1990 (3) TMI 331 - HC - VAT and Sales Tax

Court upholds tax recovery search at director's home, deems demand legal, orders return of seized documents.

The court clarified that authorities had jurisdiction to conduct a search at the director's residential premises to recover tax owed by another dealer. ... - Issues:Jurisdiction of authorities to conduct search at residential premises of the director.Compliance with provisions of section 17 of the A.P. General Sales Tax Act, 1957.Validity of seizure of documents under section 28 of the Act.Retention of seized documents beyond permissible time frame.Jurisdiction of authorities to conduct search at residential premises of the director:The petitioner, a flour mill company, challenged the search conducted at the director's residential premises. The primary issue was whether the authorities had jurisdiction to carry out the search. Section 17 of the A.P. General Sales Tax Act, 1957 allows recovery of tax from persons owing money to the dealer. The court clarified that the petitioner was not an assessee before the Commercial Tax Officer (C.T.O.) who issued notices. However, the authorities were within their jurisdiction to demand payment from the petitioner to divert it to the government for arrears of sales tax owed by another dealer.Compliance with provisions of section 17 of the A.P. General Sales Tax Act, 1957:Section 17 provides the authority to demand payment from a person owing money to a dealer. The court emphasized that the demand can be made on such a person, and the authorities had reason to believe money was due from the petitioner to another dealer. Thus, the notice issued under section 17 was deemed legal and within jurisdiction.Validity of seizure of documents under section 28 of the Act:Section 28 allows officers to seize documents if there is suspicion of tax evasion. The petitioner argued that the C.T.O. lacked jurisdiction to order a search. However, the court found that the C.T.O. complied with the Act by addressing the Deputy Commissioner and providing reasons for the search. The power vested under section 28 was properly exercised, and no illegality was observed.Retention of seized documents beyond permissible time frame:The petitioner claimed that the documents were retained without seeking an extension of time as required by the Act. Records showed that extensions were sought and granted for retaining the seized documents. The court noted that the documents had been retained for an unduly long period and directed the authorities to provide photocopies to the petitioner and return the originals within a month.In conclusion, the writ petition was disposed of, with no costs imposed, and the authorities were directed to return the original seized documents to the petitioner within a specified timeframe.