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Khanmal Vs. S. Ganapathy Chettiar - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberC.S. No. 167 of 1977 (Application Nos. 3944 of 1980 and 2737 of 1981)
Judge
Reported in[1983]52STC177(Mad)
ActsTamil Nadu General Sales Tax Act, 1959 - Sections 54, 57 and 57(1)
AppellantKhanmal
RespondentS. Ganapathy Chettiar
Appellant AdvocateK. Rangavajjula, Adv.
Respondent AdvocateN.S. Raghavan, Adv.
Cases ReferredVelayutha Nadar v. South India Tobacco Co.
Excerpt:
.....of formally providing the documents produced. - - in other words, sub-section (2) of section 57 is in the nature of an enabling provision and the authorities could produce the documents before the relevant authorities specified in sub-section (2). 8. a combined reading of sub-sections (1) and (2) clearly show that the documents produced before the commercial tax authorities are invested with a confidential nature, but they could be produced before others under certain circumstances. it is well-settled that the powers of a civil court can be fettered only by an express provision made by the legislature or by necessary intendment. the words 'no court shall' clearly imposed a fetter on the courts from requiring any public servant to produce any document......for the disclosure of the documents to a civil court only in certain contingencies and that a civil suit between two private parties is not one of the contingencies contemplated by sub-section (2). we have already extracted clause (iv) of sub-section (2). we do not consider that the construction sought to be placed thereon by the learned counsel for the respondent is correct. in our opinion, clause (iv) of sub-section (2) has been brought in only by way of abundant caution. it refers to a civil suit to which the government is a party and which relates to any matter arising out of any proceeding under the act. ordinarily, any documents which has come into the hands of the commercial tax authorities in the course of any proceeding under the act would have to be made available for.....
Judgment:

Balasubrahmanyan, J.

1. In application No. 2737 of 1981, the applicant-plaintiff prays for the issuance of summons to the Special Deputy Commercial Tax Officer, Commercial Tax Officer, Chepauk Circle, and the Special Deputy Commercial Tax Officer (1), Group II, Enforcement, to give evidence and to cause the production of certain statements recorded from the defendant at the time of the raid on 17th May, 1977, and also the assessment file of Karkalayar Plastic Works for the year 1976-77. In application No. 3944 of 1980, the prayer is for the issuance of summons to the Deputy Commercial Tax Officer, Choolai Assessment Circle, to give evidence and cause the production of the documents listed therein.

2. The suit was for the recovery of the amount borrowed by the defendant, Ganapathi Chettiar, for running his business Karkalayar Plastic Works amounting to Rs. 98,794-51. According to the plaintiff, his representative would sit in the defendant's factory and maintain an account of the day-to-day expenditure in slips of paper and the account book would be written at the end of the day. The defendant's employees would also maintain slips in which the entries would be recorded and ultimately all of them would be transposed into the books. It is in the course of advances to the said business that the plaintiff claims that a large sum was due to him. It was stated that on 17th May, 1977, the officials of the commercial tax department raided the defendant's factory at Periathambi Mudali Street, Madras, and his residence in the same street and seized the slips of paper, bills, vouchers, account books, etc. The plaintiff stated that on the same day his slips of paper and account books had been seized by the said officials and that the production of all the original documents was necessary to prove his case. He applied for certified copies of the said slips and account books, but the commercial tax department allowed him only to take a copy of his account books and did not give certified copies of the documents. It was under those circumstances that he filed the above two applications with the prayers mentioned above.

3. In the counter-affidavit, the defendant stated that the raids and the recovery of the slips were subsequent to the institution of the suit and that therefore they were not relevant to the matter covered by the suit. The allegations of the plaintiff in his affidavits in support of the applications were denied.

4. The matter came to be heard by Fakkir Mohammed, J. He noticed that there was a conflict between two decisions of this Court, one in Parvathi Ammal v. Mari Reddiar [1966] 17 STC 243 and the other in Velayutha Nadar v. South india Tobacco Co. [1973] 32 STC 202. He, therefore, thought it necessary to have the conflict resolved by a Bench and that is how the matter has been placed before me.

5. During the pendency of this reference, the Assistant Commissioner (Enforcement) II, of the commercial tax department has filed a counter-affidavit on behalf of the Deputy Commercial Tax Officer who is to respond to the summons. In the counter-affidavit it is stated that the statements recorded by the officers of the commercial tax department were privileged documents and that they could not be required to be produced before this court. It was also submitted that section 57 of the Tamil Nadu General Sales Tax Act, 1959, prohibited the documents from being disclosed and that this Court in Velayutha Nadar v. South India Tobacco Co. [1973] 32 STC 202 has interpreted the provision as meaning that the documents in the custody of the commercial tax department could not be required to be produced. There was also another point adverted to in the counter-affidavit to the effect that the department could not be required to produce all the documents by an omnibus order and that the plaintiff should be directed to specify the exact documents required for production.

6. The learned counsel for the applicant contended that there is no bar which stood in the way of the court summoning the documents, if necessary, from the commercial tax department, Mr. N. S. Raghavan, the Learned counsel for the respondent and the learned Additional Government Pleader contended that section 57 of the Tamil Nadu General Sales Tax Act stood in the way of the court summoning the documents referred to in this case. It is therefore necessary to refer to section 57 before proceeding further. Section 57, in so far as it is material, runs as follows :

'57. (1) All particulars contained in any statement made, return furnished or accounts, registers, records or documents produced under the provisions of this Act or in any evidence given or affidavit or deposition made, in the course of any proceeding under this Act or in any record of any proceeding relating to the recovery of demand, prepared for the purposes of this Act shall be treated as confidential and shall not be disclosed.

(2) Nothing contained in sub-section (1) shall apply to the disclosure of any such particulars ................. (iv) to a civil court in any suit to which the Government are party and which relates to any matter arising out of any proceeding under this Act.'

7. The provision falls into two parts. The first part deals with the confidential nature of certain documents produced before the sale tax authorities. The effect of any document being treated as confidential is to see that it is not disclosed to anyone else. The second part of the provision is enacted in sub-section (2) and it opens with the words 'Nothing contained in sub-section (1) shall apply to the disclosure of any such particulars.' These are various categories of persons or authorities to whom disclosure could be made. In other words, sub-section (2) of section 57 is in the nature of an enabling provision and the authorities could produce the documents before the relevant authorities specified in sub-section (2).

8. A combined reading of sub-sections (1) and (2) clearly show that the documents produced before the commercial tax authorities are invested with a confidential nature, but they could be produced before others under certain circumstances. Section 57 does not in any way restrict the powers of a civil court to summon the documents. Section 57 is addressed only to the authorities enforcing the Act. Some emphasis was brought to be rested on the closing words of sub-section (1), namely, 'and shall not be disclosed'. When once some documents are categorised as confidential then ordinarily their disclosure by the authorities concerned would be prohibited, and therefore, the words 'and shall not be disclosed' do not add to the effect of the documents being treated as confidential as far as the authorities are concerned.

9. We are not now concerned with the production by the authorities of any such documents. We are concerned with the power of the civil court to issue summons for the production of the said documents and for examination of the persons concerned mentioned in the applications. There is nothing in section 57 which is restrictive of the powers of the court. It is well-settled that the powers of a civil court can be fettered only by an express provision made by the legislature or by necessary intendment. There is nothing in section 57 which can be said to express any intention to act as a fetter on the powers of the civil court, nor is there any clear implication flowing from the terms of the said provision.

10. The learned counsel for the respondent contended that clause (iv) of sub-section (2) provided for the disclosure of the documents to a civil court only in certain contingencies and that a civil suit between two private parties is not one of the contingencies contemplated by sub-section (2). We have already extracted clause (iv) of sub-section (2). We do not consider that the construction sought to be placed thereon by the learned counsel for the respondent is correct. In our opinion, clause (iv) of sub-section (2) has been brought in only by way of abundant caution. It refers to a civil suit to which the Government is a party and which relates to any matter arising out of any proceeding under the Act. Ordinarily, any documents which has come into the hands of the commercial tax authorities in the course of any proceeding under the Act would have to be made available for consideration at all subsequent stages of the same proceeding. The civil suit referred to in clause (iv) is apparently one which can be filed by the Government in order to effect recovery of the tax due. The Government may have other courses open to recover the tax, but a civil suit is also one of the modes of recovery. In order that no difficulty is caused in the matter of production of any document in such a civil suit, to which the Government is a party, the legislature has considered it appropriate to make it clear by enacting clause (iv) of sub-section (2) so that the document could be produced in the civil court also. But this does not mean that the document could not be produced in a civil court under any other contingency. The maxim expressio unius est exclusio alterius cannot be imported here for the construction of the provision of the statute. The statute has to be understood in the light of the words used therein. There is no scope for construction by implication here.

11. The matter appears to be covered by an early authority of this Court in Venkatachella Chettiar v. Sampathu Chettiar (1909) ILR 32 Mad 62. In that case, the question was whether the court can compel production of documents and statements produced or made by an assessee before the authority concerned with the levy of income tax and whether such documents and statements were privileged under section 123 or section 124 of the Evidence Act. In that case, certain statements had been made by the defendants in respect of the property described in the plaint schedule during the enquiries conducted by the income-tax department. The Deputy Collector was summoned to produce the documents. Reliance was placed on section 38 of the Income Tax Act of 1886 and rule 15 of the Rules framed thereunder under which the Collector was prevented from disclosing the particulars of such documents. The contention was that they were communications made to the Collector in official confidence, the disclosure of which would be prejudicial to public interests. After referring to the relevant provisions, the learned Judges observed :

'It was argued by the Advocate-General that the income tax records may contain confidential matters and it is of great importance that persons should be able to be certain that any statements which may be made by them for the purpose of income-tax should in no case be disclosed, and as these documents must have been made in that belief they must be held to have been made 'in official confidence' and it would not be right to insist upon the production of the documents or to receive them in evidence. In support of this argument section 36 of the Income Tax Act and rule 15 ................ were relied upon. We are unable to accept this view. Though the cases do not refer to section 124 of the Evidence Act, they, in effect, decide that provisions of the Income Tax Act do not preclude the production of these documents in a Court of Justice and any person therefore submitting any return could rely only upon the official not disclosing the information to other persons otherwise than in court of law.'

12. In the Indian Income-tax Act, 1922, taking note of this decision, section 54 relating to disclosure of information by a public servant was cast in the following terms :

'54. (1) All particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of this Act, or in any evidence given, or affidavit or deposition made, in the course of any proceedings under this Act other than proceedings under this Chapter, or in any record of any assessment proceeding, or any proceeding relating to the recovery of a demand, prepared for the purposes of this Act, shall be treated as confidential and notwithstanding anything contained in the Indian Evidence Act, 1872 (I of 1872), no court shall, save as provided in this Act, be entitled to require any public servant to produce before it any such return, accounts, documents or record or any part of any such record, or to give evidence before it in respect thereof.'

13. It may be seen that the words 'no court shall, save as provided in this Act, be entitled to require any public servant to produce before it any such return, ............' have not been incorporated in section 57 of the Tamil Nadu General Sales Tax Act, 1959, while the rest of the provision is more or less practically identically worded. The words 'no court shall' clearly imposed a fetter on the courts from requiring any public servant to produce any document. The Tamil Nadu Legislature did not think it fit to put any such fetter and, therefore, the disclosure only by the particular authorities administering the Act was the subject-matter of restriction or prohibition under section 57. Thus, as a pure matter of construction, it is clear that section 57 does not impose any restriction on the court to summon any document even if the said document or documents are in the possession of the commercial tax authorities.

14. There are two decisions of this Court which appear to run counter to each other. The first is that of Veeraswami, J. (as he then was), Parvathi Ammal v. Mari Reddiar [1966] 17 STC 243. In that case certain assessment records were sought to be summoned in a suit. Objection was raised to the marking of some of the documents by the plaintiff as evidence on the ground that those documents were privileged and should be treated as confidential. The objection was upheld by the court below and the matter came on revision to this Court. The learned Judge rejected the validity of the objection and held that section 57(1) of the Act only prohibited voluntary disclosure of the particulars of the documents by an officer of the department, and did not extend to limit the powers of the civil court to summon them. In coming to this conclusion, the learned Judge has compared and contrasted the provisions of section 57 of the Madras General Sales Tax Act, 1959, with those of section 54 of Indian Income-tax Act, 1922, and has pointed out that in the absence of similar words of prohibition as against civil courts as found in section 54 of the Income-tax Act, 1922, the civil courts had ample powers to summon the documents. The learned Judge also referred to and expressed his agreement with two decisions, one of the Kerala High Court in Abdulla v. Assankutty [1960] 11 STC 730 and the other of the Rajasthan High Court in Ram Chandra v. Laxman Das [1961] 12 STC 367.

15. The contrary view taken by this Court is reported in K. S. Velayutha Nadar v. South India Tobacco Company [1973] 32 STC 202. In that case, certain documents were summoned and directed to be received in evidence by an order of the civil court in a suit. The contention urged was that section 57 of the Tamil Nadu General Sales Tax, 1959, prohibited the disclosure of such documents in any civil proceeding and that, therefore, they would not be received in evidence. Kailasam, J., (as he then was), held that the officer could not disclose and that the court also could not summon and admit in evidence any of the documents that were prohibited by section 57. In the view of the learned Judge, courts would not be in order in directing an officer to produce the documents which he has been statutorily prohibited from producing under section 57. The decision in Parvathi Ammal v. Mari Reddiar [1966] 17 STC 243 has been dissented from.

16. We have carefully considered the reasoning in the judgment in the above case and we are unable to subscribe to it. The deliberate omission on the part of the legislature of the ban enacted in the Indian Income-tax Act cannot be left out of account in construing the provision. Even without going into section 54 of the Income-tax Act, 1922, we have earlier expressed our view that section 57 of the Tamil Nadu General Sales Tax Act, 1959, did not in any manner fetter the powers of the civil court in summoning the documents. We therefore consider that Velayutha Nadar v. South India Tobacco Co. [1973] 32 STC 202 was wrongly decided.

17. The result is that the applications are ordered as prayed. The learned Additional Government Pleader wanted the plaintiff to specify the documents of which he required production. The learned Counsel for the applicants stated that he would do so. In fact, in one of the applications before us, there is a specification of the particular documents. In the other also, the particulars would be given and the summons would then issue in the light of the particulars so furnished. The Deputy Commercial Tax Officer concerned will be summoned only for the purpose of formally providing the documents produced.

18. These applications are ordered accordingly.

19. There will be no order as to costs.


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