WP(C) 9384/2004 BEFORE THE HON’BLE MR. JUSTICE HRISHIKESH ROY Heard Mr. K. Choudhury, learned Counsel appearing for the petitioners. Mr. R. D ubey, learned Standing Counsel represents the Revenue. 2. The petitioners challenge the notice dated 15.5.2004 (Annexure-C ) issued by the Inspector of Taxes under Section 44(1) of the Assam General Sal es Tax Act, 1993 (hereinafter referred to as the AGST Act ). By the impugned no tice, the petitioner No.2 was asked to produce the Books of Accounts of their bu siness w.e.f. 1.4.2003 onwards They also challenge the seizure list of the same date (Annexure-D) under Sub-Section (3) of Section 44 of the AGST Act. 3. The petitioner No.1 carries on the business of manufacture and s ale of tyres and petitioner No.2 is the carrying and forwarding agent of the pet itioner No.1. They supply tyres to the Indian Security Agencies and the present proceeding relates to the supply order(s) issued by the Chief Engineer (Projects ), Dantak. The supply was made to the different locations of Bhutan but the prec ise destination was undisclosed for security consideration. The petitioners have , inter alia, enclosed the communication made by the Chief Engineer of project D antak to show that the supplies in question were made in a foreign country’s des tination and therefore the transactions are exempt from Sales Tax, under the AGS T or the Central Sales Tax Act, 1956. 4.1 Mr. K. Choudhury, learned Counsel refers to the provisions of Se ction 44(3) of the AGST Act to show that before any seizure is made, the concern ed officer must have reason to suspect that the dealer is to evade payment of ta x or has kept his account in a manner, which is likely to cause evasion of tax. On the basis of such reasoning which has to be recorded in writing, a seizure ex ercise can be undertaken in exercise of powers under Sub-Section (3) of Section 44 of the AGST Act. 4.2. For ready reference, the provisions of Section 44(3) of the AGST Act is extracted hereinbelow : 44(3) If any authority appointed under Sub-Section (1) of Section 3 has reason to suspect that any dealer is to evade the payment of any tax or any clearing o r forwarding agent or a person transporting goods or any owner of a warehouse or a godown is keeping or has kept his account in such a manner as is likely to ca use evasion of tax payable under this Act, such authority may for reasons to be recorded in writing, seize such accounts, registers or documents of the dealer o r the clearing or forwarding agent or the person transporting goods or the owner of a warehouse or godown as may be, necessary and shall grant a receipt for the same, such seized accounts, registers or documents shall be retained for so lon g as may be reasonably necessary for examination thereof or for a prosecution un der section 57 and shall thereafter be returned to the person concerned in the p rescribed manner: Provided that if the seized accounts, registers or documents are retained by any authority other than the Commissioner for more than one hundred and twenty days , the reasons for so doing shall be recorded in writing and the approval of the Commissioner shall be obtained by the authority so retaining them . 4.3 The petitioners contend that seizure can’t be made without fulfi lling the requirement of having a reason to suspect and also basing such suspici on on objective reasoning. The learned Counsel refers to the impugned seizure no tice to show that no reason(s) are recorded by the concerned officer and therefo re he contends that the exercise of seizure power was illegal and without jurisd iction. 5.1 As no counter affidavit has been filed by the Revenue, Mr. R. D ubey, learned Counsel orally submits that as the Sales Tax Authorities suspected evasion of tax by the dealer, the seizure was made and since the dealer failed to produce papers to show the destination of the tyre consignment in a foreign c ountry, proceeding under the AGST Act is justified. 5.2 The learned Counsel further submits that the Authority suspected the transactions to be inter-State Sales which are leviable to tax under the Ce ntral Sales Tax Act and therefore the State Sales Tax Authorities were competent to issue the impugned notice. 5.3 Finally Mr. Dubey refers to the Notification dated 21st Septembe r 1993 under Memo of CTS-8/76/Pt/29 of the Commissioner of Taxes, Assam to show that power of the Commissioner exercisable under Section 44 of the AGST Act, hav e been delegated to the Inspector of Tax attached to the Bureau of Investigation (Economic Offences), Guwahati and as such he submits that the seizure was made by a duly authorized officer. 6.1 A reading of the notice dated 15.5.2004 of the Inspector of Taxe s issued under Section 44(1) shows that no reason was recorded in the said notic e and the dealer was merely asked to produce their Books of Accounts. Although r eason(s) are not necessary to be recorded under Sub-Section(1) of Section 44, bu t for exercise of seizure power under Sub-Section (3), reason has to be recorded in writing, before seizure is made. 6.2 If the Authorities actually believed that the dealer hadn’t expo rted the tyres to a foreign country and was involved in inter State sale, such r eason could have been easily disclosed in the seizure notice as it was preceded by a preliminary investigation by the Revenue Authorities. But unfortunately the seizure notice does not disclose any reason and appears to be, mere re-producti on of the statutory provisions of Section 44(3) of the AGST Act. 7.1 A division bench of this Court in Civil Rule 878/1972 (Mercantil e Stores & Agency Company Pvt. Ltd. vs. Mr. A. Rahman, Inspector of Taxes, Dibru garh) while examining the purport of Section 44(3) of the AGST Act has laid dow n in its judgment dated 1.4.1975 that while exercising power of seizure under Se ction 44(3), the officer must have reason to suspect that the dealer is attempti ng to evade payment of tax and additionally reason for such suspicion, must also be recorded in writing. The Court held that seizure of Accounts, Registers or D ocuments of the dealer may be made only after recording in writing, the reasons of suspecting that the dealer is attempting to evade payment of tax under the AG ST Act. 7.2 The Division Bench in the above judgment, relied upon the decisi on of the Apex Court in Commissioner of Commercial Taxes vs. Ramkishan Shrikisha n Jhaver reported in AIR 1968 SC 59, wherein the Supreme Court in paragraph 1 8 observed as follows : 18 Next we come to sub-section (3), which as we have already stated , is complementary to sub-section (2). It provides in addition to the safeguards which have to be complied with when a search is made under sub-section (2), tha t the officer may seize accounts etc. if he has reason to suspect that any deale r is attempting to evade the payment of any tax etc. due from him under the Act. It also provides that the officer has to record his reasons in writing and we a re of opinion that these reasons have to be recorded before the accounts are sei zed. & & &.. 7.3. Taking note of the Supreme Court decision, this Court in Mercant ile Stores & Agency Company Pvt. Ltd (supra) recorded the following : & & & &.. The legal position is very clear that before the seizure under sub-secti on (3) of Section 44 is made, the officer concerned must have reasons to suspect that the dealer is attempting to evade payment of any tax under the Act and he must record such reasons in writing. First there must exist reasons to raise a s uspicion in the mind of the officer concerned that the dealer is attempting to e vade payment of any tax under the Act and secondly if he wants to seize any acco unts, registers or documents of the dealer, he must record the reasons in writin g therefor and they only he may seize the accounts, registers or documents of th e dealer . 8. In this case, the seizure order merely reproduces the language o f Sub-Section (3) of Section 44 of the AGST Act, but does not record any objecti ve reason for ordering the seizure. The necessity of recording reason is importa nt as in that event, another authority can scrutinize as to whether the reason a re based on objective consideration. But in the present case reasons are conspic uous by their absence and supplementary reason(s) sought to be projected by the learned Counsel for the Revenue, can’t satisfy the legal requirement of recordin g reason(s), prior to making of the seizure. 9. For the foregoing reasons, it is held that the seizure made unde r Section 44(3) of the AGST Act doesn’t fulfill the requirement of Section 44(3) of the AGST Act and accordingly the impugned action can’t be sustained and the same are quashed. The consequential assessment made on the basis of the said sei zure is also interfered with. 10. The petition stands allowed accordingly without any order of cos t.