Non-communication of extended retention approval makes continued seizure unlawful, but derivative copies and notes may still be used.

Retention of books of account and seized documents beyond 60 days under the Karnataka Sales Tax Act becomes unlawful if the required approval of the next higher authority is not communicated promptly to the dealer, and the approval together with recorded reasons must be disclosed. On that basis, continued retention of the original seized records was unlawful and return of those books and documents was required. However, copies, extracts and notes prepared by the revenue authorities from the seized material need not be returned; absent an express statutory bar, such derivative material may still be used in assessment and other lawful proceedings.

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Issues: (i) Whether retention of books of account and documents seized under section 28(3) of the Karnataka Sales Tax Act beyond 60 days becomes unlawful if the order of the next higher authority approving such retention is not communicated to the dealer. (ii) Whether the dealer is entitled to the return of copies, extracts and notes prepared by the revenue authorities from the seized material.

Issue (i): Whether retention of books of account and documents seized under section 28(3) of the Karnataka Sales Tax Act beyond 60 days becomes unlawful if the order of the next higher authority approving such retention is not communicated to the dealer.

Analysis: Section 28(3) permits seizure of accounts and documents and allows retention only for so long as necessary, with retention beyond 60 days requiring permission of the next higher authority. The Court compared this scheme with section 132 of the Income-tax Act, 1961, and applied the principle laid down in the Supreme Court decision dealing with non-communication of approval for extended retention. The Court held that the statutory scheme is substantially similar on the point of retention and that the approval for continued retention, along with the reasons recorded, must be communicated expeditiously; otherwise further retention becomes unlawful.

Conclusion: The continued retention of the seized books and documents beyond 60 days without communicating the approval of the next higher authority was unlawful, and the petitioners were entitled to return of the seized books and documents.

Issue (ii): Whether the dealer is entitled to the return of copies, extracts and notes prepared by the revenue authorities from the seized material.

Analysis: The Court applied the principle that evidence or information obtained from an illegal search is not excluded merely because the search was unlawful, in the absence of an express legal prohibition. On that basis, it accepted that the revenue authorities could retain and use copies, notes and extracted information for assessment and other lawful proceedings, even though the original seized records had to be returned.

Conclusion: The petitioners were not entitled to return of the copies, notes or extracts made by the authorities, and the respondents could use them in accordance with law.

Final Conclusion: The petitions succeeded to the extent of securing return of the seized books of account and documents, but failed insofar as they sought return of copies, notes and extracted materials prepared by the revenue authorities.

Ratio Decidendi: Where a statute permits retention of seized records beyond a prescribed period only with higher authority approval, non-communication of that approval renders continued retention unlawful; however, material lawfully or unlawfully derived from the seized records may still be used unless prohibited by statute.

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