JUDGMENT
Narendra Mohan Kasliwal, J.
1. M/s Gill Sandhu Haryana Transport Co. (here in after referred to as ‘the petitioner’) has filed this writ petition challenging the provisions of Section 22A of the Rajasthan Sales Tax Act, 1954 (here in after referred to as ‘the Act’) in so far as it authorises the seizure of goods and. documents. It has also been prayed that a direction be given to the Assistant Commercial Taxes Officer, Anti Evasion, Head Office Circle, Jaipur to release the seized goods and documents of the petitioner. A prayer has also been made to direct the State Government to frame to suitable Rules and forms for the issue of transit pass as contemplated under Section 22B of the Act.
2. Brief facts leading to this writ petition are that the petitioner is a registered partnership firm having its head office at Naya Bazar, New Delhi and Branch Office at Agra Road, Jaipur. The petitioner is carrying on the business of transporting goods from one place to another.
3. According to the petitioner, the modus operandi of its business is that the consignors come at the place of its business and intimate that the goods are to be sent from a particular place to another destination. The petitioner takes delivery of the goods and issues goods receipts (GR) in which the name of the consignor is written. The GR is a document of title in respect of the goods. The delivery of the goods can be made only at the destination to the person who produces the goods receipt. The petitioner notes down the name of the consignee, which is intimated to it by the consignor. According to the trade usages and practice, the petitioner is not under any obligation to verify the name and address of the consignor or the consignee, nor the reasons for the despatch of the goods to a particular destination. The petitioner is only concerned with the freight which is payable to it in connection with the despatch of the goods from one place to another.
4. The case of the petitioner is that certain parties booked their goods from Delhi for Jaipur, Jodhpur and Indore. The goods were loaded in truck No. HRU 2995. The truck left Delhi on September 18, 1985 in the evening. The truck was accompanied with copies of the bills of sale along with the challan and the goods receipts.
5. The case of the petitioner further is that after leaving Delhi, the truck was first checked at Haryana check post, both inward and outward and thereafter the same was checked at Shahjanhpur, which is the first inward checkpost in the State of Rajasthan. The goods were duly checked and verified at Shahjanhpur check post and the challans were duly sealed bythe check post incharge. One of the GR’s meant for Jodhpur was not considered to be in order and a penalty of Rs. 1,600/- was levied under the provisions of Section 22A(7) of the Act. The rest of the GRs were found to be in order. There after the goods truck proceeded towards Jaipur. The truck was intercepted by the Assistant Commercial Taxes Officer, Anti Evasion, at Amber in the afternoon of September 20, 1985 without any reason or rhyme before the Octroi Check post, Amber. The driver of the truck was asked to drive the truck to ‘Kar Bhawan’ for verification and checking of the goods.
6. It has been further alleged that the driver under the direction of the Assistant Commercial Taxes Officer brought the truck to ‘Kar Bhawan’ and there he was served with a notice purporting to be under Section 22A of the Act mentioning therein to get the physical verification of the goods loaded in the truck. The original notice dated September 20, 1985 served on the driver has been submitted and marked as Annexure-1. It has been further submitted that on the next day i.e., on September 21, 1985 the petitioner Company’s Manager Shri Manmohan Singh went to the office of the Assistant Commercial Taxes Officer to get the truck and the goods released from his custody. The Assistant Commercial Taxes Officer insisted for unloading of the truck and for verification of the goods along with the GRs. The Assistant Commercial Taxes Officer found the GRs in respect of Jaipur and Jodhpur in order, but he suspected that the GRs meant for Indore were of suspicious nature, because the telephone numbers of the consignees and the consignors were not mentioned on the bills accompanied to the GRs. The Assistant Commercial Taxes Officer told the Manager of the petitioner that the goods meant for despatch to Indore shall remain seized till the correctness of the bills in the GRs is finally verified. The petitioner’s Manager requested that the goods were meant to be delivered outside the State of Rajasthan and as such the same should not be detained. The Manager of the petitioner further requested that they can send their officer to see that the goods actually passed through the Rajasthan border on their way to Indore. The Assistant Commercial Taxes Officer turned down all the requests made in this regard and seized the goods intended to be delivered at Indore. The seizure memo issued to the petitioner’s manager on September 21, 1985 has been submitted and marked as Annexure-2.
7. The case of the petitioner further is that while the truck was checked at the Checkpost Shahanjanpur, the petitioner’s driver requested the Incharge, Checkpost for the issue of transit pass in respect of the goods to be delivered at Indore, for being delivered to the Officer Incharge of the last Check post at Raipur, District Jhalawar in the State of Kajasthan as required under Section 22B of the Act. The Officer Incharge, however, told that the State Government has not yet framed any Rules or prepared any proforma for the issue of transit pass and as such he was unable to give any transit pass.
8. The case of the petitioner further is that after the -seizure of the goods, the petitioner’s Manager requested the Assistant Commercial Taxes Officer to release the goods on furnishing surety as required under Rule 63(4) of the Rajasthan Sales Tax Rules (here-in-after referred to as ‘the Rules’), but the Assistant Commercial Taxes Officer refused to release the goods even on furnishing the security bond. It has been further alleged that the Assistant Commercial Taxes Officer told the petitioner’s Manager that he was in the habit of approaching the Hon’ble High Court and he may again obtain the necessary orders from the High Court.
9. The non-petitioner No. 2 filed a caveat and submitted in the reply that the non-petitioner No. 2, Assistant Commercial Taxes Officer is investigating the matter to ascertain whether the consignors and consignees were genuine or fictitious. It has been further submitted that so far as the consignees of the goods are concerned, Shri Harimohan Gupta, ACTO & Shri S.N.Sharma, Commercial Taxes Officer were sent to Indore to ascertain the genuineness of the consignees. The aforesaid persons have gathered information and have found that all the consignees were fictitious. They have also obtained a letter from the Sales-tax Officer, Flying Squad No. 1, Indore in this connection. The copy of the report of Shri Hari Mohan Gupta and the letter of the Sales Tax Officer, Flying Squad No. 1, Indore have been submitted and marked as Annexures R/1 and R/2 respectively. These documents would show that the petitioner was carrying goods in the names of fictitious consignees to evade tax and deprive the State Government of its revenue. It has been further submitted that non-petitioner No. 2 is authorised to check the vehicle and merely because the vehicle had passed through Shahjanhpur Checkpost, it did not affect the competence of non-petitioner No. 2 to check the vehicle. It has been admitted that Section 22B of the Act has not been brought into effect so far.
10. It has been further submitted in the reply that there is no application on record to show that a request was made by the petitioner for release of the goods. If any application would be made in this regard, the same would be dealt with in accordance with law. What transpired orally cannot be ascertained, as Shri Mohan Singh, Assistant Commercial Taxes Officer was on leave from September 23, 1985. However, if an application is made, it can be dealt with by the Commercial Taxes Officer, Anti Evasion, Headquarters I who is competent to deal with this case.
11. It has been further submitted in the reply that the petitioner is habitually carrying on the transport business in a clandestine manner and has been carrying goods in a manner to evade the sales tax and deprive the State of its legitimate revenue. On number of previous occasions goods transported by the petitioner have been seized by the Sales Tax Department.
12. On June 28, 1984, goods in petitioner’s vehicle No. RNO 5547 were seized. On investigation it was found that the consignors of Delhi were found to be unregistered and non-existing and most of the consignees at Jodhpur were fictitious. The copies of the reports regarding consignors and consignees were placed on record as Annexures-R/3 and R/4 respectively. In that case a penalty of Rs. 11,021/- was imposed upon the petitioner.
13. In another case, on August 25, 1984, goods contained in vehicle No. HRU 4087 were seized. On investigation, it was found that out of 47 alleged consignors, two were registered dealers and the rest of the 45 were unregistered and non-existing. Nine consignees at Indore gave declaration that they have not ordered for the goods and some of the consignees were found to be unregistered. A copy of the report dated September 4, 1984 issued by the Sales Tax Officer (V.E.), New Delhi was submitted as Annexure-R/5. The goods in this case were released on account of ex parte order of this Court dated September 18, 1984.
14. In another case, on October 11, 1984, goods in vehicle No. RRD 5257 were seized. On investigation, it was found that all the 28 consignees of Indore were fictitious. Report of the Sales Tax Officer, Circle 4, Indore was submitted as Annexure-R/6. In this case, the goods were handed over to the petitioner company on supurdginama.
15. In yet another case, goods carried in vehicle No. RNE 7207 were seized on October 11, 1984. The Additional Commissioner wrote a letter dated October 16, 1984 to the Commissioner, Sales Tax, New Delhi for verification of 16 consignors. The office of the Commissioner gave a reply dated November 21, 1984 that none of the consignors were registered with the Department and apparently that the goods were transported on fictitious particulars. A copy of the letter dated October 16, 1984 along with its reply dated November 21, 1984 were submitted as Annexures-R/7 and R/8 respectively.
16. Another vehicle No. HRU 4045 was also intercepted on Sept. 2, 1985. The goods were released on furnishing security as per directions of this Court in S.B. Civil Writ Petition No. 1153 of 1985, M/s Gill Sandhu Haryana Transport Co. v. State of Rajasthan and Anr.
17. On Sept. 14, 1985, goods in vehicle No. HRU 4685 were intercepted by the CTO, Anti Evasion Head Quarters-I and in this case the petitioner accepted that the goods were being carried without bills and bilties and agreed to pay the penalty and accordingly a penalty of Rs. 5,020/- was levied and realised from the petitioner.
18. Another vehicle No. HRU 3000 was intercepted on Vishwakarma Octroi Post for checking. The Incharge of the Check-post, Shri Jagdish Lal Mathur, Assistant Commercial Taxes Officer, came to the Head Quarters Office control room for showing the bilties. In the meanwhile the driver of the truck with the help of a fiat car and in the presence of Commercial Taxes Inspector, Shri Tej Singh Rathore, ran away with the loaded truck. This happened on Sept. 26, 1985. The FIR was lodged in this connection, a copy of which was submitted as Annexure R/9.
19. On Sept. 26, 1985, another vehicle No. DEG 5925 was stopped at Jaipur By-pass Check-post to examine the goods and inspect the records. The petitioner threatened Shri Man Roop Singh, Commercial Taxes Inspector with dire consequences. After the Department was satisfied about the record, the petitioner was allowed to take away the goods along with truck. It has thus been prayed that in view of the circumstances mentioned above, the petitioner having not come with clean hands and looking to its conduct, it is not entitled to invoke the extra-ordinary jurisdiction of this Hon’ble Court.
20. Mr. Mehta, learned counsel for the petitioners has vehemently argued that the power of seizing goods from a transporter of the goods vehicle under Section 22-A of the Act is beyond the ambit of ancillary power of the Legislature under Entry 54 of List II of the Seventh Schedule of the Constitution of India. It has been submitted that the petitioner, who is only engaged with the business of transporting of goods from one place to another, has got nothing to do with the sales-tax and the goods cannot be seized from his possession even if there was any evasion of tax. It is submitted that the goods can be seized on a false impression that the consignors and/or consignees were not genuine and the officers of the Sales Tax Department can unnecessarily harass the transporters of the goods and this results in a restriction on the freedom of trade and business of the petitioner. It was also submitted that the power to seize goods carried in a goods vehicle cannot be said to be fairly and reasonably comprehended in the power to legislate in respect of taxes on sale or purchase of goods. The provisions empowering the Check post Officers to seize the goods were not ancillary or incidental to the power to tax on sale of goods and such provisions were ultra vires the powers of the State Legislature.
21. It was also submitted by Mr. Mehta that though a provision has been made Under Section 22-B qf the Act for issuing a transit pass when the goods were merely passing through a State, but the State Government has not made Rules in order to bring into effect the provisions of Section 22-B of the Act. It has been submitted that no fault lies with the petitioner, if Rules are not framed by the State Government for issuing transit pass and till then there was no justification to seize the goods.
22. On the other hand, it was submitted by Mr. Bapna, learned counsel for the non-petitioner No. 2, that the Legislative entries in the Constitution have to be considered in their widest amplitude and a power authorising imposition of the tax also includes a power to prevent tax imposed being evaded and to check such evasion. The provisions contained in Section 22-A of the Act did not provide for recovery of tax at all, but only provided for the imposition of a penalty and stringent measures to recover the same in case an attempt at evasion was made out and they were part of the incidental or ancillary powers to the power of taxation. The provision that the goods transporter should be accompanied by genuine documents is part of the provisions to check evasion. The provisions regarding furnishing of security and seizure of the goods in default, are only in the nature of an effective provision to recover the penalty, which, in turn, is a measure aimed at prevention of tax evasion and perfectly within the incidental or ancillary power of taxation. It has been further submitted by Mr. Bapna that the entire action has been taken in accordance with the powers and procedure contemplated Under Section 22-A of the Act. It has also been argued that the petitioner is in league with the consignors or consignees, who are regularly evading the tax and has been caught on several occasions prior to this incident and as such has no justification to invoke the extra-ordinary jurisdiction of this Court.
23. The situation which has arisen in the present case is of frequent occurrence and whenever the goods are seized, the transporters of such goods file writ petitions before this Court and obtain orders for releasing their goods. Many writ petitions are pending in which the vires of Section 22-A of the Act have also been challenged. Sub-section (1) of Section 22-A of the Act authorises the State Government or the Commissioner to set up Check-post or the erection of a barrier with a view to prevent or check evasion of tax under the Act by notification in the official gazette. Under Sub-section (2) of Section 22-A of the Act at every Check-post or barrier set up or erected Under Sectionub-Section (1), any officer empowered by the State Government in this behalf may ask the driver or any other person incharge of a vehicle, boat or animal to stop the same and keep it stationary so long as may reasonably be necessary and allow the Officer Incharge of the Check-post or barrier or the officer empowered as aforesaid to examine the goods carried in or on such vehicle, boat or animal and inspect all records relating to the goods carried which are in the possession of such driver or other person incharge. It further provides that on being so required, such driver or other person shall give his name and the address and the name and address of the owner’ of the vehicle, boat or animal and also the names and addresses of the consignors and consignees if any and in case the consignor or consignee is a registered dealer, whether in this State or any other State, the number with the name of the district of issue of the registration certificate. Sub-section (3) provides that the owner or person incharge of a vehicle, boat or animal shall carry with him a goods vehicle record, atrip-sheet or a log book, as the case may be, and such other documents as may be prescribed in respect of the goods and produce the same before any Officer Incharge of the Check post or barrier or any other officer as may be empowered by Government in that behalf. The owner or person incharge of the vehicle, boat or animal entering the State limits or leaving the State limits shall also give a declaration containing such particulars as may be prescribed of the goods and give one copy of the declaration to such officer and keep one copy with him. Sub-section (5) and Sub-section (6) deal with the seizure of goods and are reproduced as under:
22A. Establishment of checkpost or barrier and inspection of goods while in transit.
(5) The Officer-in-charge of a checkpost or barrier or the Officer empowered under Sub-section (2) shall have power to seize any goods which are under transport by a vehicle, boat or animal and are not covered by a goods vehicle record, a trip sheet or log book, as the case may be, and other documents prescribed under Sub-section (3) and, when the goods vehicle, boat or animal carrying any goods enters or leaves the State limits, the declaration referred to in Sub-section (3) also.
(6) The officer-in-charge of the check post or barrier or any other officer empowered in that behalf shall have powers to seize any goods other than exempted goods which are under transport by a vehicle, boat or animal in respect of which the declaration is false or which are not covered by the documents prescribed under Sub-section (3):
Provided that before seizing any goods, the officer-in-charge of the check post or barrier or any other officer empowered in that behalf shall record his reasons for doing so and shall give a receipt for the goods to the person from whose possession or control they are seized.
Explanation: For the purpose of this Sub-section exempted goods includes goods the sale or purchase of which by dealers in general is exempt from tax without any condition or on the sole condition that an exemption certificate, with or without payment of fee, is obtained or that the goods are recorded in the registration certificate of the dealer claiming the exemption.
24. As mentioned above, Sub-section (6) empowers the seizure of goods where the declaration is false or which are not covered by the documents prescribed under Sub-section (3). The provisions of proviso to Sub-section (6) lays down a safeguard that before seizing any goods reasons shall be recorded for doing so and a receipt for the goods seized shall also be given to the person from whose possession or control the goods are seized. Sub-section (7)(a) of Section 22A of the Act further provides that the Officer-in-charge of the check-post or barrier or any other officer not below the rank of an Assistant Commercial Taxes Officer, empowered in this behalf may, after giving the owner or person incharge of the goods, a reasonable opportunity of being heard and after holding such further enquiry as he may deem fit, impose on him for possession of goods not covered by goods vehicle record and other documents prescribed under Sub-section (3) or for submission of false declaration or documents, a penalty not exceeding 20% of the value of such goods, as may be determined by such officer. Thereafter clause (b) of Sub-section (7) provides that such officer may release any of the goods seized under Sub-section (5) or Sub-section (6) on payment of the penalty under clause (a) or on furnishing such security in such form as may be prescribed for the payment thereof, as he may consider necessary.
25. The provisions clearly show that they do not provide for the seizure of the transport vehicle or for confiscating the goods for non-payment of tax.
26. It cannot be lost sight of that there is a growing tendency of evasion of sales-tax in our country. The transporters of the goods vehicles cannot be considered separately with the businessmen, who send their goods through such goods vehicle. The transporters of the goods vehicles as such are always in league and actively help in the evasion of tax and it cannot be considered that they are innocent persons who are only concerned with the transporting of goods. The transporter of goods certainly knows the place from where the goods are lifted and the place of destination where such goods are delivered. In cases where such goods are sent under fictitious names of consignors and consignees, they are expected to know the real persons who are behind such business and should help the Department where such evasion of tax is detected.
27. Apart from the above circumstances, it is difficult to understand as to how the petitioner, who is merely a transporter of goods, is going to be affected in its business if the goods in which he has no interest are seized. If the goods are seized from its possession on reasonable grounds of tax evasion, they can inform the consignors or consignees to get the goods released on showing genuine documents.
28. Under the detailed procedure contained in various Sub-sections of Section22A of the Act the goods can only be seized where the declaration is false or when not covered by the prescribed documents or where the goods are not covered by a goods vehicle record. There is sufficient safeguard under the proviso to Sub-section(6) of Section 22A of the Act where reasons will have to be recorded before seizing the goods and a receipt for the goods shall be given to the person from whose possession or control they are seized.
29. There after a penalty not exceeding 20% of the value of such goods can be imposed after giving the owner or person in charge of the goods, a reasonable opportunity of hearing and after holding such enquiry that the possession of the goods was not covered by goods vehicle record and other documents prescribed under Sub-section (3) or for submission of false declaration or document. After following the above procedure, such officer may release the goods on payment of the penalty or on furnishing such security in such form as may be prescribed for the payment thereof.
30. Mr. Mehta, learned counsel for the petitioners, contended that the Manager of the petitioner was willing to furnish security for the payment of penalty, but even then the goods were not released. I see no force in this contention. This stage can only come after the Officer mentioned in clause (a) of Sub-section (7) determines the penalty after giving an opportunity of hearing and holding such enquiry under the above provision. Thus the powers of seizure of goods as provided in Sub-sections (5) and (6) of Section 22A of the Act are merely incidental and ancillary powers of taxation, which are aimed as a measure for prevention of tax evasion and clearly fall within the ambit of Entry 54 of List II of the Seventh Schedule to the Constitution of India.
31. So far as the framing of Rules under Section 22B of the Act is concerned, it was the function of the State Government to have laid down the prescribed manner with regard to transit pass, but even if the same has not been done, it cannot be held that the provisions of Section 22A of the Act are invalid or ultra-vires of any of the provisions of the Constitution of India.
32. Mr. Mehta in support of his contention has placed strong reliance on Yogesh Trading Company v. The Intelligence Officer of Sales-tax, Cannanore and Anr. (1970) 26 STC 45, The Check-post Officer, Coimbatore and Ors. v. K.P. Abdulla and Brothers (1971) 27 STC 1, The Anantpur District Co-operative Marketing Society Ltd. and Ors. v. Special Assistant Commercial Taxes Officer (Evasion), Narasaraopet and Ors. (1972) 29 STC 649 and State of Punjab and Ors. v. Dunlop India Ltd. (1974) 33 STC 168.
33. Yogesh Trading Company v. The Intelligence Officer of Sales-tax, Cannanore and Anr. (supra), a Full Bench, case of the Kerala High Court dealt with the provisions of Section 29 of the Kerala General Sales Tax Act, 1963 and Rule 35 of the Kerala General Sales Tax Rules, 1963. The provisions of Sub-sections (3) and (4) of Section 29 of the Kerala General Sales Tax Act and Sub-rules (3) to (12) of Rule 35 of the Kerala General Sales Tax Rules, 1963 were considered in the above case and it was held that the same cannot he regarded as merely regulatory of the free flow of trade. It was further held that they directly and immediately affected the transport or the movement of goods and were, therefore, violative of Article 301 of the Constitution. It was also held that the above provisions also violated the rights guaranteed by Article 19(1)(f) and (g) of the Constitution and cannot be said as reasonable restrictions on the exercise of the said rights. It was further observed that some of the provisions of Rule 35 may, by themselves, be innocuous but they are so integrally connected with the process of confiscation provided therein, that operations of them alone cannot be allowed to stand. The whole of clauses (5)(12) of Rule 35 should, therefore, be struck down.
34. The above case is clearly distinguishable, as in the provisions contained in the Sales Tax Laws of Kerala, there was also a provision for the confiscation of the goods. There is no such provision of confiscation in the Rajasthan Sales Tax Law or the Rules.
35. In The Check-post Officer, Coimbatore and Ors. v. K.P. Abdulla & Bros. (supra), their Lordships of the Supreme Court had struck down the provisions of Section 42(3) of the Madras General Sales-tax Act, 1959, which empowered the Check-post Officer to confiscate goods and levy penalty in lieu of confiscation. It was held that it was not a provision which may be ancillary or incidental to the power to tax sale of goods under Entry 54 of List II of Seventh Schedule to the Constitution of India. Thus, the above case is also clearly distinguishable, as their Lordships of the Supreme Court were considering the provisions of the Madras General Sales Tax Act, which empowered the Check-post Officer to confiscate the goods.
36. The Anantpur District Co-operative Marketing Society Ltd. and Ors. v. Special Assistant Commercial Taxes Officer (Evasion), Narasaraopet and Ors. (supra), a case of the Andhra Pradesh High Court also relates to the provisions where the Officers were empowered to confiscate the goods and as such is clearly distinguishable.
37. State of Punjab and Ors. v. Dunlop India Ltd. (supra) is a case of Division Bench of the Punjab and Haryana High Court where the provisions of Sub-section (8) of Section 14B of the Punjab General Sales Tax Act, 1948 giving the Sales-tax authorities the power to seize goods carried in a goods vehicle was declared ultra-vires the power of the State Legislature. It may be mentioned that the view taken by the Division Bench of the Punjab and Haryana High Court in the above case was over-ruled by a Full Bench consisting of five Hon’ble Judges of the same High Court in Mool Chand Chuni Lal v. Shri Manmohan Singh, Assistant Excise and Taxation Officer, Octroi Incharge Shambhu Barrier, District Patiala and Anr. (1977) 40 STC 238. The decision of their Lordships of the Supreme Court in The Check-post Officer, Coimbatore and Ors v. K.P. Abdulla & Bros, (supra) was also distinguished in the above case.
38. Hon’ble Chinnappa Reddy, J; as he then was, wrote the judgment on behalf of the Full Bench and it was held as under:
It will be noticed at once that Section 146(6) as it stood originally, provided for the seizure of any goods not covered by documents and Section 14B(8) provided for the Seizure of all goods in respects which the declaration was false. The seizure might be made irrespective of the question whether there was any attempt to evade tax. The basic but unwaranted assumption underlying both the provisions for seizure, as in the case before the Supreme Court was that the goods were transported after sale within the State. Again, in the case before the Supreme Court, no attempt was made to specify that goods might be seized. The provisions were considered by Bal Raj Tuli, J., and the Division on Bench to fall within the principles laid down in K.P. Abdulla’s case. But the position is quite differed now The new provision for the levy of penalty [amended Section 14B(7)] is no longer based on any assumption that the goods were transported after sale within the State. Its present basis is the attempt to evade tax and it prescribes a condition precedent to the levy of penalty. The condition precedent is that the authorised officer should record a finding that there has been an attempt to evade the tax due under the Act. It cannot possibly be disputed that the prevention of evasion of sales tax is a power incidental or ancillary to the levy of sales tax and falls within entry 54 of List II of Schedule VII of the Constitution. Section 14B(7), which provides for detention of goods and levy of penalty if there has been an attempt to evade the tax due under the Act, cannot, therefore, be held to be without constitutional sanction. It is further to be noticed that the goods which are to be detained are also specified in Section 14B(6) as the goods meant for trade and not covered by proper and genuine documents.
While Section 14B(8), as it stood originally, provided for the payment of the tax recoverable and a penalty, present Section 14B(7) does not provide for recovery of the tax but provides for the imposition of penalty which is calculated not on the basis of the tax payable but on the basis of the value of the goods. The present provision is clearly out side the rule laid down in Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver. It cannot for a moment be pretended that there can be no attempt to evade the tax due under the Act before the liability to pay the tax has arisen. A scheme or device to evade the tax may start operating long before the actual liability to pay the tax arises. As soon as the scheme or device is set in motion there is an attempt to evade the tax due under the Act and it will not be necessary to wait till the liability to pay the tax actually arises. If an attempt to evade tax is discovered earlier, the liability to be subjected to penalty is straight away attracted. In our view, there is no repugnancy between the provision for levy of penalty under Section 14B(7) when an attempt to evade the tax is discovered and the general scheme of the Act which provides for the levy of tax at the point of first sale within the State.
39. After Section 29 of the Kerala General Sales-tax Act was struck down by the Full Bench of the Kerala High Court in Yogesh Trading Co’s case (supra), the above decision was challenged by filing an appeal in the Supreme Court. During the pendency of the appeal before the Supreme Court Section 29-A was inserted in the Kerala General Sales Tax Act. The validity of newly inserted Section 29-A came up for consideration before a Division Bench of the Kerala High Court in P.K. Aboobacker and Ors. v. State of Kerala and Anr. (1979) 44 STC 250. The Kerala High Court in the above case up held the validity of Section 29-A and held as under:
What amount to reasonable restriction has been the subject-matter of decision of the Supreme Court in more than one case. In a recent decision of the Supreme Court reported in Pathumma v. State of Kerala, Fazal Ali, J., has grouped all the decisions and enumerated all of them under seven heads, and it is not necessary to repeat them here. The only thing to be remembered, in this connection, is that the restriction must not be arbitrary or of an excessive nature so as to go beyond the requirement of the interest of the general public and, in order to judge the quality of the resonableness, no abstract or general pattern or a fixed principle can be laid down so as to be of universal application and the same will vary from case to case. A just balance has to be struck between the restriction imposed and the interest of the general public. The restriction must have a directed and proximate nexus with the object which is sought to be achieved and the nature of reasonableness has to be viewed not only from the point of view of the citizen but the problem before the legislature arid the object which is sought to be achieved by the statute. In the light of this principle, we have to consider whether the various provisions contained in Section 29A are restrictions reasonable in the interest of the public. It cannot be disputed that evasion of tax has to be prevented and at the same time the movement of the goods shall not be pralysed. Here, the officer -in-charge of the check post has to record his reasons in writing why he suspects a violation and give an opportunity to the owner of the goods or the driver of the vehicle to furnish security for the realisation of the penalty that may likely be imposed after the enquiry. The reasons stated for suspecting the genuinenss of the documents or suspecting an attempt at evasion can be shown to be unfounded. The Section requires an enquiry to be held after giving an opportunity to the person concerned before penalty is imposed. That is consistent with the principles of natural justice. Only if security is not furnished within the time allowed, power is given to the officer to seize the goods. The ownership in the goods continues to be in the same person and, if penalty is imposed, the goods seized are sold as his goods and, after realising the penalty, if there is a balance, that is returned to the owner of the goods. Until the sale, it is open to the owner to pay the penalty and take back the goods. Time is also given to pay the penalty after the imposition. So, the procedure in the matter of imposition of penalty is substantially and procedurally fair and reasonable. This provision is substantially different from the provisions in Sub-sections (3), (4) and (5) of Section 29 held to be invalid in the above Full Bench decision. We do not think that there is any unreasonableness or excessiveness in the restriction imposed in the movement of goods. This is only a safeguard in the nature of prevention of evasion of tax.
40. The Allahabad High Court in Jain Shudh Vanaspati Ltd. v. State of U.P. and Ors. (1983) 53 STC 54 also held as under:
The provision contained in Section 28-A as it stands after enactment of the U.P. Act No. 33 of 1979 are materially different. It cannot be said that there is any assumption underlying therein that the goods to Which the provision of Section 28-A applies have actually been sold inside the State and the Section does not authorise the Sales tax authorities either to seize the said goods or to penalise the importer thereof on any such assumption. Its present basis is the attempt to evade tax. The power to detain the goods and levy penalty in raspect thereof cannot be exercised merely for the reason that the said goods were not accompanied by the requisite documents or that the documents accompanying them were false. This power can be exercised only if the goods detained are not accpmpained by the requisite documents or that the documents accompanying them are false and if there is material before the detaining authority to indicate that the goods are being imported in an attempt to evade assessment or payment of tax due or likely to be due under the Act. The instant case therefore in our opinion, clearly falls outside the ratio of the case of Checkpost Officer v. K.P. Abdulla and Brothers as decided by the Supreme Court.
41. Apart from the view taken by me, as mentioned above, the petitioner also does not deserve any indulgence in the exercise of extraordinary jurisdiction of this Court. As pointed out by the non-petitioner No. 5 in its reply, the petitioner has been caught several times on previous occasions also carrying goods where consignors and consignees remained undisclosed.
42. This writ petition has thus no force and is dismissed with costs.