Business records seizure requires recorded suspicion of tax evasion; without it, continued retention is unlawful.

Section 28(3) of the Karnataka Sales Tax Act, 1957 authorises seizure of accounts or records only when the officer records reasons based on a genuine suspicion that the dealer is attempting to evade tax. Here, the seizure order and subsequent notices did not record any such suspicion against the petitioners; they showed only an inquiry into third-party compliance. The statutory precondition was therefore not met, and the continued retention of the seized books and records was equally without authority. The seizure and retention were held invalid, and the respondents were directed to return the materials and any notes made from them.

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Issues: Whether the seizure and continued retention of the petitioners' books and records was valid under section 28(3) of the Karnataka Sales Tax Act, 1957 in the absence of a recorded reason to suspect that the petitioners were attempting to evade tax.

Analysis: Section 28(3) permits seizure of accounts, registers, records or other documents only where the officer has reason to suspect that a dealer is attempting to evade payment of tax, fee or other amount due under the Act, and the reasons must be recorded in writing. The seizure order did not state that the petitioners were suspected of evading tax; instead, it showed that the books were seized to ascertain whether first purchasers in the State had paid tax and to investigate third-party compliance. The notices issued thereafter also did not disclose any suspicion against the petitioners themselves. The statutory condition for seizure was therefore not satisfied, and the subsequent retention of the seized books and records was equally without authority of law.

Conclusion: The seizure and continued retention were invalid and contrary to section 28(3) of the Karnataka Sales Tax Act, 1957.

Final Conclusion: The petition succeeded, and the respondents were directed to return the seized books, records, and any notes made from them.

Ratio Decidendi: A seizure of business accounts under section 28(3) is lawful only when the officer has recorded reasons based on a genuine suspicion that the dealer is attempting to evade tax; absent that statutory precondition, seizure and retention are unauthorized.

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