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CASE NO.: Appeal (civil)  3419 of 2006

PETITIONER: State of Punjab & Ors.

RESPONDENT: M/s. Amritsar Beverages Ltd. & Ors.

DATE OF JUDGMENT: 08/08/2006

BENCH: S.B. Sinha & Dalveer Bhandari

JUDGMENT: J U D G M E N T [Arising out of  SLP (Civil) No. 10371-10374 of 2004]

S.B. SINHA, J :

       Leave granted.

                Situational change how far could give rise to a new interpretation  of a statutory provision is the question involved in this appeal which  arises out of the judgment and order dated 21.10.2003 passed by the  Division Bench of the High Court of Punjab and Haryana at Chandigarh  in CWP No. 14659 of 2003.

       The Respondent is a dealer within the meaning of the Punjab  General Sales Tax Act, 1948 (for short "the Act").  A raid was conducted  in his premises and a larger number of books and documents were seized  by the officers of the Sales Tax Department of the State of Punjab.  The  documents were in the form of the cash book ledger or other registers.   They were contained in a hard disk.  Seizure of documents indisputably  was done in exercise of the powers of the authorities under Section 14 of  the Act, Sub-section (3) whereof reads, thus:

"14. Production and Inspection of Books,  Documents and Accounts: (1)     *** (2)     *** (3)     If any officer referred to in sub-section  (1) has reasonable ground for believing that any  dealer is trying to evade liability for tax or other  dues under this Act and that anything necessary  for the purpose of an investigation into his  liability may be found in any book, account,  register or document, he may seize such book,  account, register or document, as may be  necessary.  The officer seizing the book,  account, register or document shall forthwith  grant a receipt for the same and shall (a)     In the case of book, account, register or  document which was being used at the time of  seizing, within a period of ten days from the  date of seizure, and (b)     in any other case, within a period of sixty  days from the date of seizure, return it to the  dealer or the person from whose custody it was  seized after examination or after having such  copies or extracts taken therefrom as may be

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considered necessary, provided the dealer or the  aforesaid person gives a receipt in writing for  the book, account, register or document  returned to him.  The officer may, before  returning the book, account, register or  document, affix his signatures and his official  seal at one or more places thereon, and in such  case the dealer or the aforesaid person will be  required to mention in the receipt given by him  the number of places where the signature and  seal of such officers have been affixed on each  book, account, register or document\005"

       The officers of the Sales Tax Department asked the Respondents to  appear on several occasions so as to enable them to verify the contents  thereof.  Cooperation from the Respondents was not forthcoming as a  result whereof the documents were not returned within the period  stipulated thereunder.   

       A writ petition was filed by the Respondents herein praying for  issuance of a writ of or in the nature of mandamus directing the  Respondents to return the seized books, accounts, documents, computer  disk in terms of the said provision.  Applying the principle of literal  interpretation and following an earlier precedent, the High Court not only  issued mandamus as had been prayed for but also imposed costs of Rs.  2,500/- in each case.  It was directed that the costs would be paid by the  officers responsible for withholding the books, accounts, etc. personally  from their pockets and the same shall not be a burden on the State  exchequer.   

       Contention of Mr. Sarup Singh, Addl. Advocate General,  appearing on behalf of the State of Punjab, is that Section 14 of the Act is  directory in nature and not mandatory.

       Mr. Vikas Mahajan, learned counsel appearing on behalf of the  Respondents, on the other hand, supported the judgment of the High  Court.   

       Before adverting to the rival contentions, we may at the outset  notice that pursuant to or in furtherance of the directions of the High  Court, the Appellants have returned the hard disk upon keeping a copy  thereof.  The Respondents in their counter-affidavit stated:

"That it may be mentioned here that dealer was  always willing to cooperate with the department  and the only reason for not complying with the  notices of assessment or proceedings taken were  that in absence of return of book it was not  feasible or practical to give any statement or  verify the entries in the seized documents.

Although the seized documents have been  returned the answering respondent have no  objection even if now in presence of their  representative the departmental authorities want  to obtain any copy of the returned documents.   But this copy must be counter signed by the  representative as well as the respondents."

       The Act was enacted in the year 1948.  Information Technology at  that time far from being developed was unknown.  Constitution of India  is a living organ.  It had been interpreted differently having regard to  different societal situations.  [See Liverpool & London S.P. & I  Association Ltd. v. M.V. Sea Success I and Another, (2004) 9 SCC 512,

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Union of India v. Naveen Jindal and Another, (2004) 2 SCC 510, John  Vallamattom and Another v. Union of India, (2003) 6 SCC 1, and Kapila  Hingorani v. State of Bihar, (2003) 6 SCC 1]  Same principle is  applicable in respect of some statutes.

       Creative interpretation had been resorted to by the Court so as to  achieve a balance between the age old and rigid laws on the one hand and  the advanced technology, on the other.  The Judiciary always responds to  the need of the changing scenario in regard to development of  technologies. It uses its own interpretative principles to achieve a balance  when Parliament has not responded to the need to amend the statute  having regard to the developments in the field of science.   

       Internet and other information technologies brought with them the  issues which were not foreseen by law as for example, problems in  determining statutory liabilities.  It also did not foresee the difficulties  which may be faced by the officers who may not have any scientific  expertise or did not have the sufficient insight to tackle with the new  situation.  Various new developments leading to various different kinds  of crimes unforeseen by our legislature come to immediate focus.   Information Technology Act, 2000 although was amended to include  various kinds of cyber crimes and the punishments therefor, does not deal  with all problems which are faced by the officers enforcing the said Act.

       We may notice some recent amendments in this behalf.  Section  464 of the Indian Penal Code deals with the inclusion of the digital  signatures.  Sections 29, 167, 172, 192 and 463 of the Indian Penal Code  have been amended to include electronics documents within the  definition of ’documents’.  Section 63 of the Evidence Act has been  amended to include admissibility of computer outputs in the media,  paper, optical or magnetic form.  Section 73A prescribes procedures for  verification of digital signatures.  Sections 85A and 85B of the Evidence  Act raise a presumption as regards electronic contracts, electronic  records, digital signature certificates and electronic messages.  

       Section 14 of the Act although has been amended, the problem, in  our opinion, should be dealt with keeping in view of the fact that the  procedural laws should be construed to be ongoing statutes similar to the  Constitution and, thus, creative interpretation according to the  circumstances is permitted.  The Court in view of development of science  has to meet and contend with challenges as an intermediary between the  litigant and the court.

       In SIL, Import, USA v. Exim Aides Silk Exporters, Bangalore,  [(1999) 4 SCC 567], notice in terms of Section 138 of the Negotiable  Instruments Act was construed to include notice by fax.

       In State of Maharashtra v. Dr. Praful B. Desai [(2003) 4 SCC 601],  this Court opined that recording of evidence through video conferencing  is permissible in terms of Section 273 of the Code of Criminal Procedure;  stating:

"This Court has approved the principle of updating  construction, as enunciated by Francis Bennion, in  a number of decisions. These principles were  quoted with approval in the case of CIT v. Podar  Cement (P) Ltd. They were also cited with  approval in the case of State v. S.J. Choudhary. In  this case it was held that the Evidence Act was an  ongoing Act and the word "handwriting" in  Section 45 of that Act was construed to include  "typewriting". These principles were also applied  in the case of SIL Import, USA v. Exim Aides Silk  Exporters 9. In this case the words "notice in

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writing", in Section 138 of the Negotiable  Instruments Act, were construed to include a  notice by fax. On the same principle courts have  interpreted, over a period of time, various terms  and phrases. To take only a few examples: "stage  carriage" has been interpreted to include "electric  tramcar"; "steam tricycle" to include  "locomotive"; "telegraph" to include "telephone";  "banker’s books" to include "microfilm"; "to take  note" to include "use of tape recorder";  "documents" to include "computer databases"."

       The officers of the Sales Tax Department of the State of Punjab  must have felt immense difficulties in giving effect to the provisions of  Section 14 of the Act.  It no doubt mandates the authorities to return to  the dealer all documents after examination or after having such copies or  extracts taken therefrom as may be considered necessary within a period  of 60 days of seizure but in the instant case even for the said purpose, not  only a copy was required to be made from the hard disk, the same was  required to be verified.  The Respondents were asked by the authorities of  the department that they should come and verify the contents but they did  not do so.  Active cooperation of the Respondents was necessary having  regard to the proviso appended to Sub-section (3) of Section 14 of the Act  inasmuch as in terms thereof the officer was entitled not only to affix his  signature and his official seal at one or more places thereupon but also the  dealer was required to give a receipt therefor.

       In case of a hard disk, literal compliance of the said provision was  impossible.  Recourse to scientific method, therefore, was necessary.

       It may be true that even in absence of cooperation from the  Respondents nothing prevented the authorities of the Sales Tax  Department to make out copies of the said hard disk or obtain a hard copy  and fix their signatures or official seal in physical form thereupon and  furnish a copy thereof to the Respondents.  However, the High Court  failed to notice that as problem arose for the first time, the officers of the  Sales Tax Department might not have been able to formulate or lay down  their own procedure as indicated hereinbefore or otherwise.

       For the reasons aforementioned, although we are of the opinion  that fulfillment of the conditions laid down in the proviso contained in  Clause (b) of Sub-section (3) of Section 14 of the Act are imperative in  character, the authorities may take recourse to the aforementioned  procedure in respect of seizure of a hard disk.   

       We, in the facts and circumstances of the case, think that it is   necessary to explain the legal position so that the complications arising  out of seizure of hard disk may be avoided in future.  The hard disk,  however, has already been returned.  We have noticed hereinbefore the  offer made by the Respondents and, thus, the authorities may now ask the  representative of the Respondents \026 Company to make themselves  available and obtain his signatures on the receipt or otherwise of the hard  copies; in terms of their undertaking in the counter-affidavit.

       We, however, set aside that portion of the impugned judgment  whereby and whereunder personal costs have been imposed upon the  officers.  The appeal is allowed to the aforementioned extent and with the  aforementioned observations and directions.  The parties shall pay and  bear their own costs.