Anti-evasion tax controls upheld, but confiscation provisions struck down for lack of clear standards and hearing safeguards.

Section 28-A of the Mysore Sales Tax Act was treated as a valid anti-evasion measure within the State's sales tax competence and not as a direct impediment to trade under Article 301, because the transport and document requirements were incidental to tax collection. The obligations to carry documents and furnish particulars were upheld as reasonable regulatory controls. However, the confiscatory and recovery machinery in sub-sections (4) to (7) was struck down because it lacked clear standards, an intelligible basis for action, and an effective hearing safeguard. The valid information-gathering provisions were held severable and remained operative.

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Issues: (i) Whether section 28-A of the Mysore Sales Tax Act, 1957, was within the legislative competence of the State Legislature and did not offend the freedom of trade under Article 301 of the Constitution of India. (ii) Whether sub-sections (4), (5), (6) and (7) of section 28-A imposed an unreasonable restriction on the fundamental right under Article 19(1)(g) of the Constitution of India, and if so, whether the valid and invalid parts were severable.

Issue (i): Whether section 28-A of the Mysore Sales Tax Act, 1957, was within the legislative competence of the State Legislature and did not offend the freedom of trade under Article 301 of the Constitution of India.

Analysis: The provision was enacted as an anti-evasion measure in aid of the power to tax sales and purchases under Entry 54 of List II. The collection of information, requirement of transport documents, and ancillary controls over transport of goods were held to be matters reasonably incidental to the levy and collection of sales tax. The section did not itself impose a tax on inter-State transactions or exempted goods, and the restrictions it created were treated as regulatory rather than as a direct impediment to trade. The previous presidential sanction under Article 304(b) was also noted.

Conclusion: The section was within legislative competence and did not fail for want of competence under Entry 54 or Article 301.

Issue (ii): Whether sub-sections (4), (5), (6) and (7) of section 28-A imposed an unreasonable restriction on the fundamental right under Article 19(1)(g) of the Constitution of India, and if so, whether the valid and invalid parts were severable.

Analysis: The substantive obligation to carry documents and furnish particulars was upheld as a reasonable regulatory requirement aimed at preventing tax evasion. The confiscatory machinery, however, was found defective because the section did not clearly state the circumstances in which confiscation could be ordered, did not define a meaningful point for enquiry, and did not provide an effective safeguard or real opportunity of being heard. The appellate or revisional safeguard under sub-section (7) was rendered ineffective by these defects. At the same time, the obligation to furnish information could operate independently of the confiscatory machinery, and the remaining provisions were supported by separate penal consequences under the Rules and the Act.

Conclusion: Sub-sections (4), (5), (6) and (7) were unconstitutional and invalid, but sub-sections (1), (2) and (3) were valid and constitutional.

Final Conclusion: The anti-evasion information-gathering provisions were sustained, while the confiscation and recovery machinery was struck down for want of adequate standards and safeguards; the petitions challenging the invalid parts succeeded, and the remaining challenges failed.

Ratio Decidendi: A taxing statute may include ancillary regulatory measures to prevent evasion, but confiscatory powers that seriously affect property and business must be supported by clear standards, an intelligible basis for action, and an effective hearing procedure; absent these safeguards, the confiscatory provisions are unconstitutional even if the underlying information-gathering obligation is valid.

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