TaxTMI 
TaxTMI 
2015 (11) TMI 215
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....ed a notice under section 49 of the KVAT Act proposing a confiscation of the vehicle that was used to transport the consignment of plywood. It is the case of the petitioner that when, despite submitting a detailed reply to the notice received by him from the second respondent, the second respondent was not inclined to release the vehicle or the goods, the petitioner approached this court through Writ Petition No. 25627 of 2010 and by exhibit P11 judgment this court disposed the said writ petition directing the second respondent to consider the documents produced by the petitioner in support of his case and pass orders thereon. It is pointed out that the second respondent thereafter passed orders detaining the vehicle and directed the payment of redemption fee and detention amount for the release of the vehicle and the goods. Although the petitioner has complied with the orders passed by the second respondent, the writ petition is filed challenging the provisions of section 49 of the KVAT Act, 2003 as unconstitutional, being beyond the legislative competence of the State Legislature and ultra vires articles 14, 19 and 21 of the Constitution of India. The petitioner also contends tha....
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....ficer to verify whether any notified goods are being smuggled into or out of the State. (2) If on verification such officer has reason to suspect that the notified goods are being smuggled into or out of the State, he may, without any unreasonable delay, produce the goods and the vehicle before such officer authorised by the Government, by notification in the Gazette, not below the rank of an Assistant Commissioner. (3) Where the authorised officer is satisfied that the driver or other person-in-charge of the vehicle or vessel or other conveyance is smuggling notified goods, the officer shall have the power to seize and detain the goods along with the vehicle or vessel: Provided that before taking action to seize and detain the goods and the vehicle or vessel under this section, the officer shall give the person-in-charge of the goods and the owner, if ascertainable, and to the owner of the vehicle or the person-in-charge of the vehicle a notice in writing informing him the reason for the seizure and detention of the goods and vehicle or vessel and an opportunity of being heard: Provided further that the authorised officer may release the goods a....
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....of the owner himself, his agent, if any, or the person-in-charge of such vehicle or vessel and that each of them has taken all reasonable and necessary precautions against such use: Provided that the authorised officer shall serve notice to the owner of the vehicle or the person-in-charge of the vehicle or the owner of the notified goods, if ascertainable, intimating the reason for the confiscation of the vehicle or vessel and an opportunity of being heard. The officer shall also afford an opportunity to pay a penalty equal to thrice the amount of tax attempted to be evaded by the owner of the goods and rupees one lakh by the owner or person-incharge of the vehicle or vessel in lieu of confiscation of vehicle, if the owner of the notified goods is not ascertainable or not willing to remit the penalty specified, the owner of the vehicle or the person-incharge of the vehicle or vessel shall pay three times of the tax sought to be evaded and an amount of rupees one lakh in lieu of confiscation of the goods and vehicle. (6) Any person aggrieved by an order under sub-section (5) may, within thirty days from the date of communication to him of such order, file an applic....
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....g the goods, is non-existent or bogus;" 5. The provision makes it clear that the apprehending of the vehicle, and the detention thereof along with the goods, can only be at the instance of an officer not below the rank of the Commercial Tax Officer. There are sufficient safeguards in the provision to ensure that only such notified goods, and the vehicles that are intimately connected with the transportation of the said goods, as would offend the provisions of section 46 of the Act, are subjected to the rigour of section 49. The challenge against the validity of the section, however, is primarily based on the earlier decision of this court in Syed Sirajuddin v. Intelligence Officer [2003] 129 STC 151 (Ker), where this court, considering a similar challenge against the provisions of section 30C of the KGST Act, struck down the provisions of the said section on finding that the provisions, which enabled the authorities to confiscate the vehicles that were involved in smuggling of goods, did not actually define the word "smuggling". In that context, it was held that the provisions of the Act governing confiscation, of vehicles and goods involved in smuggling, were vague and, therefo....
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.... has to be ascertained under the provisions of the relevant taxing statute. For this, it is necessary to fix a dealer, the taxable goods, place of sale or purchase of such goods and the quantum of tax. If a dealer in taxable goods transaction of sale or purchase escapes attention of the taxing authority, tax on such goods escapes with resultant loss to the State revenue.To overreach this possible escape a mechanism is invariably brought in a statute to seal such loopholes of escape, of course casting obligations on some to perform certain acts to reach this objective. Thus, maintaining accounts of goods transported into or outside Tripura in the prescribed manner and to furnish in the prescribed manner such information as the Commissioner requires including filling of form XXIV is only for the said objective to be achieved with the help and aid of such transporter or carrier, etc. Such obligation is cast only for identifying the consignor or consignee to fix liability on them in correlation with the goods carried by such transporter further requiring the disclosure of such goods with its quantity, value, weight, to help the taxing authority to assess such goods on such escaping dea....
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....st II could enable the State Legislature to provide for consequence of non-compliance by incorporating sub-section (5) therein. Section 78(5) and section 78(8) are part of an integral scheme and deal with two separate classes of people referred to in section 78(2)." Thereafter, in Commercial Tax Officer v. Swastik Roadways [2004] 135 STC 1 (SC), the Supreme Court while considering the validity of the provisions under the Madhya Pradesh Commercial Tax Act which prescribed the maintenance of records by, and penalty on, clearing and forwarding agents consequent to a failure to furnish information on transactions of dealers, found as follows in paragraph 11 (pages 9 and 10 in 135 STC): "11. We do not find any merit in the arguments advanced on behalf of the respondents. The power to levy a tax includes all incidental powers to prevent the evasion of such tax. The powers such as the power to seize and confiscate goods in the event of evasion of tax and the power to levy penalty are meant to check tax evasion and are intended to operate as a deterrent against tax evaders and are therefore ancillary or incidental to the power to levy tax on the sale of goods and thus fall with....
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.... in cases where he detects such evasions. This is clear from provisions of sections 57(1) and 58(1). Under various sections of the Act, tax-evaders are sought to be penalised and by contravening the provisions of sections 57 and 58 the clearing and forwarding agent also becomes liable as he facilitates such tax evasion. In the circumstances, the High Court erred in holding that there was no proximate connection between the clearing and forwarding agents and the tax evasion." On the same lines as the above decisions was the subsequent decision of the Supreme Court in A. B. C. (India) Ltd. v. State of Assam [2005] 142 STC 88 (SC); [2005] 5 RC 348, which also dealt with the validity of a provision under the Assam General Sales Tax Act, which required transporters and carriers to maintain accounts and furnish information. The court made the following observations with regard to the nature of the relationship of a transporter, to the transaction of sale or purchase of goods (page 100 in 142 STC): "22. In our view, the transporters are not strangers to the sale or purchase of goods; to the contrary are parts and parcels and are directly involved in storing the goods purchased....
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....g to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. It has been said by no less a person than Homes, J., that the Legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or straitjacket formula and this is particularly true in the case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the Legislature. The court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved. Nowhere has this admonition been more felicitously expressed than in Morey v. Doud [1957] 354 US 457 where Frankfurier, J. said in his inimitable style: 'In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. The Legislature after all has the affirmative responsibility. The courts have on....
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....he essence of pragmatic approach which must guide and inspire the Legislature in dealing with complex economic issues." The said observations have been quoted with approval in later cases which also indicate that the approach of the court, while examining a challenge to the constitutionality of an enactment, is to start with a presumption of constitutionality. Thereafter, the court should try to sustain its validity to the extent possible and it should strike down the enactment only when it is not possible to sustain it. The court should not approach the enactment with a view to pick holes or to search for defect of drafting, much less, in exactitude of language employed. It is necessary that any defects in drafting should be ironed out as part of the attempt to sustain the validity or the constitutionality of the enactment. The said principles emanate from a recognition of the fact that, an Act made by a Legislature represents the will of the people and, therefore, cannot be lightly interfered with. In the context of a taxing statute, the following observation in Government of Andhra Pradesh v. P. Lakshmi Devi [2008] 4 SCC 720, is also significant. "73. All decisions i....