TaxTMI 
TaxTMI 
TaxTMI 
2008 (7) TMI 869
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....39;s godown at Dhirenpara, Guwahati, and served, on the petitioner-company, a notice, dated February 6, 2008, issued under section 74(1) of the Act, and demanded that the petitioner-company shall produce or cause to be produced all necessary documents related to the books of account, on February 6, 2008 itself, in order to ascertain the taxes payable by the petitioner-company. Respondent No. 4 also seized, vide two seizure lists, stock of goods, documents, stock register, other registers and books relating to the business of the petitioner-company. At the time of the said seizure, the petitioner-company had, in their stock, both plastic as well as leather goods. While the plastic goods are taxable at the rate of four per cent of its value, the leather goods are taxable at the rate of 12 per cent. By making a writ application, under article 226 of the Constitution of India, which gave rise to W.P. (C). No. 1050 of 2008(1), the petitioners had impugned the said notice and also seizures of the books of account and goods by respondent No. 4 on the ground, inter alia, that the notice aforementioned as well as seizures of the goods and also of the books of account were without th....
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....Shoes Ltd. v. State of Assam [2008] 14 VST 422 (Gauhati). the seizure was upheld on a factually incorrect submission made on behalf of the respondents, such incorrect submissions, in the writ petition, having been made on, perhaps, incorrect instructions given to their counsel by the respondents inasmuch as the respondents sought to sustain, in the writ petition, seizure of the goods by contending that the seized goods did not tally with the invoices produced by the petitioners; whereas the seizure was, in fact, made not because of alleged non-production of invoices, but because of the alleged misclassification of goods and (ii) that even otherwise, the conclusion, reached in the decision aforementioned, to the effect that the seizure, in question, was within the jurisdiction, is an error, which is apparent on the face of the record, inasmuch as the seizure of the goods, in question, in the light of the relevant provisions of the Act, were ex facie without jurisdiction and this becomes clearer, when the events, subsequent to the disposal of the writ petition, are taken into consideration inasmuch as the subsequent notice, dated April 16, 2008, clearly shows that the seizure of the ....
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....tioner, according to Mr. Dutta, cannot seek review of the entire case on merit, for, the merit of an order or of a case can be decided in appeal and not by way of review petition. It is also submitted by Mr. Dutta that a review can be for an error on the face of the record, such error being an error of fact, and not for correction of an error of law inasmuch as an error of law, contends Mr. Dutta, can be corrected by a court of appeal and not by resorting to the power of review. A review, further contends Mr. Dutta, is possible under order 47, rule 1 of the Code of Civil Procedure, 1908 (in short, "the Code") on three specific grounds, namely, (i) discovery of new and important matter or evidence, which, after exercise of due diligence, was not within the knowledge of the person seeking the review or could not be produced by him, when the order, sought to be reviewed, was passed, (ii) mistake or error apparent on the face of the record and (iii) any other sufficient reason. The expression, "any other sufficient reason", submits Mr. Dutta, would mean such a reason, which is "analogous" to the other two reasons as specified hereinbefore. It is not possible, insists Mr. Dutta, to revi....
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....ions of order 47, rule 1 of the Code, were mentioned, in Moran Mar Basselios Cathlicos v. Most Rev. Mar Poulose Athanasius AIR 1954 SC 526, as the only grounds on which alone review was possible, is not a rule of universal application, for, it is, according to Dr. Saraf, permissible to review an order, which is found to have been suffering from mistake of fact or law and, if necessitated, an order can be reviewed by even invoking the doctrine of "actus curiae neminen gravabit". Hence, in a given case, the court may review its order, contends Dr. Saraf, on "any other sufficient reason ", though such a "reason" may not necessarily be "analogous" to the two grounds specified in order 47, rule 1, namely, (i) discovery of new and important matter or evidence, which, after the exercise of due diligence, was not within the applicant's knowledge or could not be produced by him at the time, when the order was passed, or (ii) mistake or error, which is apparent on the face of the record. Support for this submission is sought to be derived by Dr. Saraf from the case of Board of Control for Cricket, India v. Netaji Cricket Club reported in [2005] 4 SCC 741. Referring to Lily Thomas v. Unio....
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....in, on Board of Control for Cricket, India [2005] 4 SCC 741. Let me, now, deal with the correctness or otherwise of the submissions noted above and determine the scope and ambit of the power of review of the High Courts. While considering the scope of the power of review, what needs to be noted is that under section 114 of the Code, any person, considering himself aggrieved, by a decree or order of a court from which appeal is allowed, but no appeal is preferred, or where there is no provision for appeal against the order or decree, may apply for review of the decree or order, as the case may be, in the court, which made the order or passed the decree. Broadly speaking, thus, under section 114 of the Code, review of a decree or order is possible if no appeal is provided against such a decree or order or where provisions for appeal exist, but no appeal has been preferred. This is really the substantive power of review. This substantive power of review under section 114 has not laid down any condition as a condition precedent for exercise of the power of review nor has section 114 imposed any fetters on the court's power to review its decision. No wonder, therefore, that the ape....
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....d that "any sufficient reason" cannot become a ground for review unless even such "sufficient reason" is "analogous" to one of the other two grounds mentioned in order 47, rule 1, namely, (i) discovery of new and important matter or evidence, which, after the exercise of due diligence, was not within the applicant's knowledge or could not be produced by him at the time, when the decree was passed or (ii) mistake or error apparent on the face of the record. Board of Control for Cricket, India [2005] 4 SCC 741 is one of those cases, which has elaborately dealt with the scope of the power of review, particularly, of the High Courts and, having considered the case of Moran Mar Basselios Cathlicos AIR 1954 SC 526, the Supreme Court has clarified, in no uncertain words, in Board of Control for Cricket, India [2005] 4 SCC 741, that the rule that "any other sufficient ground" must be "analogous" to the other two grounds, as mentioned in order 47, rule 1, is not a rule of universal application. The relevant observations, made, at para 91, in Board of Control for Cricket, India [2005] 4 SCC 741, in this regard, read: "91. It is true that in Moran Mar Basselios Cathlicos v. Most Rev. Ma....
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....eation of statute and not an inherent power, that (b) no power of review can be exercised if not given to a court or Tribunal either specifically or by necessary implication; and that (c) under the guise of review jurisdiction, merit of a decision cannot really be examined, the Supreme Court has, in unequivocal terms, pointed out that justice is, after all, a virtue, which must prevail over all barriers and that the rules, procedures or technicalities of law must, if necessary, bend before justice and that such a situation may arise, when a court finds that it has rendered a decision, which it would not have rendered, but for an assumption of fact, which, in fact, did not exist and its adherence to such a faulty decision would result in miscarriage of justice. In such cases, rules Lily Thomas [2000] 6 SCC 224, nothing can prevent a court from rectifying its own error, because the doctrine of "actus curiae neminem gravabit", (i.e., an act of court shall prejudice none), can be invoked, in such a case, for correcting the error committed by the court. The real theme of the Supreme Court's decision, in Lily Thomas [2000] 6 SCC 224, is that though the power of review cannot be exer....
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....trol for Cricket, India [2005] 4 SCC 741, that in exercising the power of review, the court can take into account any subsequent event, the Supreme Court has pointed out that when a court, in the light of the subsequent event, finds that it had committed a mistake in understanding the nature and purport of an undertaking given by a counsel appearing on behalf of a party, the court may rectify its own mistake. One can profitably refer, in this regard, to the following observations made, at paras 87, 89, 90 and 93, in Board of Control for Cricket, India [2005] 4 SCC 741. "87. Indisputably, an undertaking had been given by a learned Senior Counsel appearing on behalf of the Board. In the impugned order, the Division Bench before whom such undertaking had been given was of the opinion that it was misled. This court having regard to the understanding of such undertaking by the Division Bench does not intend to deal with the effect and purport thereof and as we are of (1)Here italicised. the opinion that the Division Bench of the Madras High Court itself is competent therefor. If para 14 of the order of the learned single judge is to be taken into consideration, it is possible to conten....
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....ate, an application for review may be necessary and by invoking the doctrine of "actus curiae neminem gravabit", the court can correct such an error. This, in turn, shows that if, as a result of misunderstanding of fact or law by a court, a mistake has crept in, which the court finds would cause or has caused miscarriage of justice, such an error can, and must, be corrected by exercising the power of review and, for this purpose, the doctrine of "actus curiae neminem gravabit" can also be invoked. A mistake, on the part of the court, would include, according to the decision in Board of Control for Cricket, India [2005] 4 SCC 741, a mistake in the nature of the undertaking, which may have been given by a counsel meaning thereby that when a counsel, on a mistaken belief or on an erroneous or incorrect instruction, makes a statement and the court acts on such a statement, but, on a review application having been subsequently filed, the court finds that it had misunderstood the counsel's submission or had got misled by a counsel's submission or when the court finds that it (court), had proceeded on an assumption of fact, which did not really exist, or when it (court) finds that....
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....331, that laws cannot be interpreted and enforced divorced from their effect on human beings for whom the laws are meant. Further observed the Supreme Court, in Municipal Board, Pratabgarh [1982] 3 SCC 331, on this aspect of law, thus, ". . Undoubtedly, rule of law must prevail but as is often said, 'rule of law must run akin to rule of life. And life of law is not logic but experience'. By pointing out the error which according to us crept into the High Court's judgment the legal position is restored and the rule of law has been ensured its pristine glory . . .". From the decisions in Municipal Board, Pratabgarh [1982] 3 SCC 331, Rajesh D. Darbar [2003] 7 SCC 219, Lily Thomas [2000] 6 SCC 224 and Board of Control for Cricket, India [2005] 4 SCC 741, what clearly transpires is that whenever a mistake is committed by a court, because of wrong interpretation of law or because of incorrect assumption of fact or because of misrepresentation of fact by the counsel or when a decision is based on a submission, which might have been made by a counsel on a wrong or incorrect instruction, or when a decision is based on a wrong understanding of a counsel's submissions or on ....
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....fficulties in implementing the principles and norms laid down by the apex court and accordingly, applications were made by some of such agencies seeking clarification as well as alteration in the principle and norms, which had been laid down by the apex court in this regard. The apex court, in Laxmi Kant Pandey [2001] 9 SCC 379, clarified the norms and procedures, which it had laid down earlier on the subject-matter of inter-country adoption. From the decision in Laxmi Kant Pandey [2001] 9 SCC 379 too, one can easily gather that in a given case, when a court's decision or direction has been misunderstood by the parties or have created difficulties in carrying out or implementing the directions, the court owes a duty to clarify its decision or order, as the case may be. M.C. Metha v. Union of India reported in [1986] 2 SCC 325, is yet another case, wherein the Supreme Court had, while declining to modify the conditions, which it had imposed by its earlier directions, had, nevertheless, clarified as to how the directions given by it earlier shall be carried out. The relevant observations, made in this regard, read: ". . . We do not therefore propose to modify this part of the ....
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....9;s power to review its order or decision, yet the power of review even by a civil court cannot be unguided and uncanalised, for, order 47, rule 1 circumscribes the court's power of review. Though, at one point of time, it was considered to be a rule of universal application that review by a court of its order is not possible except on two prescribed grounds, namely, (i) discovery of new and important matter or evidence, which, after the exercise of due diligence, was not within the applicant's knowledge or could not be produced by him at the time, when the decree or order was passed and (ii) mistake or error apparent on the face of the record or any such sufficient ground, which is analogous to the two grounds aforementioned, the subsequent development of law, on the subject of review, has shown that this rule is no longer a rule of universal application. One of the cases, which has helped in the expansion of the court's power to review its order is the case of Lily Thomas [2000] 6 SCC 224 inasmuch as Lily Thomas [2000] 6 SCC 224 ruled that ordinarily, the power of review, being a creature of statute, cannot be exercised as an inherent power, yet such technicalities o....
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....take in the nature of the undertaking, which may have been given by a counsel meaning thereby that when a counsel, on a mistaken belief or on an erroneous or incorrect instruction, makes a statement and the court acts on such a statement, but, on a review application having been subsequently filed, the court finds that it had misunderstood the counsel's submission or had got misled by a counsel's submission or when the court finds that it (court) had proceeded on an assumption of fact, which did not really exist, or when it (court) finds that it had misinterpreted a provision of law or had acted on a misconception of law and that the error, so crept in, was, as a result of subsequent event or otherwise, apparent on the face of the record, and that such error had caused, or would cause, miscarriage of justice, such a reason would be a "sufficient reason" calling for exercise of the power of review. Coupled with the above, when a court finds that its decision or order has confounded the parties concerned and has been causing, or has caused, impediments in effective execution or implementation of its directions or in understanding the directions correctly, it is within the am....
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.... the relevant parts of the decision (rendered on April 11, 2008, in W.P. (C). No. 1050 of 2008(1)), which deal with the rival submissions made on behalf of the parties concerned, how this court had dealt with the questions raised and why this court had, eventually, reached the conclusion that the seizure of the goods, in question, was not in violation of the relevant provisions of law. With these objectives in view, let me, first, point out as to what the rival submissions, on the question of the seizure of goods, were. The relevant submissions, on this aspect of the writ petitioner's case, as appear at para 8 of the decision, under review, are reproduced hereinbelow: "8. Assailing the seizure of the goods, Mr. Goswami has contended that under sub-section (5)(a)(ii) of section 74, the power of seizure is exercisable only when the authority concerned has reason to believe that though the goods belong to the dealer, the same have not been accounted for by the dealer in his accounts or registers or other documents maintained in the ordinary course of his business. In the present case, submits Mr. Goswami, a careful reading of the relevant seizure list does not show that the goods....
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....r. Goswami has contended that if the petitionercompany has sold any goods and has not paid requisite tax, the remedy lies not in making seizure under section 74 of the Act; rather, the remedy, in such a case, according to Mr. Goswami, lies in taking resort to section 40 of the Act, which makes provisions for realisation of escaped assessment. As far as the goods, in the present case, are concerned, Mr. Goswami submits that there is nothing, in the seizure list, to show that the goods had not been accounted for; rather, seizure has taken place, according to Mr. Goswami, on account of the fact that the goods were misclassified. It is further pointed out by Mr. Goswami that the seizure list clearly shows that the goods, found lying in the godown of the petitioner-company, were duly accounted for in the stock register and, hence, in such circumstances, if the stock register has been maintained by misclassifying the goods, i.e., the goods, which were of leather, have been shown as plastic goods, it would become a case of escaped assessment. Consequently, the power of seizure, under section 74(5), in such a case, according to Mr. Goswami, could not have been exercised, for, the condition....
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....cise of power under section 74(5)(a)(ii) was justified. Notwithstanding the fact the grounds of seizure reflected that seizure was also due to the alleged misclassification of goods, this was not a ground, which was ever pressed into service by the respondents in the writ petition; rather, they abandoned or, at least, avoided seeking to assert that the seizure of the goods was on account of misclassification of goods; significantly, if I may reiterate, what the respondents sought to contend, for the purpose of sustaining the seizure of the goods, was that seizure had taken place due to the fact that the goods did not tally with the invoices produced meaning thereby that since the goods were not found to have been tallying with the invoices produced, there was no entry in existence with regard to those goods, which were seized, and, hence, the goods, so seized, cannot be said to have been accounted for. Thus, the submissions, noted above, clearly reflect that the specific case of the respondents, as set up in the writ petition, was that the goods had been seized, because of the fact that the "seized goods did not tally with the invoices produced". It was never, I may repeat, never ....
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....re shown taxable at a lower rate. In the light of the rival submissions, made before this court, as the same appear in the court's earlier decision(1), under review, at paras 8, 11 and 12, regarding how this court and why this court had come to take the view that the seizure of goods cannot be interfered with, this court's observations, made at paras 15, 16, 39, 40 and 41, are relevant and, therefore, reproduced hereinbelow: "15. A conjoint reading of section 40 and section 74, particularly, sub-section (3) thereof, makes it clear that seizure of the accounts, registers, etc., is permissible if the prescribed authority has reasons to believe that the dealer has evaded or is attempting to evade payment of any tax due from him and/or he is keeping or has kept his accounts in such a manner as is likely to cause evasion of tax payable under the Act. What section 40 does is that it empowers the prescribed authority to make assessment of the tax, which has escaped assessment or has been under-assessed or has been assessed at a rate lower than the rate at which it is assessable or a deduction has been wrongly allowed or any credit has been wrongly permitted. For the purpose of m....
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....le in law. Viewed in this light, it becomes clear that when the goods, lying in the godown of the petitioner-company, were allegedly found not tallying with the invoices produced by the petitioners' representative, it cannot be said that "the goods had been accounted for by the petitioner-company" in their books of account, registers, etc. In such circumstances, if I may reiterate, the goods, in question, cannot be said to have been accounted for in terms of section 74(5)(a)(ii). 41.. Thus, the conditions precedent for exercise of power under section 74(5)(a)(ii) did exist in the present case and, in such circumstances, such seizure, in question, cannot be said to be without jurisdiction or without the authority of law. I may also point out that the grounds of seizure, as far as goods are concerned, are divided into two parts. While the first part reads, 'stock of goods was found not matching with the invoice produced', the second part states, 'goods taxable at the higher rate are found shown as taxable at the lower rate of taxes and thereby causing evasion of taxes payable under the AVAT Act, 2003'. In short, the grounds of seizure of the goods, in question, s....
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.... a manner as would uphold the legislative intent embodied in section 74(5). 46.. With the above object in view, the respondents are hereby directed to complete, if they have not already completed, the process of verification or enquiry, within a period of one week from today, and, upon completion of such verification or enquiry, respondents shall permit the petitioner to obtain release of the seized goods in terms of the provisions contained in section 74(5) and other provisions relevant thereto or connected therewith." Following the directions, given in the decision, dated April 11, 2008(1), the presently impugned notice, dated April 16, 2008, was issued by the Inspector of Taxes, Unit-B, Guwahati. This notice reads as under: "GOVERNMENT OF ASSAM OFFICE OF THE ASSISTANT COMMISSIONER OF TAXES: UNIT-B: GUWAHATI To, M/s. Dhanani Shoes Ltd., Amtola, Dhirenpara Guwahati-25 Sub: Notice of show-cause under section 74(5)(b) of the Assam Value Added Tax Act, 2003. Ref: 1. Seizure list dated February 6, 2008. 2. Honourable Guwahati High Court judgment and order dated April 11, 2008 passed in Writ Petition (Civil) No. 1050 of 2008 Dhanani Shoes Ltd. v. State of Assam(1). Wh....
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....t that the exercise of power of seizure of the goods, under section 74(5)(a)(ii), by respondent No. 2, cannot be said to be illegal or without foundation. What is being pointed out, in order to seek review of the conclusion so reached, is that this conclusion has been reached on a specific submission, which had been made, orally as well as in writing, on behalf of the respondents, by Mr. Saikia, learned counsel, appearing on behalf of the respondents, during the course of hearing of the writ petition, that the seizure, in question, had been made, because of the reason that the goods, which stood seized, were found to have not tallied with the invoices produced by or on behalf of the petitioners; whereas the submissions, which had been so made on behalf of the respondents, particularly, in their written submission, in the writ petition, have, now, proved to be completely hollow and wholly untrue and incorrect inasmuch as the respondents, in the presently impugned notice, dated April 16, 2008, have dropped the ground of the goods having not tallied with the invoices produced as the ground for seizure of the goods and, instead thereof, what the respondents, now, contend, in the impugn....
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....hat this court's conclusion (reached at para 41 of its decision, which is under review), that the seizure of the goods was legal, has been proved to be factually incorrect in the light of the subsequent development, i.e., the impugned notice, dated April 16, 2008, and this incorrect conclusion is apparent on the face of the record, such incorrect conclusion having been reached due to an incorrect submission made by Mr. Saikia, learned counsel, appearing on behalf of the respondents, and such incorrect submissions had, perhaps, been made due to false assertions made in the seizure list, in question, that the seized goods were found to have not been tallying with the invoices produced. Even otherwise also, points out the review petitioners, the seizure list clearly showed that the goods, which came to be seized, were found to have been entered, in the stock register, as goods taxable at four per cent; hence, when the stock of goods was found to have been entered in the stock register, the question of the goods having not been entered into in any register or documents, etc., and thereby the goods not having been accounted for did not arise at all; but this aspect of the matter, ac....
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.... at a lower rate and, furthermore, this court, ought to have clarified and must, now, clarify, and, indeed, clarifies that this court had never upheld the seizure, in question, on the ground of alleged misclassification of the goods by the petitioners in the sense that the goods, which are taxable at a higher rate, had been allegedly shown taxable, at a lower rate, by the writ petitioners. Having realised that the basis of the conclusion reached, in the writ petition, as regards the validity of the seizure of the goods, has disappeared, it is, now, sought to be contended, on behalf of the respondents, that the seizure of the goods were made not merely because of the fact that the seized goods did not tally with the invoices produced, but also on the ground that the books of account and the other relevant documents reflected that the leather goods, which are taxable at 12.5 per cent, were shown as plastic goods taxable at four per cent and that this misclassification of the goods was one of the grounds for sustaining the seizure of the goods. In order to strengthen this submission, it is, now, argued, on behalf of the respondents, that since section 74(5)(a)(ii) states that seizure....
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....as may be calculated on the price which such goods would have fetched on their assumed sale in the State, on the date of seizure, be not imposed on him for the dealer's default in not making entries in respect of such goods in his books of account or registers or other documents, as the case may be, maintained by him in the course of his business. (c) The authority seizing the goods shall record the statement, if any, given by the owner of the goods or his representative. If the authority referred to in clause (a), after taking into consideration the explanation of the dealer and after giving him a reasonable opportunity of being heard, is satisfied that the entries relating to the said goods were not made in the books of account, registers or other documents of the dealer without any proper justification, such authority shall, pass an order imposing penalty mentioned in clause (b) and direct him to deposit, in addition to the penalty, advance tax calculated on the deemed sale value of the goods at applicable rate of tax on sales of such goods which shall be adjustable with the liability to tax incurred on the purchase or the sale of such goods or the sale of goods manufacture....
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....lty is imposable only when no entry has been made in respect of the seized goods in the books of account, register or other documents maintained by the dealer in the ordinary course of his business, and his failure to offer any proper justification for not making the entries. It is, thus, seen that it is not making of any entry whatsoever, as envisaged in clauses (b) and (c), which would warrant imposition of penalty. This, in turn, shows that when clause (a) uses expression "not accounted for", it would mean "complete absence of entry in the books of account or register or documents maintained by the dealer in his ordinary course of his business", and not "proper", due or valid entry in the books of account or register or documents maintained by the dealer in his ordinary course of his business. The effect of such construction of clauses (a), (b) and (c) is that if entry can be related to seized goods, seizure of the goods is impermissible. Hence, when a dealer reflects, in his books of account, register or documents, a particular item as taxable, at a rate lower than what is ought to be, seizure of such goods is not possible, for, the goods can be traced with the help of the en....
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....goods. In other words, only those goods can be seized in respect whereof, no entry has been made. Thus, it is non-existence of entry in the books of account, registers or other documents, which can become the ground for seizure of the goods and it is this absence of entries, which is covered by the expression "not accounted for". The "non-existence of entry" cannot be equated to the expression "non-existence of proper or due or valid entries" nor can the expression "not accounted for" be equated to the expression "absence of proper or due or valid entries". The impression that it is the complete absence of entry and not mere absence of proper or due or valid entry, which can become the foundation for seizure of goods, gets strengthened, when one comes to clause (b) of sub-section (5) of section 74, for clause (b) requires the seizing authority to give a notice to show cause as to why penalty, as perceived in clause (b), shall not be imposed on the dealer "for the dealer's default in not making entries" in respect of such goods in his books of account, registers or any other documents. The expression, "for his default in not making entries in respect of such goods" cannot be eq....
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....on 74(5)(a), there remains no room for doubt that the condition precedent for making seizure of the goods, under section 74(5)(a), is that entries had not been made in respect of the goods in the books of account, registers or other documents maintained in the ordinary course of the business by the dealer. If the entries have been made and with the help of the entries so made, the goods, in controversy, can be identified, it can, by no stretch of imagination, be construed that the entries have not been made in terms of the provisions of section 74(5)(a). If the goods, sought to be seized, are identifiable, because of the brand-name or because of the code number, etc., of the product, it cannot be said, in the face of existence of such an entry in the books of account, register or documents, that no entries in respect of the goods exist and to a situation of this kind, provisions of section 74(5)(a) would not be attracted. What surfaces from the above discussion is that it is the non-existence of any entry or complete absence of entries in his books of account, register or other documents maintained by a dealer in the ordinary course of his business, which can become the foundation....
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....ment, such authority may leave the receipt at the premises and record this fact." A plain reading of clause (a) of sub-section (3) of section 74 makes it clear that when the authority concerned has reason to believe that the dealer has evaded or is attempting to evade payment of tax due from him or is keeping or has kept the accounts in such a manner as is likely to cause evasion of tax payable under the Act, the books of account of the dealer may be seized. However, no such condition has been imposed by sub-section (5)(a) of section 74 of the Act. If entries, in respect of the goods, which is sought to be seized, have been made in the books of account, registers or documents maintained in the ordinary course of business, then, such goods cannot be seized on the plea that the goods have not been "properly" or "duly" or "validly" entered into the books of account, registers or documents or that entries have been made therein in such a manner that the same is likely to cause evasion of tax payable under the Act. That such is the legislative intent, while enacting clause (a) sub-section (5) of section 74 of the Act, becomes all the more clearer, when one takes, in this regard, note o....
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....izure of goods. When the corresponding provisions, as embodied in the Act of 1993, are borne in mind, it becomes abundantly clear that a misclassification of goods could have, undoubtedly, been made a ground for seizure under the old Act of 1993, but not under the present Act, for, the word "properly", which appeared in section 46(2)(b), stands, now, consciously omitted in the present Act. It is interesting to note that even when there were some semblance of authority, under the old Act of 1993, to make seizure of goods if the goods had not been "properly accounted for" or when there was reason to suspect evasion of tax, this High Court, in Shri Kamal Kumar Sharma v. State of Assam reported in [2006] 144 STC 458 (Gauhati); [2005] 3 GLR 425, having considered the scope of the power of seizure of an authority under section 46(a) and (b) of the Act of 1993, observed and held as under (at page 463 of STC): "The rival submissions advanced on behalf of the parties have received the due and anxious consideration of the court. What must be emphasised at the outset is that the Act contemplates exercise of different species of power at different stages leading to the assessment of levy and....
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....e remedy can be attempted at the stage of final assessment and the object of the Act, i.e., to ensure due and proper collection of tax can be achieved at the stage of assessment, there is no reason why by a process of judicial interpretation such a power should be conferred to the authority at the stage of seizure. The power to determine the sale price for the purpose of assessment of tax under the Act, in case of a dispute, therefore, must be understood to have been vested in the assessing authority and insofar as a registered dealer like the writ petitioner is concerned, if the quantity of the goods in transit and the variety thereof is known what should be the sale price for the purpose of assessment of tax is a question that must be understood to have been relegated by the statute to the stage of final assessment, a conclusion that appears to be fortified by the provisions contained in the proviso to section 2(34)(d) of the Act." Thus, even when the words, used in section 46(2)(b) of the Act of 1993, were "not properly accounted for" and even when the goods might have been seized if the authorities had reason to suspect that evasion of tax may take place in respect of the good....
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....t the goods had not been accounted for and, hence, the seizing authority must be held to have acted arbitrarily and illegally in seizing the said goods from the godown of the petitioners. It appears that the seizure was made only on the ground that the goods, which, according to the petitioner, were plastic shoes taxable at the rate of 4 paise in a rupee, were, in the opinion of the seizing authority, not plastic goods and, therefore, taxable at the rate of 12.5 per cent in a rupee. The misclassification of an item cannot be a reason for the seizure of the goods under section 74(5)(a) of the Act. As already pointed out above, the pre-condition for seizing goods, under section 74(5)(a), is that no entry whatsoever has been made in respect of the goods in the books of account or registers or documents. In the present case, seizure has been upheld, if I may reiterate, not on the ground that the dealer had shown the goods in the stock register taxable at four per cent (because the seizure was not even sought to be sustained on this ground by the respondents), but on the ground that the goods seized did not tally with the invoices produced meaning thereby that there was no entry anywh....
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....tion carried out on the strength of the seizure of the goods), too suffers from lack of jurisdiction and cannot be sustained. Thus, this court's finding with regard to its own decision, under review, is sufficient not only to set aside the seizure, in question, but also the impugned notice to show cause. W.P. (C). No. 1781 of 2008: Bearing in mind what has already been indicated above, let me, now, deal with W.P. (C). No. 1781 of 2008, whereby the present petitioners have challenged the validity of the impugned show-cause notice, dated April 16, 2008. Though, in the light of the decision, reached on the review petition, the impugned notice to show cause cannot survive, what needs to be pointed out is that the review petitioners have, by way of a separate writ petition, challenged the show-cause notice, dated April 16, 2008, aforementioned and it is this writ petition, which, as indicated above, has given rise to W.P. (C) No. 1781 of 2008. The impugned notice is sought to be sustained by the respondents on the ground that the notice had been issued pursuant to the directions given by this court in its earlier decision, under review, and, hence, the notice to show cause cannot ....
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....to be seized, is found to have been made in the books of account, registers or documents maintained by a dealer in the ordinary course of his business. The seizing authority can assume jurisdiction, under section 74(5)(b), to issue show-cause notice only when the dealer defaults in making entry in respect of the goods in his books of account, registers or other documents as aforementioned. The very fact that the impugned show-cause notice claims that the goods, taxable at 12.5 per cent, have been shown as taxable at four per cent, logically implies that the entries in respect of the goods, which were seized, did exist in the books of account, documents or registers, although, in the opinion of the seizing authority, tax would be payable at 12.5 per cent instead of at four per cent. What is also equally important to note is that a dealer is free to sell taxable goods without realising sales tax from his buyer. As far as the dealer is concerned, he would be liable to pay sales tax, which he may or may not have realised from his buyer. Liability to pay sales tax arises only when the dealer sells goods and not before sale takes place. Before sale, the liability is to make entry in th....
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....on, proceeded against, to show cause against the assessment, which is sought to be made, and when provisions also exist for preferring appeal against the order, which may be passed in the assessment proceeding, there was an alternative remedy available to the person proceeded against and, hence, writ jurisdiction, under article 226, was not invokable. Reacting to the submissions so made, the Constitution Bench pointed out that when the conditions precedent for assumption of jurisdiction, under section 34 of the Income-tax Act, are not satisfied, the High Court would be justified in invoking its jurisdiction under article 226. In fact, leaving no room for doubt, the apex court emphasised, in Calcutta Discount Co. Ltd. [1961] 41 ITR 191 (SC); AIR 1961 SC 372, that when the Constitution confers on the High Courts the power to give relief, it becomes the duty of the High Court to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons. Thus, existence of alternative remedy cannot be construed as a bar to the exercise of jurisdiction under article 226 if a statutory authority exercises a power without satisfying ....
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....nt of any of the fundamental rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged . . ." From what have been observed and laid down, in Whirlpool Corporation Ltd. [1998] 8 SCC 1, it becomes clear that an alternative remedy is not an absolute bar to the exercise of jurisdiction, under article 226, in, at least, three contingencies, namely, (i) where the writ petition has been filed for the enforcement of any of the fundamental rights, or (ii) where there has been a violation of the principles of natural justice, or (iii) where the order or proceeding is wholly without jurisdiction or where the vires of an enactment is under challenge. In Buishi Yada Motors v. State of Arunachal Pradesh reported in [2004] 135 STC 438 (Gauhati); [2003] 3 GLR 550, this court has held that when a show-cause notice is issued on consideration of assumption of law, which are extraneous and untenable, the same makes the notice one without jurisdiction and thereby deserves to be interfered with under article 226 of the Constitution of India. The relevant observations, made in Bui....
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....an authority, which has the jurisdiction in regard to one aspect, launches an enquiry into a matter in respect of which it had no jurisdiction, then, merely because it had, in regard to one aspect, jurisdiction, the court cannot ignore the fact of lack of jurisdiction and allow the Tribunal to proceed in the matter in respect of which it had no jurisdiction to make enquiry. The observations made, in this regard, by the Supreme Court read as under (at page 287 of STC): ". . . We are unable to accept the contention of the learned counsel for reasons more than one. First, as submitted by Mr. K.K. Venugopal, if an authority which has jurisdiction in regard to one aspect takes upon itself to make enquiry into a matter in respect of which it had no jurisdiction then merely because in regard to one aspect it has jurisdiction, the court cannot ignore the fact of lack of jurisdiction and allow the Tribunal to proceed with the matter in respect of which it has no jurisdiction to make inquiry. Secondly, the position, stated above, namely, that valuation once accepted under clause (a) and there being no vitiating factor, no recourse can be had to valuation under clause (b) is a settled posit....
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....e proposed penalty is of no real significance. To the facts of the case at hand, therefore, the decision in V.S.T. Industries Ltd. [2008] 16 VST 283 (Gauhati) [App]; [2004] 2 GLT 290 has no application at all. Turning to the case of M.S. Associates [2007] 4 GLT 176, it needs to be pointed out that in M.S. Associates [2007] 4 GLT 176, a notice to show cause was issued on the ground that the petitioner therein was rendering business of auxiliary services without obtaining service tax registration. The said notice was challenged on the ground that the apex court, in B.R. Enterprises v. State of U.P. [2000] 120 STC 302 (SC); AIR 1999 SC 1867, has held that the State lotteries cannot be construed to be a trade and business within the meaning of articles 301 to 304 of the Constitution of India. The facts of the case of M.S. Associates [2007] 4 GLT 176 too, were, thus, completely different from the facts of the present case. The apex court's decision in P.N. Godavarman [2000] 10 SCC 494, which had been relied upon in M.S. Associates [2007] 4 GLT 176, is a case, where the apex court was dealing with a special leave petition filed against an interim order passed by the High Court on a....