and to levy penalty in respect of all goods which are carried in a vehicle, whether the goods are sold or not is not incidental or ancillary to the power to levy sales tax' must be understood in the above context and should not be torn from it's context.

70. Now, I shall examine the provisions of section 28(6) of the Andhra Pradesh Act, and whether the ratio of the Supreme Court decision applies here. The power under sub-section (6) of section 28 is not a power to be exercised at the check post or the barrier. The said power is to be exercised only with respect to, or in the case of dealers alone, but not other persons. Every dealer is expected to maintain accounts, registers and other documents relating to the goods in his possession; sub-section (6) says that, if any goods are found in possession of the dealer which are not so accounted for, they may be seized and confiscated if it is found, after holding an enquiry, as prescribed by rule 48, that 'there is an evasion or an attempt to evade the tax thereon', As rightly pointed out in the two earlier Bench decisions of this Court in Papanna v. Deputy Commercial Tax Officer, Guntakal [1967] 19 STC 506 and Kalangi Krishna Murty & Company v. Commercial Tax Officer, Guntur [1968] 22 STC 540, this provision is meant to operate as a deterrent, and as a penalty upon tax-evaders, and is conceived in the interest of preventing the evasion of tax. The idea is to make the evasion of tax higher costly and a losing proposition. It is thus a power incidental and ancillary to the substantive power of taxation, conferred by entry 54. There is no occasion for this power to be exercised against non-dealers, or against persons who store or carry their own goods, for their own consumption. Indeed, rule 45(4) provides that, in the case of a person carrying his own goods, or goods for his consumption, and several other products such as agricultural, horticultural, dairy, poultry and other farms, no way-bill is required, as required in the case of transport of other goods. I am, therefore, unable to see how the principle of the decision in Abdulla's case [1971] 27 STC 1 (SC) warrants the striking down of sub-section (6) of section 28. The entire section 28 deals only with dealers, and not with other persons. It is not based upon any assumption, as was underlying sub-section (3) of section 42 of the Madras Act. An elaborate enquiry is provided for, with a view to find out whether there has been an evasion of tax, or whether there is an attempt to evade tax, and only upon proof of such fact the goods are liable to be confiscated. There is also provision for appeal and revision. I am, therefore, of the respectful opinion that the Bench in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra), was not right in holding that the principle of the decision in Abdulla's case [1971] 27 STC 1 (SC) warrants striking down of sub-section (6) of section 28. The learned Judges appear to have lifted one sentence out of the Supreme Court judgment and attached undue importance to it, the sentence being 'in any event power conferred by sub-section (3) to seize and confiscate and to levy penalty in respect of all goods which are carried in a vehicle whether the goods are sold or not is not incidental or ancillary to the power to levy sales tax'. I have already explained that the said sentence occurs in the course of a discussion pertaining to the assumption that all goods being carried across the border of the State of Madras have been sold within that State, and have thus attracted the liability to tax, which assumption was held by the Supreme Court to be unwarranted. It is then that they said that a provision based upon such an assumption is outside the purview of the legislative power, conferred by entry 54. In fact, the purport, object and the field covered by section 42 of the Madras Act is entirely different and distinct from the one covered by section 28 of the Andhra Pradesh Act. It is section 29 of the Andhra Pradesh Act which corresponds to section 42 of the Madras Act; and since the said decision of the Supreme Court, the section has been totally recast, removing the vice pointed out in Abdulla's case [1971] 27 STC 1 (SC).

71. Now, I shall proceed to show how Abdulla's case [1971] 27 STC 1 (SC) has been understood by other High Courts. A Full Bench of five Judges of the Punjab and Haryana High Court, in Mool Chand Chuni Lal v. Shri Manmohan Singh [1977] 40 STC 238 (FB) read the decision in Abdulla's case [1971] 27 STC 1 (SC) as being based upon the aforesaid assumption that all goods transported across the border of the State of Madras were transported after sale and after attracting the liability to tax; and where a provision for the levy of penalty, i.e., amended section 14-B(7) of the Punjab General Sales Tax Act, was not based upon any such assumption, the principle of the decision in Abdulla's case [1971] 27 STC 1 (SC) was held to be not applicable. Section 14-B(7), after amendment, read as follows :

'(7) The officer detaining the goods shall record the statement, if any, given by the owner of the goods or his representative or the driver or other person in charge of the goods vehicle or vessel and shall require him to produce proper and genuine documents as referred to in sub-section (2) or sub-section (4), as the case may be, before him in his office on a specified date on which date the officer shall submit the proceedings along with the connected records to such officer as may be authorised in that behalf by the State Government for conducting necessary enquiry in the matter. The said officer shall, before conducting the enquiry, serve a notice on the owner of the goods and give him an opportunity of being heard and if, after the enquiry, such officer finds that there has been an attempt to evade the tax due under this Act, he shall, by order, impose on the owner of the goods a penalty not exceeding one thousand rupees or twenty per centum of the value of the goods, whichever is greater, and in case he finds otherwise, he shall order the release of the goods.'

72. The Full Bench, speaking through Chinnappa Reddy J., proceeded to observe :

'Its present basis is the attempts to evade tax and it prescribes a condition precedent to the levy of penalty. The condition precedent is that the authorised officer should record a finding that there has been an attempt to evade the tax due under Act. It cannot possibly be disputed that the prevention of evasion of sales tax is a power incidental or ancillary to the levy of sales tax and falls within entry 54 of List II of Schedule VII of the Constitution. Section 14-B(7), which provides for detention of goods and levy of penalty if there has been an attempt to evade the tax due under the Act, cannot, therefore, be held to be without constitutional sanction .....'

73. Another argument, which was put forward before the Bench was that, section 14-B(7), of the Punjab Act, contemplates imposition of penalty for attempting to evade tax due under the Act, even before the liability to tax had arisen. It was contended, on the basis of the decision of the Supreme Court in Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver : [1967]66ITR664(SC) , that until the taxable event, viz., the sale, took place, there is no liability to pay tax. This argument was met by the Bench, in the following words :

'The present section 14-B(7) does not provide for recovery of the tax but provides for the imposition of penalty which is calculated not on the basis of the tax payable but on the basis of the value of the goods. The present provision is clearly outside the rule laid down in Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver : [1967]66ITR664(SC) . It cannot for a moment be pretended that there can be no attempt to evade the tax due under the Act before the liability to pay the tax has arisen. A scheme or device to evade the tax may start operating long before the actual liability to pay the tax arises. As soon as the scheme or device is set in motion there is an attempt to evade the tax due under the Act and it will not be necessary to wait till the liability to pay the tax actually arises. If an attempt to evade tax is discovered earlier, the liability to be subjected to penalty is straightway attracted. In our view, there is no repugnancy between the provision for levy of penalty under section 14-B(7) when an attempt to evade the tax is discovered and the general scheme of the Act which provides for the levy of tax at the point of first sale within the State .....'

74. Thus, this decision establishes two propositions, viz., that, my reading of the decision in Abdulla's case [1971] 27 STC 1 (SC) is correct, and secondly, that the levy of penalty for an attempt to evade the tax is equally included within the substantive legislative power of taxation. It may be remembered that, section 28(6) read with rule 48 of the Rules, clearly provides for an enquiry, where the affected party is given a reasonable and adequate opportunity to defend himself, recording of a finding, as also the provision for appeal and revision. No doubt, the penalty is provided in both the cases, viz., where the tax has been evaded, as also where the tax is attempted to be evaded.

75. A Bench of the Orissa High Court, in Kamal Goyal v. State of Orissa [1975] 35 STC 343, also held that the decision of the Supreme Court in Abdulla's case [1971] 27 STC 1 (SC) is premised on the assumption that all goods being carried across the border of Tamil Nadu were sold within Tamil Nadu and attracted liability to tax. It was held that section 16-A of the Orissa Sales Tax Act, and rule 94 of the Orissa Sales Tax Rules, which are not based upon any such assumption cannot be struck down following the principle of the decision in Abdulla's case [1971] 27 STC 1 (SC). Section 16-A of the Orissa Act deals with establishment of check posts and barriers, and inspection of goods in transit. Sub-section (3) thereof confers the power of seizure and confiscation of any goods, which are under transport by a goods vehicle and are not covered by proper way-bill, etc. It, however, provides that, before taking any action for confiscation of the goods, the officer shall give the person affected an opportunity of being heard, and make an enquiry in the manner prescribed. Rule 94 prescribes the detailed procedure to be followed by the office at the check post, while making the enquiry and confiscating the goods. It was held that, since the provisions of the Orissa Act are not based upon the assumption which underlay the decision in Abdulla's case [1971] 27 STC 1 (SC), the said provisions are good and valid.

76. From the above discussion, it is clear that the decision in W.P. No. 3515 of 1970 dated 10th November, 1971 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra), striking down sub-section (6) of section 28 as being beyond the legislative competence of the State Legislature, is not only not decide correctly, but has been decided without referring to, and taking note of the two earlier decisions of this Court, which expressly upheld the said provisions, as being within the legislative competence of the State Legislature. It is significant to note that, not only the power of confiscation, but also the power of seizure was struck down; indeed, the entire sub-section (6) was struck down. The Bench did not notice the earlier decision of the Supreme Court in Commissioner of Commercial Taxes v. R. S. Jhaver : [1967]66ITR664(SC) , which expressly upheld the power of search and seizure as incidental and ancillary to the power of taxation. With greatest respect to the learned Judges, who rendered the decision in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra). I must say that the learned Judges have not even made an attempt to find out whether the Madras provision struck down by the Supreme Court, and section 28(6) of the Andhra Pradesh Act provide for the same thing, or whether there are any points of distinction. Unfortunately, the State did not carry the matter in appeal to the Supreme Court; but, the fact remains that, against a subsequent decision following the said decision, the State has gone in appeal to the Supreme Court and we are told, the Supreme Court has granted special leave to appeal and has also stayed the release of goods. Be that as it may, I am of the opinion that a decision so rendered, without taking notice of the earlier Bench decisions on the same point, which were binding upon the later Bench, and even ignoring the decision of the Supreme Court, as explained above, cannot be treated as a binding decision. It must be held to be a decision rendered per curiam, vide Mamleshwar v. Kanahaiya Lal : [1975]3SCR834 where it is held 'where by obvious inadvertence or oversight a judgment fails to notice a plain statutory provision or obligatory authority running counter to the reasoning and result reached, it may not have the sway of binding precedents ........................................ a prior decision of this Court on identical facts and law binds the Court on the same points in a later case.' The Bench, which decided W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra), was bound by the earlier two Bench decisions. It failed even to notice them. Further, it did not also examine whether the provision dealt with by the Supreme Court in Abdulla's case [1971] 27 STC 1 (SC) and the provision which they were striking down, are analogously situated. Indeed, it has misunderstood the said decision. I have also shown hereinabove the decision in Abdulla's case [1971] 27 STC 1 (SC) which understanding is at variance with the understanding of the Bench in W.P. No. 3515 of 1970 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 infra), and is in accord without understanding of the said decision. In this view of the matter, the said decision based on a misunderstanding of the Supreme Court's decision, cannot be treated as a binding decision; it would be more appropriate to follow the two earlier Bench decisions of this Court in Papanna v. Deputy Commercial Tax Officer, Guntakal [1967] 19 STC 506 and Kalangi Krishna Murty & Company v. Commercial Tax Officer, Guntur [1968] 22 STC 540. Accordingly, it must be held that sub-section (6) of section 28 of the A.P. General Sales Tax Act is prefectly valid and within the competence of the State Legislature. In this view of the matter, it is also not necessary to refer the matter to a Full Bench.

77. I may also reiterate that, according to the sales tax authorities, a big racket is going on resulting in substantial loss of public revenue. It is but desirable, in public interest, that this racket is investigated and if necessary, the guilty persons are proceeded against according to law. The learned Government Pleader stated that copies of show cause notice which was issued to the Transport Corporation of India Ltd. are likely to be issued to the petitioners in other writ petitions also. He also questioned as to why the manufacturers are now coming forward to claim the goods when, according to them, the goods were already sold to third-parties in Silvaasa These are all questions of fact, or at any rate, mixed questions of fact and law, which require an enquiry to find out the truth. The discretionary jurisdiction of this Court under article 226 of the Constitution, in my opinion, should not be used to obstruct or interdict such an enquiry.

78. I agree with the final order proposed by my learned brother.


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