Case: The Check Post Officer &amp; Ors Vs. K. P. Abdulla Bros

in charge of the check post or barrier, or the officer empowered as aforesaid, shall have power to seize and confiscate any goods which are under transport by any vehicle or boat and are not covered by, (i) a bill of sale or delivery note, (ii) a Goods Vehicle Record, a Trip Sheet or a Log Book as the case may be; and (iii) such other documents as may be prescribed under Sections 43 and 44; Provided that before ordering confiscation the officer shall give the person affected an opportunity of being heard and make an inquiry in the prescribed manner; Provided further that the officer ordering the confiscation shall give the person affected option to pay in lieu of confiscation - (a) in cases where the goods are taxable under this Act, in addition to the tax recoverable, a sum of money not exceeding one thousand rupees, or double the amount of tax recoverable, whichever is greater; and (b) in other cases, a Sum of money not exceeding one thousand rupees. By sub-section (2) the driver or any person in charge of the vehicle is required to stop the vehicle and to allow the officer in charge of the check post or barrier to examine the contents in the vehicle, and to inspect all records relating to the goods carried in the vehicle. The officer in charge of the check post or barrier is invested with power by sub-sec. (3) to seize and confiscate any goods which are carried and are not covered by the documents specified there in. The officer is required when orderings confiscation to give the person affected option to pay penalty in lieu of confiscation. 4. Entry 54 of List II of the Seventh Schedule to the Constitution authorises the State Legislature to legislate in respect of taxes on the sale or purchase of goods. A legislative entry does not merely enunciate powers: it specifies a field of legislation and the widest import and significance should be attached to it. Power to legislate on a specified topic includes power to legislate in respect of matters which may fairly and reasonably be said to be comprehended therein: see The United Provinces v. Mst. Atiqa Begum, 1940 FCR 110 = (AIR 1941 FC 16), Navinchandra Mafatlal v. The Commissioner of Income-tax, Bombay City, (1955) 1 SCR 829 = (AIR 1955 SC 58 ) and Balaji v. Income tax Officer, Special Investigation Circle, (1962) 2 SCR 983 = (AIR 1962 SC 123 ). A taxing entry therefore, confers power upon the Legislature to legislate for matters ancillary or incidental including provision for preventing evasion of tax.Sub-ss. (l) and (2) of S. 42 are intended to set up machinery for preventing evasion of sales tax. But, in our judgment the power to confiscate goods carried in a 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. By sub-section (3) the officer in charge of the check post or barrier has the power to seize and confiscate any goods which are being carried in any vehicle if they are not covered by the documents specified in the three sub-clauses. Subsection (3) assumes that all goods carried in a vehicle near a check post are goods which have been sold within the State of Madras and in respect of which liability to pay sales tax has arisen, and authorises the check post officer, unless the specified documents are produced at the check post or the barrier, to seize and confiscate the goods and to give an option to the person affected to pay penalty in lieu of confiscation. A provision so enacted on the assumption that goods carried in a vehicle from one State to another must be presumed to be transported after sale within the State is unwarranted. In any event power conferred by sub-section (3) to seize and confiscate and to levy penalty in respect of all goods which are carried in a vehicle whether the goods are sold or not is not incidental or ancillary to the power to levy sales tax. A person carrying his own goods even as personal luggage from one State to another or for consumption, because he is unable to produce the documents specified in clauses (i), (ii) and (iii) of sub-section (3) of Section 42, stands in danger of having his goods forfeited. Power under sub-section (3) of Section 42 cannot be said to be ancillary or incidental to the power to legislate for levy of sales tax. 5. The High Court was of the view that the question which fell to be determined was concluded by the judgment of this Court in The Commissioner of Commercial Taxes v. R. S. Jhaver, (1968) 1 SCR 148 = (AIR 1968 SC 59 ). That case arose under Section 41 (2) of the Madras General Sales Tax Act 1 of 1959, and this Court struck down the power conferred under the Madras General Sales Tax Act, 1959, upon the officer of the Government to seize such accounts, registers, records or other documents of the dealer as he may consider necessary, if he had reason to suspect that any dealer has attempted to evade payment of any tax, fee or other amount. This Court held that tax and penalty cannot be levied before the first sale in the State, and on that account authority conferred to levy tax and penalty before the sale and to confiscate the goods for non-payment was outside the legislative competence of the State. That case may have no direct bearing in this case. 6. In the present case, however, the power to confiscate the goods and to levy penalty in lieu of confiscation, when in respect of the goods found in a vehicle the driver of the vehicle is not carrying with him the documents specified therein, is not a provision which is ancillary or incidental to the power to tax sale of goods.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]5. The High Court was of the view that the question which fell to be determined was concluded by the judgment of this Court in The Commissioner of Commercial Taxes v. R. S. Jhaver, (1968) 1 SCR 148   = (AIR 1968 SC 59  ). That case arose under Section 41 (2) of the Madras General Sales Tax Act 1 of 1959, and this Court struck down the power conferred under the Madras General Sales Tax Act, 1959, upon the officer of the Government to seize such accounts, registers, records or other documents of the dealer as he may consider necessary, if he had reason to suspect that any dealer has attempted to evade payment of any tax, fee or other amount. This Court held that tax and penalty cannot be levied before the first sale in the State, and on that account authority conferred to levy tax and penalty before the sale and to confiscate the goods for non-payment was outside the legislative competence of the State. That case may have no direct bearing in this case6. In the present case, however, the power to confiscate the goods and to levy penalty in lieu of confiscation, when in respect of the goods found in a vehicle the driver of the vehicle is not carrying with him the documents specified therein, is not a provision which is ancillary or incidental to the power to tax sale of goods.