Confiscatory taxing power struck down for arbitrariness and undefined discretion in anti-evasion seizure provisions.

Section 30C of the Kerala General Sales Tax Act, 1963, which authorised seizure and confiscation of specified goods and the transport vehicle on the ground of "smuggling," was struck down as an unconstitutional exercise of taxing power. The court held that while Entry 54 of List II permits ancillary anti-evasion measures, confiscation cannot rest on undefined and unguided discretion or on a subjective satisfaction standard that can operate even in trivial cases. Treating the provision as materially different from earlier regulatory safeguards, the court found the confiscatory power excessive and arbitrary. The consequential seizure and confiscation proceedings therefore could not stand.

---

---

Issues: Whether Section 30C of the Kerala General Sales Tax Act, 1963, which empowered seizure and confiscation of specified goods and the vehicle or vessel used for their transport on the ground of "smuggling", was constitutionally valid.

Analysis: The power of taxation under Entry 54 of List II includes ancillary measures to prevent evasion, but confiscation cannot be upheld merely because it is linked to revenue protection. Section 30C was found to confer a very wide and arbitrary power because the expression "smuggling" was not defined, the circumstances attracting confiscation were left to the subjective satisfaction of the authorised officer, and the provision was capable of operating even in trivial cases. The provision was also treated as materially different from the earlier regulatory mechanism under Sections 29A and 29B, and the reasoning in the earlier sales tax decisions was applied to hold that confiscatory power of this nature was not justified as an incidental tax measure.

Conclusion: Section 30C of the Kerala General Sales Tax Act, 1963, was held unconstitutional and struck down. The Original Petitions were allowed.

Final Conclusion: The confiscation provision was invalidated as an excessive and arbitrary exercise of taxing power, and the consequential seizure and confiscation proceedings could not stand.

Ratio Decidendi: A confiscatory provision enacted under the taxing power is unconstitutional if it confers undefined and unguided discretion, is not reasonably ancillary to tax collection, and permits arbitrary seizure and confiscation.

---