TaxTMI 
TaxTMI 
2008 (4) TMI 687
X X X X Extracts X X X X
X X X X Extracts X X X X
....ompany'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 their value, the leather goods are taxable at the rate of 12 per cent. By making this writ application, under article 226 of the Constitution of India, the petitioners have 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 the authority of law and, hence, without....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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, found lying in the godown of the petitioners, had not been accounted for. Thus, the condition precedent, according to Mr. Goswami, for invoking the provisions of sub-section (5)(a)(ii) of section 74 did not exist in the present case and, hence, in such circumstances, the exercise of power of seizure of the goods, in question, was without the authority of law and needs to be regarded as arbitrary and without jurisdiction. Controverting the above submissions, made on behalf of the petitioners, Mr. Saikia has raised two preliminary objections to the maintainability of the writ petition. In this regard, Mr. Saikia submits that though no provision for appeal has been made in the Act against seizure of books of account, etc., and also as regard seizure of stock of goods, section 82 of the Act does make provisions for revision against such seizure. Since the seizures, made in the present case, are, according to Mr. Saikia, subject to the power of revision under section 82, there is an alternative and efficacious remedy available to the petitioner....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ered with. Repelling the above submissions made on behalf of the respondents, Mr. Goswami has contended that if the petitioner-company 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ealer 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 making the assessment of the income, which has escaped assessment, the prescribed authority may, after giving the dealer a reasonable opportunity of being heard and after making such enquiries as he may consider necessary, proceed to assess, to the best of his judgment, the amount of tax due from the dealer in respect of such turnover. The power vested in an authority, under section 74(3)(a), is really an enabling provision for the prescribed authority to collect materials for the purpose of determining if any income of the dealer has escaped assessment in any manner whatsoever. It cannot, therefore, be said that exercise of power of seizure of the accounts, regi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for a moment, beyond what is absolutely indispensable or necessary for the purpose of enabling the authority concerned to assess as to what is the amount, which shall be realisable from the dealer on account of the goods having not been accounted for. In the case at hand, since no notice has yet been served on the petitioner-company, no proceeding, under clause (b) read with clause (c) of sub-section (5) of section 74, has really commenced. The fact that the respondents are still working out as to how much tax is liable to be paid cannot be said to be a proceeding for the purpose of clause (b) and/or clause (c) of sub-section (5) of section 74. In such circumstances, it was not incumbent, on the part of the petitioner-company, to mention, in the writ petition, the fact that the respondents are working out as to how much amount is, according to the respondents, payable as tax by the petitionercompany. When the seizure of goods is admitted and the notice, as contemplated by clause (b) of sub-section (5) of section 74, has not been issued, it is but natural to infer that making of the assessment is still in progress. Had there been no progress, the petitioners could have come to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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, is 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 the conditions subject to which exercise of such power is permissible. In such a case, such exercise of power would be treated as an exercise of power without authority of law and without jurisdiction. In the case of Wazir Chand v. State of Himachal Pradesh AIR 1954 SC 415, the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation [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 the present case, when the petitioners contend, as already indicated above, that the conditions precedent for exercise of power of seizure of books of account, etc., and also the conditions precedent for exercise of power of seizure of goods were wholly non-existent, it becomes transparent that according to the petitioners, the seizures were made without the authority of law. When such is the contention of the petitioners, the fact that there are provisions for revision in the relevant statute cannot bar the High Court from exercising its powers under article 226 if the High Court is satisfied that the submissions made by the petitioners, as indicated hereinbefore, are well founded. The question, thus,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n exercise of its jurisdiction under article 226, either at the stage of show cause notice or at the stage of assessment, where alternative remedy by way of filing a reply or appeal is available, has nevertheless clarified that there are limitations imposed by the courts themselves in exercise of their jurisdiction and these are not matters, which are jurisdictional in nature. This decision, therefore, shows that the principle of non-interference by way of writ jurisdiction under article 226 in a case, where there is provision for appeal or other statutory remedy, is self-imposed and does not restrict the jurisdiction of the High Court to entertain a writ petition, in an appropriate case, even where alternative remedy may have been statutorily made available provided, of course, that the conditions for invoking such jurisdiction, as indicated hereinabove, are satisfied. As far as the case of Dunlop India Ltd. [1985] 154 ITR 172 (SC); [1985] 1 SCC 260, relied upon by Mr. Saikia, is concerned, this case is essentially a case in respect of passing of interim orders. Even in Dunlop India Ltd. [1985] 154 ITR 172 (SC); [1985] 1 SCC 260, the apex court has clarified that interim orders m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt out here that section 3(10) of the Act comes into play, when a person challenges the jurisdiction of an authority under the Act upon service of notice on him under the provisions of the Act. In a given case, therefore, when the seizure itself is without jurisdiction or authority, there is no legal impediment, on the part of such a person, to come to the High Court seeking interference in exercise of the High Court's powers under article 226. Let me, now, deal with the legality of the seizure of various books, registers, etc., which forms the subject of challenge in the present writ petition. The grounds of seizure, mentioned, in this regard, in the impugned seizure list, mentions thus: "Grounds of seizure-The godown in-charge misclassified the goods and effected sale at the lower rate. Goods (footwear) taxable at 12.5 per cent are entered in books of account as four per cent. Hence, taxes are likely to be found evaded payable under the AVAT Act, 2003. List of document seized: 1.. Exhibit 1 5 (five) Nos. notebook containing business transactions. 2. Exhibit 2 1 (one) bundle of loose slips relating to the business. 3. Exhibit 3 18 (eighteen) Nos. of challan books.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....jurisdiction or without any authority of law. Turning to the seizure of goods, it needs to be noted that the grounds of seizure, as regard the goods, read as under: "Stock of goods were found not matching with the invoice produced. 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." From a bare reading of the grounds of seizure of goods, as mentioned above, it becomes transparent that the stocks of goods were allegedly found to be not matching with the invoices produced. The allegations, so made against the petitioner-company, may or may not be true; but this court, in the present proceeding, has to proceed on the assumption that the allegations are true and, upon such assumption, examine and test if the grounds, assigned for the seizure of the stock, are sustainable 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 bo....