Tax evasion seizure power upheld, but cashew-nut seizure set aside where supporting documents showed tax had been paid.

Section 28(6) of the Andhra Pradesh General Sales Tax Act, 1957 was treated as a valid machinery provision because it applied to goods in a dealer's premises or business places that were not accounted for in the records and operated to prevent tax evasion. Writ relief at the stage of show cause notices and detention orders was refused because the issues involved factual enquiry, mixed questions of fact and law, and an available alternative remedy. In the cashew-nut matter, seizure was set aside because the goods were supported by purchase bills, lorry receipts and vendor certificates showing tax had already been paid, and no falsity in those certificates was shown.

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Issues: (i) Whether the power of seizure and confiscation under section 28(6) of the Andhra Pradesh General Sales Tax Act, 1957 was ultra vires the State Legislature and unconstitutional. (ii) Whether the impugned show cause notice and detention orders could be quashed in writ jurisdiction at the threshold. (iii) Whether the seizure of the cashew-nut consignment was warranted when the goods were supported by documents and the vendors had certified payment of tax.

Issue (i): Whether the power of seizure and confiscation under section 28(6) of the Andhra Pradesh General Sales Tax Act, 1957 was ultra vires the State Legislature and unconstitutional.

Analysis: The provision applied only to goods found in the dealer's premises or other business places and not accounted for in the dealer's records. It was held to be a machinery provision meant to prevent actual or attempted evasion of tax and to operate as a deterrent against tax-evaders. The earlier Division Bench view striking it down was held to have misread the Supreme Court decision on check-post confiscation, which dealt with transit seizure under a different provision and on a different statutory assumption. The Court preferred the earlier Andhra Pradesh decisions upholding the validity of section 28(6) and treated the contrary later view as not correctly decided.

Conclusion: Section 28(6) was held to be valid and within legislative competence, against the assessee's challenge.

Issue (ii): Whether the impugned show cause notice and detention orders could be quashed in writ jurisdiction at the threshold.

Analysis: The notice raised factual allegations about the true nature of the transactions, the role of the transporter, and possible tax evasion. The Court held that such matters required enquiry by the statutory authorities and involved mixed questions of fact and law. Where an effective alternative remedy existed and no total want of jurisdiction was shown, writ interference at the stage of a show cause notice was considered unwarranted. The same approach applied to the detention orders in the connected matters, which were treated as regulatory steps taken to investigate suspected evasion.

Conclusion: The challenge to the show cause notice and the detention orders failed.

Issue (iii): Whether the seizure of the cashew-nut consignment was warranted when the goods were supported by documents and the vendors had certified payment of tax.

Analysis: In the cashew-nut matter, the petitioner produced purchase bills, lorry receipts, consignee copies and certificates from the vendors stating that the turnover had been included in their returns and tax had been paid. The record did not show that these certificates were found false or fabricated. On those facts, the basis for invoking the seizure power was not made out.

Conclusion: The seizure of the cashew-nut consignment was set aside and that writ petition was allowed in favour of the petitioner.

Final Conclusion: The judgment upheld the constitutional validity and regulatory use of the seizure and detention machinery under the sales tax enactment, refused writ interference in the show cause and detention matters, but granted relief in the cashew-nut case where the goods were shown to have already suffered tax and seizure was unjustified.

Ratio Decidendi: A statutory power of seizure or confiscation aimed at preventing tax evasion is valid if it is confined to the dealer's accounted goods or to a properly regulated transit/detention scheme, is supported by enquiry and hearing, and is not based on an overbroad assumption that all goods in transit are taxable.

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