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PETITIONER: THE CHECK POST OFFICER & ORS.

       Vs.

RESPONDENT: K. P. ABDULLA BROS.

DATE OF JUDGMENT: 23/11/1970

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. MITTER, G.K. HEGDE, K.S. GROVER, A.N. RAY, A.N.

CITATION:  1971 AIR  792            1971 SCR  (1) 817  1970 SCC  (3) 355  CITATOR INFO :  RF         1977 SC2279  (27)  R          1984 SC 981  (8)

ACT: Madras  General Sales Tax Act, 1959-Section  42  sub-section (3)--Power to confiscate all goods and levy penalty in  lieu at  check post--If ancillary or incidental to legislate,  on taxes  on  the  sale or purchase  of  goods-Constitution  of India, Seventh Schedule, List II, Entry 54-Interpretation of entries.

HEADNOTE: By  sub-s. 3 of s. 42 of the Madras General Sales  Tax  Act, 1959,  the Officer-in-charge of a 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. On the question whether the power to confiscate 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  a provision which is ancillary or incidental to them power  to legislate  in  respect of taxes on the sale or  purchase  of goods in entry 54 of List II of the Seventh Schedule to  the Constitution, HELD : A taxing entry confers power upon the legislature  to legislate  for  matters ancillary or  incidental,  including provisions  for  preventing evasion of tax.  But  the  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. [819 H-820  B; 820 E] Commissioner  of Commercial Taxes & Ors., v. R. S. Jhevar  & Ors., [1968] 1 S.C.R. 148, held inapplicable. United Provinces v. Mst.  Atiqa Begum & Ors., [1940]  F.C.R. 110;  Navinchandra Mafatlal v. Commissioner  of  Income-tax, Bombay  City, [1955] 1 S.C.R. 829 and Balaji  v.  Income-tax

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Officer, Special Investigation Circle, [1962] 2 S.C.R.  983, referred to.

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  2012  and 201 of 1969. Appeals from the judgment and order dated September 23, 1968 of the Madras High Court in Writ Appeals Nos. 106 and 107 of 1968. A.K.  Sen and A. V. Rangam, for the appellants (in both  the appeals). T.  A.  Ramachandran,  for  the  respondent  (in  both   the appeals), 10-L694SupCI/71 818 The Judgment of the Court was delivered by Shah  J. 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 maids, 20 bags of flour and 20 bags of Khandsari 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 maid a and Khandsari 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  &  Bros. the owners of the  goods  to  pay  Rs. 1,000’as penalty in lieu of confiscation. The  owners of the goods then moved a petition in  the  High Court of Madras challenging the validity of s. 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.               Section  42 of the Madras General  Sales Tax               Act, 1959, provides               "(1)  If the Government consider that  with  a               view to prevent or check evasion of tax  under               this Act in any place or places in the  State,               it  is  necessary  so  to  do,  they  may,  by               notification, direct the setting up of a check               post or the erection of a barrier or both,  at               such place or places as may be notified.               "(2) At every check post or barrier  mentioned               in sub-section (1), or at any other place when               so  required by any officer empowered  by  the               Government  in this behalf, the driver or  any               other person in charge of any vehicle or  boat               shall  stop the vehicle or boat, as  the  case               may be, and keep it stationary as long as  may               reasonably be necessary, and allow the officer               in charge of the check post or barrier, or the               officer empowered as aforesaid, to examine the               contents  in the vehicle or boat  and  inspect               all  records  relating to the  goods  carried,               which are in the possession of such driver, or

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             other  person  in  charge, who  shall,  if  so               required,               819               give  his  name and address and the  name  and               address of the owner of the vehicle or boat as               well  as  those  of  the  consignor  and   the               consignee of the goods.               (3)The officer 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 section 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-s.  (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-s. (3) to seize and confiscate any goods  which are  carried and are not covered by the documents  specified therein.  The officer is required when ordering confiscation to give the person affected option to pay penalty in lieu of confiscation. 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 820 matters  which  may  fairly and reasonably  be  said  to  be comprehended  therein:  see  The United  Provinces  v.  Mst. Atiqa  Begum  and Others(1); Navinchandra  Mafatlal  v.  The Commissioner  of Income-tax, Bombay City(2); and  Balaji  v. Income-tax  Officer,  Special  Investigation  Circle(3).,  A taxing entry therefore confers power upon the Legislature to legislate  for  matters ancillary  or  incidental  including provisions for preventing evasion of tax.  Subsections (1) & (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-s. (3)  the officer in charge of the check post or barrier  has

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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  subclauses.   Sub-section (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.  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-s. (3)  to seize  and confiscate add 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) & (iii) of sub-s. (3) of  s. 42, stands in danger of having- his goods forfeited.   Power under  sub-section (3) of S. 42 cannot be said to be  ancil- lary  or  incidental to the power to legislate for  levy  of sales tax. 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 and Others v. R.  S. Jhaver  and Others,(4).  That case arose under s.  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 is attempted to evade payment  of any tax, fee or other (1)  [1940] F.C.R. 110 (2)   [1955] 1 S.C.R. 829 (3)  [1962] 2 S.C.R. 983 (4)  [1968] 1 S.C.R. 148                             821 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. 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. The  appeals  therefore fail and are dismissed  with  costs. One hearing fee. Y.P.                      Appeals dismissed. 822