Security for tax collection upheld where statutory safeguards constrained discretion and natural justice was satisfied before the order.

Section 8A of the Bengal Finance (Sales Tax) Act, 1941 was upheld as a valid safeguard for tax collection because the Commissioner's power to demand security was conditioned on satisfaction that it was necessary for proper realisation of tax and required recorded reasons, so it was not an undefined or unrestricted discretion. The absence of a fixed upper limit for security did not invalidate the provision because the amount had to relate to the dealer's present or likely tax liability, having regard to business nature and turnover, with revision available as an additional control. Natural justice was not breached where notice was issued, explanations were filed and heard, and objections were considered before the security order was made.

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Issues: (i) Whether section 8A of the Bengal Finance (Sales Tax) Act, 1941 conferred an undefined, unlimited or unrestricted power on the Commissioner to require security; (ii) whether the provision was invalid because it did not prescribe any upper limit for the amount of security; and (iii) whether the absence of an express hearing provision or prior inquiry rendered the section unconstitutional or the impugned order bad for violation of natural justice.

Issue (i): Whether section 8A of the Bengal Finance (Sales Tax) Act, 1941 conferred an undefined, unlimited or unrestricted power on the Commissioner to require security.

Analysis: The power under section 8A was conditioned by the statutory requirement that the Commissioner must be satisfied that security was necessary for the proper realisation of tax, and reasons had to be recorded in writing. The provision therefore supplied its own guidance and did not leave the matter to unguided personal discretion. The power to require security was treated as a permissible safeguard in aid of tax collection.

Conclusion: The section did not confer an unlimited or unrestricted power and was valid on this ground, against the petitioner.

Issue (ii): Whether the provision was invalid because it did not prescribe any upper limit for the amount of security.

Analysis: The amount of security had to bear a relation to the tax liability that the dealer may be or become liable to pay. It was to depend on the nature of the business, turnover and likely tax payable, and the order was subject to revision by the Chief Commissioner, providing further control against arbitrariness.

Conclusion: The absence of a fixed ceiling did not make the provision invalid, against the petitioner.

Issue (iii): Whether the absence of an express hearing provision or prior inquiry rendered the section unconstitutional or the impugned order bad for violation of natural justice.

Analysis: Even without an express recital of a hearing procedure, the principles of natural justice applied. The petitioners were in fact issued notice, appeared, filed a written explanation and made oral submissions before the Sales Tax Officer, and their objections were considered before the security order was made. A further oral hearing before the Commissioner was not held to be necessary in the circumstances.

Conclusion: There was no violation of natural justice and the contention failed, against the petitioner.

Final Conclusion: The challenge to the validity of section 8A and to the security order failed, and the petition was dismissed with costs.

Ratio Decidendi: A statutory power to demand security for tax collection is valid where the statute itself supplies guidance by conditioning the exercise of power on necessity for proper realisation of tax, requiring recorded reasons, and subjecting the order to revision; natural justice is satisfied when the affected party is given a real opportunity to respond before the order is made.

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