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Sohan Lal Vs. Nasib Chand and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Revision No. 1503 of 1976
Judge
Reported in[1978]41STC381(P& H)
AppellantSohan Lal
RespondentNasib Chand and ors.
Appellant Advocate Satya Parkash Jain, Adv.
Respondent Advocate M.S. Rakkar, Adv.
DispositionPetition allowed
Cases ReferredRam Chandra v. Laxman Das
Excerpt:
.....had been seized in the raid and not to any other document. the language of section 26 clearly shows that the privilege referred to therein applies only to such documents, statements, etc......of objections against the report of the local commissioner, the plaintiff sought to get certain documents produced from the sales tax authorities. when the official of the department appeared with the documents, a privilege in respect thereof was claimed against the production of the documents under section 26 of the punjab general sales tax act (hereinafter referred to as 'the act'). the trial court having allowed the said privilege, the plaintiff has come up to this court in revision of that order. 2. sub-section (1) of section 26 of the act (which alone is relevant) is reproduced below :26. (1) all particulars contained in any statement made, return furnished or accounts or documents produced in accordance with this act, or in any record of evidence given in the course of any.....
Judgment:

R.S. Narula, C.J.

1. The parties to the suit, from which this revision has arisen, are the erstwhile partners of a firm. In the proceedings before the Commissioner, for taking accounts in pursuance of a preliminary decree for rendition of accounts passed in favour of the plaintiff against the defendants, no books of account were produced by the defendants. The local Commissioner submitted his report. In the course of objections against the report of the local Commissioner, the plaintiff sought to get certain documents produced from the sales tax authorities. When the official of the department appeared with the documents, a privilege in respect thereof was claimed against the production of the documents under Section 26 of the Punjab General Sales Tax Act (hereinafter referred to as 'the Act'). The trial court having allowed the said privilege, the plaintiff has come up to this court in revision of that order.

2. Sub-section (1) of Section 26 of the Act (which alone is relevant) is reproduced below :

26. (1) All particulars contained in any statement made, return furnished or accounts or documents produced in accordance with this Act, or in any record of evidence given in the course of any proceedings under this Act other than proceedings before a criminal court, shall, save as provided in Sub-section (3), be treated as confidential and notwithstanding anything contained in the Indian Evidence Act, 1872, no court shall, save as aforesaid, be entitled to require any officer of the State Government to produce before it any such statement, return, account, document or record or any part thereof or to give evidence before it in respect thereof.

3. The learned trial court has observed in its order under revision that the statements in dispute, which were sought to be produced by the departmental representative, were made under the Act and are, therefore, privileged from proof and production. Reliance has been placed by the learned Subordinate Judge on the judgment of this court in Firm Tara Chand Hari Ram v. Suraj Bhan 71 P.L.R. 329, wherein it has been observed that the only exception to the rule contained in Section 26 is when such a statement is sought to be used for the purpose of prosecution under the Indian Penal Code.

4. Mr. Satya Parkash Jain, the learned counsel for the plaintiff-petitioner, has firstly made it clear that he does not want the production of any document, statement of record produced before or recorded by the sales tax authorities, except the following two, of which he has shown to me certified copies (which copies have also been shown to Mr. M.S. Rakkar, the learned counsel for the defendant-respondents):

1. Original statement of Gurdial, son of Baghu, an employee of the firm, dated 15th September, 1971, wherein all that is recorded is that at 5 P. M. on that day (i. e., 15th September, 1971) Mr. P.S. Sandhu and Mr. R.S. Parmar went to Gurdial's brick-kiln and the books mentioned in that document were produced before them by Gurdial, which were taken into possession by the aforesaid officials, who had given a receipt for the same to him. The only other thing stated in the document is that Gurdial undertook to produce the owners of the brick-kiln at the Rest House on the next day.

2. Statement of Baghu Ram dated nil (certified copy does not show the date). In that statement, Baghu Ram has stated that the position as regards the books, which had been taken from their brick-kiln was as detailed by him. After that he has referred to different sets of documents (9 copy books, 6 diaries, 2 day-books, 2 small note-books and 4 registers). After stating as to what each set of documents contained, Baghu Ram has stated at the end of his statement in respect of each set that he has received back the books of account, etc., after their being signed at certain specified places.

5. On going through this document, Mr. Rakkar has stated that though nothing serious turns on the statement of Baghu Ram in respect of other items but his statement in respect of the nine copy books, wherein he is supposed to have stated that entries in respect of bills were not available only in respect of two transactions specified therein relating to sale of bricks, is fully covered by Section 26 of the Act.

6. Mr. Jain has stated at the Bar that he does not want the production of any document, except the two referred to above, of which certified copies have been shown in the court.

7. The argument of the learned counsel for the plain tiff-petitioner is that the documents in question do not form part of any return furnished or accounts or documents produced voluntarily by any assessee and being record of proceedings relating to taking of forcible possession of the books of account under Section 14(1) of the Act, they are not covered by the privilege referred to in Section 26. For that proposition, he has relied upon the judgment of S. S. Sandhawalia, J., dated 26th October, 1976, in Civil Revision No. 1388 of 1974, Dalip Singh v. Dilbagh Rai [1977] 39 S.T.C. 263, wherein the learned Judge has, following the judgment of the Madras High Court in Ramaswami Chettiar v. K.J. Mahadevan [1969] 23 S.T.C. 255, held that the privilege in question cannot be extended to the documents seized in a raid and it can apply only to the documents produced voluntarily. Production of documents, which had been seized and not produced voluntarily, was held to be not privileged by the Madras High Court. After laying down the law to the above effect, the learned Judge has observed as below :

Learned counsel for the respondents, however, have pointed out that the trial court has not clearly found whether the privilege was claimed expressly in regard to the record which had been only seized by the department. This is indeed so and therefore a clear determination whether the relevant record is the seized one and not the one voluntarily produced before the authorities, is necessary.

(Emphasis supplied)

8. The above-quoted portion of the judgment of Sandhawalia, J., clearly shows that the learned Judge was confining the non-applicability of the privilege only to the record, which had been seized in the raid and not to any other document. The Madras case [1969] 23 S.T.C. 255 also related to the books of account seized by the department and the report of the investigation. It did not relate to any statement made voluntarily by any partner, representative, or employee of the assessee in the course of post-raid proceedings. Mr. Jain had then referred to the judgment of P.C. Pandit, J. (as he then was), in Ram Murti v. Hans Raj 1968 Cur. L.J. 945. The learned Judge held in that case that the documents, which were relevant for the purposes of assessment, would be covered by the provisions of Section 26, but the said section does not lay down that everything that is filed before the sales tax department, irrespective of its nature, would come within its purview. The dispute in Ram Murti's case2 related to the application for cancellation of licence and it was held that the said document was not covered by Section 26. It is significant that the learned Judge also observed in the course of the judgment that the privilege under Section 26 can be claimed by the officer of the State Government, who is asked to produce the relevant document and not by the counsel for the opposite party. The point that fell for determination before Pandit, J., related to the nature of the documents and not to the manner in which it had got into the custody of the sales tax authorities. I am not only bound by the judgment of Sandhawalia, J., but am also in full agreement with the law laid down by the learned Judge. The language of Section 26 clearly shows that the privilege referred to therein applies only to such documents, statements, etc., which are 'produced' in accordance with the Act and to such record of evidence, etc., which is 'given in the course of any proceedings under this Act' other than the proceedings before a criminal court. Latter part of Section 26 bars the production of only those documents which are treated as 'confidential' under the first part. A mere glance at the statement of Gurdial dated 15th September, 1971, shows that the said statement cannot possibly be said to have been made by him voluntarily. In effect it is a mere acknowledgement of the receipt for the books of account, etc., which were seized in the raid on 15th September, 1971. If the documents seized in the raid were still in the possession of the sales tax authorities and their production was sought in a civil proceeding, the department could not have claimed privilege in respect thereof, because those documents had not been produced before the authorities, but had been seized by them. The statement of Gurdial dated 15th September, 1971, is a part of the seizure proceedings as the said statement merely amounts to an acknowledgement of the receipt, which the department was bound to give to the firm at the time of the seizure under Sub-section (3) of Section 14 of the Act. I, therefore, hold that the said document is neither confidential nor contains a statement covered by Section 26 of the Act and the decision of the trial court about the production of the same being privileged is not correct.

9. Before dealing with the second document, I may take notice of the other arguments addressed by the learned counsel for the parties. In addition to submitting that the documents do not fall within the purview of Section 26 of the Act, for the reasons already noticed above, Mr. Jain took up the position that any document, of which certified copies have already been furnished by the department, cannot be held confidential within the meaning of Section 26 of the Act and, therefore, production thereof cannot be privileged, as the privilege under Section 26 relates only to those documents, which are treated as confidential under that provision. The learned counsel further submitted that by furnishing certified copies of even those documents, which could otherwise have been treated as confidential, the privilege against their production is expressly waived by the department by its conduct. For this proposition, he has relied upon the judgment of the learned single Judge of the Rajasthan High Court in Ram Chandra v. Laxman Das [1961] 12 S.T.C. 367. It was held in that case that every partner has a right to inspect the record, obtain certified copies of the documents, waive the privilege and produce them before courts. On the other hand, Mr. Rakkar, the learned counsel for the defendant-respondents has referred me to the judgment of Mahajan, J. (as he taken was), in Firm Tarachand Hari Ram v. Sura] Bhan 71 P.L.R. 329, wherein a certified copy of the statement made in the course of the assessment proceedings had been obtained by the party and produced in the court. A prayer for the production of the original statement was allowed by the trial court. That order was set aside by the learned Judge on account of the clear language of Section 26(1) of the Act. Though the fact of the certified copy having been given by the department was noticed in the order, but the effect, if any, of the grant of the certified copy, on the privilege claimed under Section 26, has not been discussed. The question that calls for decision on this point in this situation is as to the person or persons from whom the documents referred in Section 26 are to be treated as confidential. After carefully looking into the matter and hearing the learned counsel for the parties, I am of the opinion that there is no meaning in treating the documents produced by a party or the statements made by a party as confidential against that party itself. The whole object of the section appears to be that statements made or documents produced in confidence by an assessee or other concerned person during the proceedings under the Act should remain confidential from others ; and their contents should not be divulged to third parties. The first part of Section 26, therefore, impliedly prohibits the department from giving even certified copies of the documents produced by the assessee to a third person, as doing so would amount to not treating the documents as confidential. The documents were seized from the firm and the statements sought to be produced were made on behalf of the firm. The certified copy also appears to have been given to the erstwhile partners of the firm. The production of the documents of the firm at the instance of one of the partners in a litigation between two or more partners of the firm itself does not appear to be covered by Section 26 of the Act, as the contents thereof are known to the parties and cannot be said to be confidential from them. Anything, which is not to be treated as confidential from a particular person, cannot be covered by the privilege in respect of its production at the request of that person in a proceeding, to which no outsider is a party. The mere grant of a certified copy cannot by itself be conclusive, if by error the certified copy is issued to a person from whom the document is treated as confidential under the provisions of the first part of Section 26 of the Act. But, on the facts of this case, I am inclined to agree with Mr. Jain, that for the purposes of the Act, the word 'assessee' must include every partner of the assessee-firm and the documents produced before any sales tax authority by any partner or employee of the firm must be treated to have been produced by the firm and every partner has a right to inspect that document or obtain certified copy thereof. As held by the Rajasthan High Court in Ram Chandra v. Laxman Das [1961] 21 S.T.C. 367, a party who inspects the documents or obtains certified copy thereof, waives the privilege in respect thereof and can have the documents produced before the court.

10. In the view I have taken of the interpretation and application of Section 26 of the Act, it is unnecessary to split up the second document so as to exclude from its purview that part of the statement of Baghu Ram, wherein he has referred to two transactions, of which the bills have not been entered. In any case, the second document also relates to the seizure proceedings and is in effect nothing but a detailed receipt for the return of the seized books, etc. The department does not appear to have filed any affidavit claiming the privilege.

11. For the reasons assigned above, I allow this petition, set aside and reverse the order of the trial court and decline the privilege claimed by the department or the counsel for the other side in respect of the two documents specifically referred to above.

12. Parties are left to bear their own costs and have been directed to appear before the trial court on 7th November, 1977.


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