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Kemco Chemicals and anr. Vs. the Commercial Tax Officer, Central Section and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKolkata High Court
Decided On
Case Number C.R. No. 5510(W) of 1984
Judge
Reported in[1984]57STC337(Cal)
AppellantKemco Chemicals and anr.
RespondentThe Commercial Tax Officer, Central Section and ors.
Appellant Advocate Sanjoy Bhattacharjee and ; Chandrima Bhattacharjee, Advs.
Respondent Advocate Samar Dutta, Adv.
DispositionPetition allowed
Cases ReferredOriental Rubber Works v. A.K. Sinha
Excerpt:
- .....in section 9(2)(a) of the 1954 act the legislature has used the words 'he may serve on such a dealer a notice requiring him on a date to be therein specified, to attend before him or to produce or to cause to be produced before him any evidence in support of the return'. similarly in section 14(1) of the 1941 act the words used by the legislature are 'the commissioner may, subject to such conditions as may be prescribed, require any person-(a) to produce before him ,any accounts, registers or documents, (b) to furnish any information, etc., as may be deemed necessary for the purposes of this act'. it is contended that in framing statutes the same words shall be presumed to have been used by the legislature in the same sense and that when different words are used it shall be presumed.....
Judgment:

Amitabha Dutta, J.

1. In this writ petition the petitioners are Kemco Chemicals, a registered firm carrying on business of manufacturing cosmetic goods at 18, R.N. Mukherjee Road and other places in Calcutta and the petitioner No. 2 is one of its partners. The said firm is a registered dealer and has been assessed to sales tax up to the period from 16th November, 1982 to 8th November, 1983. They have challenged the purported notice dated 26th March, 1984, which is annexure A to the writ petition from Sri S. K. Roy, Commercial Tax Officer, Central Section. The said notice is reproduced below :

Registered with A/D.Government of West Bengal, Office of the Assistant Commissioner, Commercial Taxes, Central Section, 14, Beliaghata Road, Calcutta-15. Memo No. 877. Dated : 26-3-84ToM/s. Kemco Chemicals, 18, R. N. Mukherjee Road, Calcutta-700001.Sub : Notice under Section 13(1) of the West Bengal Sales Tax Act, 1954.

In terms of the provisions of Section 13(1) of the W.B.S.T. Act, 1954, you are hereby directed to appear before the undersigned at his office on 4th May, 1984 at 11-30 a.m. and produce all books of accounts, records & documents, bank statement and other relevant papers for the accounting year 1983-84.

In case of your failure to comply with the notice, ex parte decision will be taken against you without any further reference to you. Sd/- S. K. Roy 26-3-84 (S.K. Roy)Commercial Tax Officer Central Section.

2. Before the issue of the impugned notice, eleven inspectors of the Commercial Tax Directorate had searched the factory premises, the administrative office premises and the warehouse of the petitioner No. 1 on 19th March, 1984 and left without seizing anything as no incriminating material or document was found.

3. The petitioners' case is that there is no scope in Section 13(1) of the West Bengal Sales Tax Act, 1954 (the 1954 Act for short) for the Commercial Tax Officer to issue a notice and called the petitioner No. 1 to appear before him with the relevant papers and documents and threatened the petitioner that ex parte decision would be taken against him in the event of failure to comply with such notice. So, the action of the respondent No. 1 is said to be wholly arbitrary and illegal and without jurisdiction. It is also contended that the issue of the notice under Section 13(1) of the 1954 Act after thorough inspection and search of the business places of the petitioners by eleven inspectors who did not find any material against the petitioners is an abuse of the power on the part of the respondent No. 1.

4. On the other hand the respondent No. 1, the Commercial Tax Officer, Central Section, has by his counter-affidavit stated, inter alia, that after receiving a secret information that the petitioner was evading payment of sales tax by suppression of sales, he directed the inspectors to make necessary inspections and enquiries at the business places of the petitioners. It is further stated that at 18, R. N. Mukherjee Road, and at 48B, Muktaram Babu Street (1st Floor), which are two out of three business places of the petitioner No. 1, the request to produce relevant books, documents and papers were complied with and as such request was not acceded to at 7A, Bentinck Street which is the other place of business of the petitioner-firm, the said premises were searched but no relevant document or paper was found. It is further averred in the counter-affidavit that all papers and documents were not made available to the inspectors at the other two business places and that important books and papers were not made available to them. It is, therefore, claimed that the respondent No. 1 was competent to issue the impugned notice under Section 13(1) of the 1954 Act.

5. The petitioners in their rejoinder have denied that all papers and documents or important papers and documents were not made available to the Inspectors at the time of their inspection and search on 19th March, 1984.

6. Before considering the respective contentions of the parties it is necessary to set forth the provisions of Section 13 of the 1954 Act as follows :

'13. Maintenance of accounts, furnishing of information, inspection, search and seizure-(1) Every dealer shall-

(a) keep true accounts of notified commodities manufactured, made or processed by him, or brought by him into West Bengal from any place outside West Bengal for the purpose of sale in West Bengal, and of turnovers and specified purchase prices and if the prescribed authority is satisfied that such accounts are not sufficiently clear and intelligible, he may require the dealer to keep accounts in such form as may be prescribed;

(b) furnish any information that may be required by the prescribed authority in order to enable him to carry out the purpose of the Act;

(c) make available for inspection by the prescribed authority any accounts, registers, vouchers or other documents relating to the manufacture, making, processing, import, sale, or purchase of notified commodities and other goods or matters connected therewith, as may be required by the prescribed authority.

(1-A) All notified commodities kept in any place of business, factory or warehouse of any dealer or person shall at all reasonable time be open to inspection or search, if necessary by the prescribed authority.

(2) The prescribed authority may', in accordance with such rules as may be prescribed, enter and search any place where he has reason to believe that the dealer keeps or is for the time being keeping any accounts, registers, vouchers or other documents referred to in Clause (c) of Sub-section (1) and if necessary, inspect, seize or retain them for so long as may be necessary for examination or for the purpose of any prosecution.

(3) For removal of doubts it is hereby declared that the prescribed authority may, while entering and searching places referred to in Sub-section (1-A) or Sub-section (2), break open, if necessary, any door or window, or any almirah, safe, box or container in which he has reason to believe that the dealer keeps or is, for the time being, keeping any accounts, registers, vouchers or other documents referred to in Sub-section (2) or stocks of notified commodities for sale.

(4) The prescribed authority may, subject to such restrictions or conditions as may be prescribed, seal any room, warehouse, almirah, safe, box or container in which he has reason to believe that the dealer keeps or is, for the time being, keeping any accounts, registers, vouchers or other documents referred to in Sub-section (2) or stocks of notified commodities for sale, either before entering and searching or during searching places referred to in Sub-section (1-A) or Sub-section (2), and may thereafter, if necessary, break open such room, warehouse, almirah, safe, box or container.'

7. It appears that Section 13(1) of the 1954 Act imposes duty on the dealer, (a) to keep true accounts and if required by the prescribed authority keep accounts in prescribed form; (b) to furnish any information required by the prescribed authority to enable him to carry out the purposes of this Act and (c) make available for inspection by the prescribed authority any accounts, registers, vouchers or other documents referred to in Clause (c) that may be required by the prescribed authority. Sub-section (2) mentions accounts, registers, vouchers or other documents referred to in Clause (c) of Sub-section (1) and empowers the prescribed authority to inspect, seize or retain them if necessary for examination or for the purpose of prosecution. Sub-sections (2) to (4) deal with the powers of search, seizure and incidental powers of the prescribed authority. It has been argued on 'behalf of the petitioners that the powers sought to be exercised by the respondent No. 1 in the present case in analogous to the power conferred on the prescribed authority under Section 9(2) of the 1954 Act in connection with assessment of sales tax after the filing of return about the language used in Section 9(2) is different from the language in Section 13(1) of the Act. It is pointed out that the language of Section 13(1) of the 1954 Act is similarly different from the language used in Section 14(1) of the Bengal Finance (Sales Tax) Act, 1941. In Section 9(2)(a) of the 1954 Act the legislature has used the words 'he may serve on such a dealer a notice requiring him on a date to be therein specified, to attend before him or to produce or to cause to be produced before him any evidence in support of the return'. Similarly in Section 14(1) of the 1941 Act the words used by the legislature are 'the commissioner may, subject to such conditions as may be prescribed, require any person-(a) to produce before him ,any accounts, registers or documents, (b) to furnish any information, etc., as may be deemed necessary for the purposes of this Act'. It is contended that in framing statutes the same words shall be presumed to have been used by the legislature in the same sense and that when different words are used it shall be presumed that different meaning is conveyed. It is urged that in the present case the prescribed authority has exercised power which the statute does not confer on him in issuing the impugned notice in excess of his jurisdiction.

8. The learned Advocate for the petitioners has referred to the following decisions, viz., (1) Barium Chemicals Ltd. v. A. J. Rana : [1972]2SCR752 ; (2) Grindlays Bank Ltd. v. Income-tax Officer : [1978]115ITR799(Cal) ; (3) D.L. Brahmachari v. New Central Jute Mills Co. Ltd. : [1978]112ITR568(Cal) ; (4) State of West Bengal v. Oriental Rubber Works [1977] 39 STC 333 and (5) Oriental Rubber Works v. A.K. Sinha [1974] 34 STC 30. But these decisions are on statutes which are not in pari materia with Section 13(1) of the 1954 Act and so it is not necessary to discuss them.- The Supreme Court in Barium Chemicals' case : [1972]2SCR752 observed that there must be some nexus between the documents sought to be obtained and the purposes of the Act under which notice for production thereof is issued. This is a fundamental requirement of law, to prevent arbitrariness or unreasonableness in requiring production of documents or papers from an assessee or any other person, in purported exercise of power under the concerned Act.

9. After considering the submissions made by the learned Advocates appearing for the parties I find that the question for decision in this case is three fold; first whether the prescribed authority can issue notice under Section 13(1)(c) of the 1954 Act requiring the dealer to produce or cause to be produced accounts, registers, vouchers and other relevant documents required by him in respect of a particular period for the purposes of the Act, secondly, whether the prescribed authority can by such notice call upon the dealer to appear personally before him with those documents; thirdly whether the prescribed authority can by such notice intimate the dealer that in case he does not comply with the notice an ex parte decision will be taken against him in the matter of imposition of tax liability. My answer to the first question is in the affirmative and my answers to the second and third questions are in the negative. In my view, the words 'make available' in Section 13(1) of the 1954 Act have the same meaning as the words 'produce or cause to be produced'. To make available for inspection means to produce or cause to be produced for inspection. Although generally a presumption is to be made that in framing statutes the same words should also be employed in the same sense, still there are many instances to be found of the legislature departing from the language previously used for the purpose of convey-a certain meaning without intending to depart from that meaning. Whether the meaning is altered or not depends on whether the requirements of English language demand it or these requirement permit it and the sense of the section demands it (see Craies Statute Law, 7th edition, pp. 143-144). The language of Clause (c) of Sub-section (1) of Section 13 of the 1954 Act does not warrant the view that the dealer cannot be called upon to make available, that is to say, to produce or cause to be produced the documents required by the prescribed authority for the purposes of the Act at the office Of the latter on a date fixed. There can be no doubt that the prescribed authority on getting secret information of suppression of sales by a dealer has power to make investigation to find out whether a dealer has evaded or is going to evade liability to pay sales tax by suppressing his sales. Such investigation to check evasion is for the purposes of the Act. But the prescribed authority has no power under Section 13(1) of the 1954 Act to require the dealer to appear personally before him and produce documents required for inspection. Nor has the prescribed authority any power to take ex parte decision in the matter of tax liability of the dealer in case of non-compliance with the notice for making available for inspection of accounts, registers, vouchers and other documents, required by him under Section 13(1)(c) of the said Act.

10. I, therefore, find that the impugned notice is bad in law and is in excess of power conferred by Section 13(1)(c) of the 1954 Act in so far as it requires the dealer to appear personally and produce documents and holds out a threat that an ex parte decision would be taken against him if he does not comply with the notice. For this reason the impugned notice must be struck down.

11. In the result, the writ petition succeeds and the rule is made absolute to the extent indicated below. The purported notice dated 26th March, 1984 (annexure A to the writ petition), is quashed. The respondents are directed not to give effect to the said notice. There will be no order as to costs.

12. Let appropriate writs be issued accordingly.


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