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

1. Motor Lorry No. K. L. R. 3919 driven along a highway from Coimbatore in the State of Madras towards the border of the State of Kerala was when searched by the Check Post Officer found to carry 85 bags of foodstuffs: 45 bags of maida, 20 bags of flour, and 20 bags of Khandasari sugar. The driver of the motor lorry was found to carry with him a bill of sale and a delivery note which covered 85 bags of flour. On the ground that without a bill of sale or delivery note maida and Khandasari sugar were attempted to be transported, and suspecting that there was an attempt at evasion of sales tax, the Check Post Officer by order dated March 2, 1965, confiscated the goods and gave an option to M/s K. P. Abdulla and Bros. the owners of the goods to pay Rs. 1,000/- as penalty in lieu of confiscation.    2. The owners of the goods then moved a petition in the High Court of Madras challenging the validity of Section 42 (3) (a) of the Madras General Sales Tax Act, 1959, and for an order quashing the penalty, and another petition for a direction to the State of Madras and the Check Post Officer to return the goods seized and confiscated while in transit. Ramakrishnan, J. rejected the petitions. In appeals filed by the owners, the petitions were allowed and the orders imposing penalty and confiscation of goods were set aside. The State of Madras has appealed to this Court with certificate granted by the High Court.

Reasoning: 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.