Coercive tax recovery on lost way bills is unlawful without assessment, proven liability, or evidence of misuse.

Coercive recovery of estimated tax on lost way bills was held unlawful where no assessment, proved liability, or evidence of misuse of the lost forms existed. The petitioner had reported the loss, furnished a bank guarantee and indemnity bond, and the record showed no amount due on assessment or otherwise. General allegations that way bills are sometimes misused by dealers could not justify a demand against this assessee. The demand and recovery were therefore found to be without authority of law and arbitrary, and costs were imposed for the improper exercise of power.

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Issues: Whether the demand notice and coercive collection of Rs. 80,000 towards estimated tax on lost way bills, in the absence of any assessment, established liability, or proved misuse of the lost way bills by the petitioner, was lawful.

Analysis: The petitioner had informed the authorities of the loss of the way bill book, furnished a bank guarantee and an indemnity bond, and there was no dispute that no amount was due on assessment or otherwise. It was also not the respondents' case that the lost way bills had been misused by anyone causing loss to the department. In these circumstances, the demand and the attempted recovery had no foundation in law and were characterised as high-handed and arbitrary. Reliance on misuse of way bills by dealers in general could not justify action against the petitioner.

Conclusion: The impugned demand and recovery action were illegal and without authority of law, and the petition was allowed with costs.

Final Conclusion: The petitioner succeeded in challenging the coercive demand, and the respondents were directed to bear costs, including exemplary costs, for arbitrary exercise of power.

Ratio Decidendi: A fiscal demand cannot be enforced coercively unless it is supported by lawful authority and a legally sustainable liability; generalised suspicion or unrelated misuse by others cannot justify recovery from a particular assessee.

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