Tax check-post powers upheld as regulatory measures, but penalty requires real adjudication and hearing before seizure consequences follow.

Sections 6 and 7 of the West Bengal Sales Tax Act, 1954 were treated as valid regulatory provisions within the State's legislative competence because check-post, interception, search and seizure powers were viewed as ancillary measures to prevent tax evasion. Section 7(2) was read as requiring a real adjudication after hearing the affected party, because penalty cannot follow automatically from seizure and non-production of documents alone. The word "may" was construed as conferring discretion to impose or decline penalty and, where appropriate, direct release of goods. On that construction, the penalty proceedings were set aside for fresh consideration after hearing.

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Issues: (i) Whether sections 6 and 7 of the West Bengal Sales Tax Act, 1954 and the connected rules were beyond the legislative competence of the State Legislature. (ii) Whether section 7, particularly sub-section (2), was arbitrary and violative of article 14 for not requiring a substantive adjudication before penalty and release of seized goods.

Issue (i): Whether sections 6 and 7 of the West Bengal Sales Tax Act, 1954 and the connected rules were beyond the legislative competence of the State Legislature.

Analysis: The power under entry 54 of List II includes ancillary and incidental powers necessary to make the levy effective and to prevent evasion of tax. Check-posts, interception, search and seizure provisions are regulatory measures designed to ensure that goods are not diverted to evade sales tax. The impugned provisions do not create a tax on inter-State transactions nor do they prohibit lawful movement of goods; they merely provide safeguards against evasion in relation to intra-State taxation.

Conclusion: The provisions were within the legislative competence of the State Legislature and were not ultra vires on that ground.

Issue (ii): Whether section 7, particularly sub-section (2), was arbitrary and violative of article 14 for not requiring a substantive adjudication before penalty and release of seized goods.

Analysis: Although section 7(2) expressly requires a reasonable opportunity of being heard, the scheme of the provision would become harsh and arbitrary if penalty were treated as automatic upon seizure and failure to produce documents at the check-post. The hearing must therefore extend beyond valuation and quantum of penalty to the question whether, on the facts, any penalty should be imposed at all. The word "may" in section 7(2) was read as conferring a discretionary power to impose or decline penalty, and in appropriate cases to direct release of the goods. This reading preserves the provision from invalidity under article 14.

Conclusion: Section 7(2) was construed as directory and adjudicatory in character, and the impugned seizure-cum-penalty action could not stand without fresh adjudication.

Final Conclusion: The applications succeeded in part, the penalty proceedings were set aside for fresh consideration, and the matters were remitted for adjudication after affording a reasonable opportunity of hearing.

Ratio Decidendi: A fiscal check-post and seizure scheme is valid if it is a regulatory measure to prevent tax evasion, but penalty cannot be imposed mechanically on seizure alone; the authority must exercise a real discretion after hearing the affected party on whether any penalty is justified and, if not, release of the goods follows by implication.

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