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PETITIONER: THE COMMISSIONER OF COMMERCIAL TAXES AND A  OTHERS ETC.

       Vs.

RESPONDENT: R. S. JHAVER AND OTHERS ETC.

DATE OF JUDGMENT: 09/08/1967

BENCH: WANCHOO, K.N. (CJ) BENCH: WANCHOO, K.N. (CJ) BACHAWAT, R.S. RAMASWAMI, V. MITTER, G.K. HEGDE, K.S.

CITATION:  1968 AIR   59            1968 SCR  (1) 148  CITATOR INFO :  D          1971 SC 792  (5)  F          1971 SC1170  (25)  RF         1972 SC 787  (7)  R          1974 SC 348  (10)  E&R        1978 SC 851  (89)  R          1985 SC 582  (39)  D          1985 SC 989  (11)

ACT: Madras  General  Sales  Tax Act, 1  of  1959,  s.  41--scope of--subsec. (2) granting power to inspect--Whether  includes power  of  search--sub-section (4) giving power  to  officer confiscating  to  give dealer an option to pay tax  Plus  an additional  amount  before  stage of  first  sale  when  tax ordinarily  becomes due--Whether repugnant to scheme of  Act and  invalid--Sub-sec.  (3)  authorising  seizure  and  sub- section  (4) authorising confiscation--Whether  unreasonable restrictions and violative of Art. 19 (1) (f) and (g) of the Constitution.

HEADNOTE: On August 19, 1964, officers belonging to the Department  of the appellant raided and searched the premises of a  company and  foreibly  removed  certain  accounts  and  goods.   The respondents  challenged  the  department’s  action  by  writ petitions  filed  in the High Court under Art.  226  of  the Constitution  praying  that the articles  seized  should  be returned.   It  was contended by the petitioners that  on  a proper  construction  of section 41 of  the  Madras  General Sales Tax Act, No. 1 of 1959, the officers of the Department had  no  authority  to search the  premises  and  seize  any account  books or goods found there; that if  section  41(4) authorised seizure and confiscation of goods, it was  beyond the legislative competence of the State Legislature, for  it was  not  covered  by  item 54 of List  II  of  the  Seventh Schedule to the Constitution relating to "taxes on the  sale or purchase of goods"; and that if various provisions in  S. 41 were capable of being construed as authorising search and seizure, they were violative of Art. 19(1)(f) and (g) of the

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Constitution. The  High Court allowed the Petitions holding,  inter  alia, that  s. 41 (2) did not permit a search being made and  only provided   for   inspection;  the  power   of   seizure   or confiscation   in  s.  41(4)  was  beyond  the   legislative competence  of the State Legislature; and that   subsections (2),  (3)  and  (4) of s.  41  contained  unreasonable  res- trictions and were violative of Art. 19(1) (f) and (g).  The High  Court also found with respect to one of the  petitions that  the  search  warrant  had  been  issued  without   the application  of  Mind  by the magistrate and  was  bad.   On appeal to this Court; Held: dismissing the appeal, (i)Anything  recovered during the search must be  returned to the petitioners for the safeguards provided by s. 165  of the Code of Criminal Procedure were not followed and in  one case  the finding of the High Court that the search  warrant issued by the magistrate was bad on various grounds was  not challenged;  furthermore anything confiscated must  also  be returned as sub-section (4) of s. 41 must fall.[163 B-D]. Clause  (a) of the second proviso to sub-section  (4)  gives power  to  the  officer ordering confiscation  to  give  the person affected an option to pay in lieu of confiscation, in cases  where  the goods are taxable under the Act,  the  tax recoverable  and an additional amount and thus provides  for recovery of tax even before the first sale in 149      the  State  which  is  the point of  time  in  a  large majority  of  cases  for recovery of tax.  As  such  it  was repugnant  to the entire scheme of the Act  and  sub-section (4)  must therefore be struck down.  As Clause  (a)  compels the officer to give the option and thus compels recovery  of tax  before  the  first point of  sale,  which  cannot  have occurred  in cases of goods seized from the dealer  himself, it  is  clearly intended by the legislature to  go  together with  the  main  part of the Section and  is  not  therefore severable. [159F-16OD]. (ii)  Although generally speaking the power to inspect  does not give power to search, where, as in the case of s. 41 (2) the  power  has been given to inspect  not  merely  accounts registers,  records,  goods, etc., but also to  inspect  the offices,  shops  etc., these two powers together  amount  to giving  the concerned officer the power to enter and  search the  offices etc. and if he finds any accounts or  goods  in the  offices, shops, etc., to respect them.  The High  Court was therefore  wrong  in holding that there was no power  of search whatsoever under sub-section (2). [154H-155E]. The  proviso  to  sub-section  (2)  in  providing  that  all searches   under  "this  sub-section"  shall  be   made   in accordance  with  the  provisions of the  Code  of  Criminal Procedure, bears out the construction that the main part  of sub-section  (2)  contemplates searches.   Similarly  it  is clear  from  sub-section  (3) which  gives  power  to  seize accounts  etc., in certain circumstances,  that  sub-section (2)  must  include the power of search for a  seizure  under sub-section  (3) is not possible unless there is  a  search. [156D-E. 158B-C].      The contention that as the main part of sub-section (2) does  not  provide  for  search  of  a  purely   residential accommodation  and therefore the proviso is otiose  must  be rejected.  Although generally a provision is an exception to the  main  part  of the section, it Is  recognised  that  in exceptional cases, as in the present case, the provision may be a substantive provision itself. [156D-F]. Bhonda  Urban District Council v. Taff Vale Railway Co.,  L.

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R.  [1909] A.C. 253: Commissioner of Income-tax  v.  Nandlal Bhandari & Sons (1963) 47 I.T.R. 803, and State of Rajasthan v. Leela Jain. [1965] 1 S.C.R. 276, referred to. (ii)Sub-sections (2) and (3) of S. 41 are not violative  of Art. 19 as they are protected by clauses (5) and (6) of Art. 19 of the Constitution. [162F-G]. The  High Court had wrongly assumed that the  provisions  of the Criminal Procedure Code did not apply to a search  under s. 41(2).  In view of the safeguards provided in s. 165  Cr. P.C. and in Chapter VII of that Code, it cannot be said that the  power  to search provided in sub-section (2) is  not  a reasonable  restriction  keeping in View the object  of  the search, namely, prevention of evasion of tax. [161EG]. The mere fact that the Act gives power to Government to  em- power  any  officer to conduct the search is  no  reason  to strike  down  the provision for it cannot  be  assumed  that Government  will  not empower officers of proper  status  to make searches. [160-H], To, exercise the power of seizure under sub-section (3)  the officer concerned has to record his reasons in writing,  has to  give  a receipt for the accounts seized,  and  can  only retain the items seized beyond a period of 30 days with  the permission of the next higher officer.  These are sufficient safeguards and the restriction, if any, on 150 the  right to hold property and the right to carry on  trade by sub-section (3) must therefore be held to be a reasonable restriction. [162-D-G]. While  the  court  held that the Legislature  has  power  to provide  for search and seizure in connection with  taxation law in order that evasion may be checked, it did not  decide the  general  question whether a power to  confiscate  goods which  are  found  on search and which are  not  entered  in account  books  of  the  dealer  is  an  ancillary     power necessary for the purpose of stopping evasion of tax. [159C- D]. K.S.  Papanna  and  another  v.  Deputy  Commercial   Tax Officer, Gunkakal, (1967) XIX S.T.C. 506; referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 150--154 of 1967. Appeals from the judgment and order dated February 26,  1965 of the Madras High Court in Writ Petitions Nos. 1321,  1495, 1496 and 1553 of 1964. S.V.  Gupta,  Silicitor--General,  V.  Ramaswamy  and  A. Rangam, for the appellant (in C.As. Nos. 150, 153 of 1967). K.   N. Mudaliyar, Advocate-General, Madras, V. Raniaswaln and  A.  V. Rangajn, for the appellant (in C.A. No.  154  of 1967). N.C.   Chatterjee   and  R.  Ganapathy  Iyer,   for   the respondents (in C.As. Nos. 150, 151 and 154 of 1967). A.   G. Pudissery, for the intervener. The Judgment of the Court was delivered by Wanchoo,  C. J.--These five appeals on certificates  granted by  the Madras High Court raise common questions of law  and will  be dealt with to-ether.  We shall give brief facts  in one  of  the appeals (No. 150 of 1967) arising out  of  writ petition  No.  1321  of  1964 in  order  to  understand  the questions  that fall to be decided in the  present  appeals. On  August 19, 1964, at about 5.00 p.m, the officers of  the Commercial  Tax Department (hereinafter referred to  as  the Department)   raided  the  premises  of  Zenith  Lamps   and

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Electricals Ltd., (hereinafter referred to as the  Company). It  is said that the premises were searched and a  Suit-case was seized and forcibly removed by the officers who made the raid, in spite of the fact that they were informed that  the box did not contain any papers or documents belonging to the Company  and  its  contents  consisted  merely  of  personal effects  of  one  of the Managing  Directors,  namely,  Shri Ramkishan Srikishan.  Jhaver.  The raid and search were made by  the  authorities  concerned  on  information  that  Shri Geonka,  one of the Directors of the Company, had removed  a box  containing  secret accounts relating to it.   The  main contention  of the petitioner in support of his prayer  that the  articles  seized should be returned to  him  was  under three  heads.   It  was first contended  that  on  a  proper construction  of section 41 of the Madras General Sales  Tax Act, No. 1. of 1959 (hereinafter 151 referred to as the Act), the officers of the Department  had no  authority  to search the premises and seize  either  the account books or the goods found therein.  Secondly, it  was contended  that  if  section 41(4)  authorised  seizure  and confiscation  of  goods,  it  was  beyond  the   legislative competence  of  the State Legislature, for it could  not  be covered by item 54 of list II of the Seventh Schedule to the Constitution  relating to "taxes on the sale or purchase  of goods." Lastly, it was contended that if various  provisions in  s.41  were  capable of being  construed  as  authorising search  and seizure. the provisions contained  therein  were unconstitutional  in view of Art. 19(1) (f) and (g)  of  the Constitution. It  is  not  necessary to refer to the facts  in  the  other petitions  which have resulted in the other  appeals  before this Court because in those cases also there was search  and seizure  by the officers of the Department and their  action is  being attacked on the same grounds.  All  the  petitions were opposed on behalf of the State Government and its  case was--firstly.  that  s.41  authorised  search  and  seizure; secondly, that the State Legislature was competent to  enact s.41(4) under item 54 of list 11 of the Seventh Schedule  to the  Constitution;  and  thirdly,  that  the  provisions  in question  did  not  offend Art. 19(1) (f)  and  (g)  of  the Constitution  and were in any case protected by  Art.  19(5) and (6). The High Court held that s. 41(2) did not allow search being made  thereunder,  as it only provided for  inspection,  and that   search   was  a  different  thing   altogether   from inspection.   The High Court further held that if  s.41  (2) provided  for  search  it would be  within  the  legislative competence of the State Legslature.  The High Court took the view  that  the power of seizure and confiscation  of  goods contained  in  sub-section  (4)  could not  be  said  to  be ancillary  and  incidental  to  the power  to  tax  sale  or purchase  of goods and therefore this provision  was  beyond the   legislative  competence  of  the  State   Legislature. Finally, the High Court held that sub-sections (2), (3)  and (4)  of’  section  41 were  unconstitutional  as  they  were unreasonable   restrictions   on  the   fundamental   rights guaranteed under Art. 19(1) (f) and (g) of the Constitution. Besides the above. the High Court also found with respect to one of the petitions that the search warrant issued for  the search of the residential house by the magistrate  disclosed that  the magistrate had not applied his mind at all to  the necessity of the search of he residential house, for columns in the printed search warrant which should have been  struck out were not so struck out.  Further the gaps in the printed

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form which should have been filled in before the warrant was issued had not been filled in.  From these two circumstances the  High  Court concluded that the search warrant  for  the residential house had been issued without the application of mind by the magistrate to the necessity of the search of the residential  house.   The  High  Court  further  found  that s.41(4)  was not complied with strictly before  confiscation was ordered and no pro- 152 per  opportunity  was given to the dealer to show  that  the goods  seized and confiscated were not accounted for in  his accounts.   In the result therefore the High  Court  allowed all  the petitions and directed that the  documents,  things and goods covered by the petitions should be returned to the petitioners along with photographs, negatives,  translations and notes made by the Department from the accounts etc.  The State  of Madras then applied for and obtained  certificates from the High Court to appeal to this Court and that is  how the matter has come before us. The same three questions which were raised, before the  High Court have been raised before us on behalf of the appellant. Before, however, we deal with them we would briefly refer to the  provisions  of  the  Act which  are  material  for  our purposes.-Section  3  is  the main  charging  section  which provides that "every dealer whose total turnover for a  year is  not  less than Rs. 10,000......... shall pay a  tax  for each  year  at  the  rate  of 2  per  cent  of  his  taxable turnover."  The point at which tax has to be paid on  single point  taxable goods is indicated in the First  Schedule  to the Act and that will show that in a large majority of cases the  tax  has to be paid at the point of first sale  in  the State,  though in some cases it has to be paid at the  point of first purchase or of last purchase in the State.  Section 4  is another charging section in respect of declared  goods and  the Second Schedule to the Act deals with the point  at which  tax  has to be paid in respect of such  goods.   That Schedule also shows that in a majority of cases the tax  had to  be paid at the point of first sale in the State,  though in  some  cases  it has to be paid at  the  point  of  first purchase  in  the State or the last purchase in  the  State. Certain  goods  are  exempt from the tax under  the  Act  as provided in the Third Schedule and do not thus form part  of the  taxable  turnover, though they will be a  part  of  the turnover for purposes of calculating the total turnover  per year.   The  Act provides for registration of firms  and  of dealers, for appointment of officers, for collection of tax, for the levy of penalty, and for appeals and revisions.   It also casts a duty on dealers to maintain a true and  correct account.    Then  comes  section  41  with  which   we   are particularly concerned.  It is in these terms:               "(1)  Any officer empowered by the  Government               in  this behalf may, for the purpose  of  this               Act. require any dealer to produce before  him               the  accounts,  registers, records  and  other               documents  and  tot  furnish  any  other   in-               formation relating to his business.               (2)All  accounts,  registers,  records  and               other documents maintained by a dealer in  the               course  of  his  business. the  goods  in  his               possession  and his offices,  shops,  godowns,               vessels   or   vehicles  shall  be   open   to               inspection  at  all reasonable times  by  such               officer:               Provided  that  no  residential  accommodation               (not being a place of  business-cum-residence)

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             shall be entered               153               into  and searched by such officer  except  on               the authority of a search warrant issued by  a               Magistrate having jurisdiction over the  area,               and all searches under this sub-section shall,               so  far as may be, be made in accordance  with               the   provisions  of  the  Code  of   Criminal               Procedure. 1898 (Central Act V of 1898).               (3)If  any  such  officer  has  reason   to               suspect that any dealer is attempting to evade               the  payment of any tax, fee or  other  amount               due  from  him  under this  Act  he  may,  for               reasons to be recorded in writing, seize  such               accounts..   registers,   records   or   other               documents  of  the dealer as he  may  consider               necessary, and shall give the dealer a receipt               for   the  same.   The  accounts,   registers,               records  and  documents. so  seized  shall  be               retained  by such officer only for so long  as               may be necessary for their examination and for               any inquiry or proceeding under this Act.               Provided  that  such accounts,  registers  and               documents shall not be retained for more  than               thirty   days  at  a  time  except  with   the               permission of the next higher authority.               (4)Any  such  officer shall have  power  to               seize and confiscate any goods which are found               in any office. shop, godown, vessel,  vehicle,               or any other place of business or any building               or place of the dealer, but not accounted  for               by  tile  dealer  in  his  accounts  registers               records and other documents maintained in  the               course of his business.               Provided that before ordering the confiscation               of  goods under this Sub-section  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.               Explanation-It shall be open to the Government               to  empower different classes of officers  for               the  purpose  of  asking  action  under   sub-               sections (1). (2) and (3)". 154 It  will  be  seen  from  the  above  brief  review  of  the provisions of the Act that it mainly deals with sales tax to be  levied at the point of first sale in the  State.  though there  is also provision for purchase tax in certain  cases. It  is  in  this background that we  have  to  consider  the construction  of  s.41 of the Act.  So far  as  sub-s(1)  is concerned, there is no difficulty.  It empowers any officer, empowered  by the Government in this behalf, to require  any dealer to produce before him the accounts registers, records and  other  documents and to furnish any  other  information relating to his business.  It may be mentioned here that the

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Government has empowered all officers of the Department  not lower in rank than the Assistant Commercial Tax Officer, all officers of the Revenue Department not lower in rank than an Inspector  and  all officers of the  Police  Department  not lower in rank than a Sub-Inspector. to act under s.41.  sub- ss.  (2)  to  (4).   Presumably. so far  as  sub-s.  (1)  is concerned. only officers of the Department can act under the provision.   However,  there is no dispute with  respect  to that  sub-section as the power has to he exercised  for  the purpose  of  the  Act i.e.,  with  reference  to  assessment proceedings  at  all stages including recovery  of  tax  and prosecution for offences.  It is not disputed that the power under  sub-s. (1) can only be exercised to require a  dealer to  produce accounts etc. relating to his business  and  not that of any body else. The  main dispute centres round the interpretation  of  sub- s.(2)  of s.41. The contention on behalf of the  respondents is that that provision did not authorise search of  premises but merely provided for inspection thereof it all reasonable times  by the empowered officer.  We shall first deal  with, the main part of sub-s. (2) to see what it provides  without reference  to  the proviso.  Clearly Sub-s(2)  provides  for three  things, namely--(1) all accounts. registers,  records and other documents maintained by a dealer in the course  of his business ’,,hall be open to inspection at all reasonable times, (ii) the goods in the possession of the dealer  shall also be open to inspection, and (iii) the dealer’s  offices, shops,  godowns, vessels or vehicles shall also be  open  to inspection.   There is no doubt that there are  no  specific words in sub-s. (2) giving power of search.  But if we  read the  three  powers conferred by sub-s.(2) it should  not  be difficult to hold that search is included therein. In  sub- s.(1)  the dealer is required to produce his  accounts  etc. and to furnish other information relating to his business and it is left to   the  dealer to produce what accounts  he may  say he has.  The legislature was however  cognizant  of the  fact  that  a dealer may not produce  all  accounts  or furnish ill information even though required to do so, under sub-s.(1). Therefore. sub-s.(2) provides that ,ill  accounts etc.  of  the dealer shall be open to inspection.   It  also provides that the dealer’s offices. shops, godowns,  vessels or  vehicles shall be open to inspection.  It is  true  that generally  speaking a power to inspect does not  necessarily give power to search.  But 155 where, as in this case, the power has been given to  inspect not merely accounts, registers, records and other  documents maintained  by  a dealer but also to  inspect  his  offices, shops,  godowns,  vessels or vehicles, it follows  that  the empowered officer would have the right to enter the  offices etc.  for purposes of inspection.  Naturally his  inspection will  be  for purposes of the Act i.e., for the  purpose  of seeing that there is no evasion of tax.  If therefore during his  inspection of offices etc. the empowered officer  finds any  accounts, registers, records or other documents in  the shop,  those accounts etc. will also be open to  inspection. Reading therefore these two provisions together, it is clear that  the  empowered  officer has the right  to;  enter  the offices etc. and to inspect them, and if on such  inspection he  finds  accounts etc. he has also the  power  to  inspect them.   Lind to see if they relate to the  business.   These two  powers taken together in our opinion mean that the  em- powered officer has the power to search the office etc.  and inspect  accounts etc found therein.  Though  therefore  the word  "search"  has  not been used in  sub-s.(2)  these  two

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powers  of entering the offices etc. for inspection  and  of inspecting every kind of account maintained by a dealer with respect  to  his  business together  amount  to  giving  the officer concerned the power to enter and search the  offices etc. and if he finds any account in the offices, shops  etc. to  inspect  them.   Otherwise we can see no  sense  in  the legislature  giving power to the empowered officer to  enter the  offices  etc.  for the purpose  of  inspection  as  the officer  concerned  would  only do so  for  the  purpose  of finding  out all accounts etc. maintained by the dealer  and if  necessary to inspect them for the purposes of  the  Act. We cannot therefore agree with the High Court that there  is no  power  of  search whatsoever  in  sub-s(2)  because  the subsection in terms does not provide for search. goods  in  the possession of the dealer.  He  has  also  the power to enter the dealer’s offices etc. for the purpose  of such  inspection,  Combining these two  powers  together  it follows on the same reasoning that the officer has the power to search for the goods also and to inspect them if found in the  offices  etc.  of the dealer.   We  have  therefore  no hesitation  in  coming to the conclusion that the  power  of search is implicit in sub-s.(2) with reference accounts etc. maintained  by the dealer and the goods in the  ’)possession of the dealer.  It also seems to us that this power in  Sub- s.  (2) is confined to offices, shops,godowns.  vessels  and vehicles  of the dealer and does not go beyond them.  It  is urged  on  behalf of the appellant that as  the  officer  is entitled  to  inspect all accounts etc.  maintained  by  the dealer  he  can  search  for  them  even  in  the   dealer’s residential premises.  But we do not agree with this conten- tion.  for we have found the power of search by reading  the power  of  inspection  of offices etc.  with  the  power  of inspection  of accounts etc. and the power of inspection  of goods.  Sub-s. (2) does not give any power of inspecting the residential, accommodation 156 of the dealer and therefore it cannot be read as giving  the power of search of the residential house for purposes of the Act.   But whether it is a case  of  business-cum-residence, the  power of search will be there, for under sub-s.(2)  all offices,  shops, godowns, vessels or vehicles of the  dealer are open to inspection. Let us now see what light is thrown on the interpretation of sub-s.(2)  by the proviso and whether the interpretation  we have  put on the main part of sub-s.(2) is supported by  the proviso.    The  proviso  lays  down  that  (i)  no   purely residential accommodation shall be entered into and searched by such officer except on the authority of a search  warrant issued by a Magistrate having jurisdiction over the area and (ii) that all searches under this sub-section shall, so  far as may be, be made in accordance with the provisions of  the Code  of Criminal Procedure, 1898.  The latter part  of  the proviso  clearly shows that the main part of sub-s.(2)  con- templates searches, for it refers to all searches made under this  sub-section.  If the reference in the second  part  of the  proviso  was confined only to searches made  under  the first  part of the proviso, the words would have  been  "all searches under this proviso shall be made in accordance with the  provisions  of  the Code of  Criminal  Procedure."  The proviso  therefore bears out the construction that  we  have put  on the main part of sub-s.(2). But it is urged  that  a proviso  carves out something which is already contained  in the  main provision and the main provision at any rate  does not   provide   for   search   of   a   purely   residential accommodation.   Therefore the proviso is otiose.   That  is

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what  the  High Court also seems to  have  held.   Generally speaking, it is true that the proviso is an exception to the main  part  of  the section; but it is  recognised  that  in exceptional  cases a proviso may be a substantive  provision itself.   We  may in this connection refer to  Bhonda  Urban District Council v. Taff Vale Railway Co.(1), where s.51  of the Act there under consideration was framed as a proviso to preceding sections.  The Lord Chancellor however pointed out that  "though  s.51 was framed as a proviso  upon  preceding sections, but it is true that the latter half of it,  though in form a proviso, is in substance a fresh enactment, adding to and not merely qualifying that which goes before.". Again  in Commissioner of Income-Tax v. Nandlal  Bhandari  & Sons(2)  it was observed that ’though ordinarily  a  proviso restricts   rather   than  enlarges  the  meaning   of   the provisional   to  which  it  is  appended,  at   times   the legislature  embodies a substantive provision in a  proviso. The question whether a proviso is by way of an exception  or a  condition to the substantive provision, or whether it  is in itself a substantive provision, must be determined on the substance of the proviso and not its form.". (1) L. R. [1909] A.C. 253. (2) [1963]47 1. T. R. 803. 157 Finally in State of Rajasthan v. Leela Jain(1) the  question arose  whether  the proviso in the Act  under  consideration there was a limiting provision to the main provision or  was a substantive provision in itself.  This Court observed that "so far as general principle of construction of a proviso is concerned, it has been broadly stated that the function of a proviso  is to limit the main part of the section and  carve out  something  which but for the proviso  would  have  been within the operative part." But it was further observed that the proviso in that particular case was really not a proviso in  the  accepted  sense  but  an  independent   legislative provision  by which to a remedy which was prohibited by  the main part of the section, an alternative was provided. These  three cases show that in exceptional circumstances  a proviso  may not be really a proviso in the  accepted  sense but  may be a substantive provision itself.  It seems to  us that  the  proviso  under  consideration  now  is  of   this exceptional  nature.  As we have already held, there  is  no provision in the main part of the sub-section for  searching purely  residential  premises.  Therefore when  the  proviso provides  for such search it is providing for something  in- dependent of the main part of the sub-section.  Further  the second  part  of the proviso which talks  of  searches  made under  this sub-section shows that the power  of  inspection provided  in the main part of the sub-section is  tantamount to  a  power  of  search.  We  have  already  come  to  that conclusion independent of the proviso.  All that we need say here is that the proviso also shows that that interpretation is  correct.   We  may add that we are  not  precluded  from looking at the proviso in interpreting the main part of  the sub-section.   We  may  in  this  connection  refer  to  the following passage in Maxwell on Interpretation of  Statutes, Eleventh Edition, at p.155 where it is observed-               "There  is no rule that the first or  enacting               part is to, be construed without reference  to               the  proviso.  ’The proper course is to  apply               the broad general rule of construction,  which               is  that  a  section  or  enactment  must   be               ’construed  as a whole, each portion  throwing               light, if need be, on the rest’.               "The  true principle undoubtedly is  that  the

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             sound   interpretation  and  meaning  of   the               statute,  on  a view of the  enacting  clause,               saving clause and proviso, taken and construed               together is to prevail." But  as  we have said already even without  looking  at  the proviso,  our conclusion is that the main part of  sub-s.(2) provides  for searches and the proviso merely enforces  that conclusion.   We therefore cannot agree with the High  Court that  subsection(2)  does  not provide  for  search  of  the business premises of a dealer, in the shape of offices etc. (1) [1965] 1 B.C. R. 276 158 Then  we  come  to sub-section(3).  That  provides  for  the seizure  of  accounts  etc., if the  empowered  officer  has reason to suspect that any dealer is attempting to evade the payment  of any tax. fee or other amount due from him  under the  Act.   If he has such reason he may for reasons  to  be recorded  in writing seize such accounts etc.  Now  if  sub- s.(2)  gives  power  of search,  sub-s.(3)  merely  provides further  power  to  seize the accounts etc.  found  on  such search.  We have already held that sub-s.(2) gives the power of search and in that case sub-s.(3) is merely complementary to  sub-s.(2) and gives the ,empowered officer the power  to seize  the  accounts  found in  certain  circumstances.   If anything,  sub-s.(3)  also  bears out  that  sub-s.(2)  must include the power of search for a seizure under sub-s.(3) is not  possible unless there is a search.   Reading  therefore sub-s  (2),  its proviso and sub-s.(3) together  we  are  of opinion  that  they provide for search and  seizure  without warrant  except  that  if the place  searched  is  a  purely residential  accomodation  it cannot be searched  without  a search warrant from a Magistrate.  It naturally follows that if it cannot be searched without a search warrant it is  not open  to  the  empowered officer to seize  anything  from  a residential accommodation for he cannot enter and search  it unless he has a warrant from a Magistrate to do so. The  next question relates to the legislative competence  of the  State, legislature to enact sub-s.(4). This  subsection provides for seizure and confiscation of any goods found  in any office etc.. including purely residential  accommodation after  search if they are not accounted for in the  accounts maintained in the course of the dealer’s business.  The sub- section  thus completes the process which starts  with  sub- section (1) and gives authority to the empowered officer  to seize and confiscate goods of the nature indicated  therein. The  contention  on behalf of the respondents  is  that  the power  of confiscation provided by sub-s.(4) was not  within the competence of the State Legislature under item 54,  List II.  of  the Seventh Schedule relating to tax on  sales  and purchase  of  goods.   On  the  other  hand.  the  appellant justifies  the  power to seize and confiscate goods  on  the round  that it is ancillary and incidental to the  power  to tax,  for  it is necessary to have such power  in  order  to check  evasion  of tax and make it unprofitable.   The  High Court  held that the Act was not a law on goods and  that  a provision  for  confiscation of goods found  on  search  was neither  incidental  nor  ancillary  to  the  power  to  tax contained in item 54.  List II of the Seventh Schedule.  Now it  has not been and cannot be disputed that the entries  in the various Lists of the Seventh Schedule must be given  the widest  possible  interpretation.  It is also not  in  doubt that  while making a law under any entry in the Schedule  it is competent to the legislature to make all such  incidental and  ancillary provisions as may be necessary to  effectuate the law; particularly it cannot be disputed that in the case

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of  a taxing statute it is open to the legislature to  enact provisions which                             159 would  check  evasion  of tax.  It is under  this  power  to check- evasion that provision for search and seizure is made in many taxing statutes.  It must therefore be held that the legislature  has power to provide for search and seizure  in connection  with taxation laws in order that evasion may  be checked.   It  is further urged on behalf of  the  appellant that confiscation of goods which are not entered in accounts is  merely a provision of ancillary nature to check  evasion of  tax  by making it unprofitable for  dealers  to  secrete goods  in which they are dealing.  Reliance in this  connec- tion  is  placed  on K. S. Papantna and  another  v.  Deputy Commercial  Tax  Officer,  Guntakal,(1)  where  the   Andhra Pradesh  High  Court upheld an analogous  provision  in  the Andhra  Pradesh General Sales Tax Act, (No. 6 of  1957).  in s.28 (6). We do not propose in the present case to decide the  general question whether a power to confiscate goods which are found on search and which are not entered in account books of  the dealer  is an ancillary power necessary for the  purpose  of stopping evasion of tax.  Assuming that is so, we have still to see whether sub-s.(4) of the Act can be upheld read along with the second proviso thereof.  It may be added that there is  no such provision as the second proviso in s.28  of  the Andhra  Pradesh General Sales Tax Act.  We do not  therefore propose to express any opinion as to the correctness of  the above  decision of the Andhra Pradesh High Court.   Sub-s(4) of  s.41, before it was amended by the Madras General  Sales Tax (Second Amendment) Act. from April 1, 1961, had only the first proviso with respect to giving an opportunity of being heard  and making an enquiry in the matter  before  ordering confiscation.  By the amendment of 1961, the second  proviso was  added.   That provides that the  officer  ordering  the confiscation shall give the person affected option to pay in lieu  of confiscation. in cases where the goods are  taxable under the 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.   This  provision clearly requires the officer ordering confiscation to do two things(i)  to  order  the person concerned to  pay  the  tax recoverable.  and (ii) to pay a sum of money  not  exceeding one thousand rupees or double the amount of tax recoverable. whichever  is greater.  We have already indicated that in  a large  majority  of  cases covered by the  Act  the  tax  is payable at the point of first sale in the State.  But  under cl.(a)  of  the  second proviso the tax  is  ordered  to  be recovered  even before the sale, in addition to the  penalty not  exceeding  Rs.  1,000  or  double  the  amount  of  tax recoverable  whichever is greater.  Therefore cl.(a) of  the second proviso is clearly repugnant to the general scheme of the  Act  which in the majority of the  cases  provides  for recovery of tax at the point of first sale in the State.  In view of this repugnancy one or other of these two provisions must fall.  Clearly it (1967) XIX S.T.C. 506. 160 is cl. (a) in the proviso which under the circumstances must fall,  for  we  cannot hold that the entire  Act  must  fall because  of this inconsistency with respect to  recovery  of tax  under  cl.(a) of the ,second proviso  even  before  the taxable  event occurs in the large majority of  cases  which would  be covered by the Act.  We are ,therefore of  opinion that  cl.(a)  of the second proviso being repugnant  to  the

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entire  scheme  of  the Act, in so far as  it  provides  for recovery  of  tax even before the first sale  in  the  State which is the point of time in a large majority of cases  for recovery of tax, must ,fall, on the ground of repugnancy. It  is  next urged that in any case the second  provisio  is severable and therefore only this proviso would fall and not the  main part of sub-s.(4). We are however of opinion  that cl. (a) of second proviso is not severable.  We have already indicated  that originally the second proviso was not  there in the Act.  It was brought in by the amendment of 1961  and it compels the officer to give the ’Option, and thus compels recovery  of  tax  even  in those cases  where  the  tax  is recoverable  only  at the first point of sale in  the  State which  naturally has not occurred in cases of  goods  seized ’from  the  dealer himself.  Considering the fact  that  the legislature added this compulsory proviso later, it is clear that  the  legislature intended that the main  part  of  the section  and the second proviso should go together.   It  is difficult  to hold therefore that after the introduction  of the  second  proviso  in 1961, the  legislature  could  have intended  that  the main part of sub-s.(4) should  stand  by itself.  We are therefore of opinion that sub-s.(4) with the two provisos must fall on this narrow ground.  We  therefore agree with the High Court and strike down sub-s.(4) but  for reasons  different from those which commended themselves  to the High Court. Then  we come to the question whether sub-ss.(2) and (3)  of s.41  of  the Act which have been struck down  by  the  High Court on the ground that they are unreasonable  restrictions on  the  right to hold property and to carry on  trade  have been correctly struck down.  The main reason which  impelled the High Court to strike ,down sub-s.(2) was that there  was no safeguard provided for search made thereunder.  The  High Court held that s. 165 of the Code of Criminal Procedure did not  apply  to searches made under sub-s(2).  It  also  held that the State Government was given the power to empower any officer to make a search under sub-s.(2) and this meant that even   an  officer  of  low  status  could   be   empowered. Consequently  the  High Court struck down sub-s.(2)  on  the ground that it gave arbitrary power of search which could be made  even  by an officer of low status.  It  is  true  that search  under  this sub-section can be made by  any  officer empowered  by  Government  in this behalf, but  we  have  no reason to think that Government will not empower officers of proper status to make searches.  In this very case, we  find that  the Government empowered an Assistant  Commercial  Tax Officer,  a Revenue Inspector and a Sub Inspector of  Police to make searches.  Considering the 161 large  number  of  dealers who are covered by  the  Act,  it cannot  be said that these officers are of such  low  status that they cannot be depended upon to make a search with  due care  and caution.  We cannot also forget that in a case  of this  kind the Government cannot find sufficient  number  of officers of what may be called high status to make searches, for  dealers  who may be covered by the Act  may  be  legion throughout  the  State, and if such searches could  only  be made  by  high officers there would not be  enough  officers available  to do so.  The fact that the Act gives  power  to Government to, empower any officer is therefore no reason to strike.  it down for, as we have said, the  Government  will see that officers of proper status are empowered.  Nor do we think  that  an  Assistant  Commercial  Tax  Officer  or  an Inspector of Revenue Department or a Sub-Inspector of Police Department  is  not  an officer of  proper  status  to  make

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searches under this provision. We are also of opinion that though sub-s.(2) itself provides no safeguards and might have been open to objection on  that ground,  there is a provision in the proviso  to,  sub-s.(2) which  lays  down that all searches  under  this  subsection shall,  so  far as may be. be made in  accordance  with  the provisions  of the Code of Criminal  Procedure.   Therefore, the provisions of the Code of Criminal Procedure, so far  as may  be,  apply to all searches made under sub-s.  (2).   It appears  that in the High Court, the parties as well as  the Court  assumed that s.165 of the Code of Criminal  Procedure would  not apply to searches under sub-s.(2) We  cannot  see any  warrant for this assumption.  The proviso clearly  lays down  that all searches made under this sub-section, so  far as  may be, shall be made in accordance with the  provisions of  the  Code of Criminal Procedure.   Thus  all  provisions contained  in  the Code of Criminal  Procedure  relating  to searches would be applicable to searches under sub-s.(2), so far  as may be.  Some of these provisions are  contained  in Chapter VII but one such provision is contained in s.165. It is true that that section specifically refers to an  officer in-charge of a police-station or a police officer making  an investigation.  But when the proviso applies the  provisions of the Code of Criminal Procedure to all searches made under this  sub-section,  as  far as may be possible,  we  see  no reason  why  s.165 should not apply,  mutatis  mutandis,  to searches  made under sub-s.(2). We are therefore of  opinion that  safeguards provided in S. 165 also apply  to  searches made  under  sub-s. (2).  These safeguards are-(i)  the  em- powered  officer must have reasonable grounds for  believing that  anything necessary for the purpose of recovery of  tax may  be found in any place within his jurisdiction, (ii)  he must  be of the opinion that such thing cannot be  otherwise got without undue delay, (iii) be must record in writing the grounds  of  his belief, and (iv) he must  specify  in  such writing so far as possible the thing for which search is  to be  made.  After he has done these things, he can  make  the search.  These safeguards, which in our opinion 162 apply  searches under sub-s.(2) also clearly show  that  the power to search under sub-s. (2) is not arbitrary.  In  view of these safeguards and other safeguards provided in Chapter VII of the Code apply so far as may be to searsee no  reason to  hold that the restriction, if any, on the right to  hold property  and  to carry on trade by the search  provided  in sub-s.(2)  is not a reasonable restriction keeping  in  view the  object of the search, namely, prevention of evasion  of tax. Next we come to sub-s.(3), which as we have already  stated, is  complementary to sub-s.(2). It provides in  addition  to the safeguards- which have to be complied with when a search is made under sub-s.(2), that the officer may seize accounts etc.  if  he  has  reason to  suspect  that  any  dealer  is attempting to evade the payment of any tax etc. due from him under  the Act.  It also provides that he has to record  his reasons in writing and we are of opinion that these  reasons have  to  be  recorded before the accounts   are  seize.  It further  provides that the dealer shall be given a  receipt, and  this means that the receipt must be given as  and  when the  accounts  etc. are seized.  Finally  it  provides  that these  accounts etc.  Shall be retained by such  officer  so long  as may be necessary for their examination and for  any enquiry  or proceeding under the Act. These in  our  opinion are  sufficient safeguards and the restrictions iS  any,  on the  right to hold property and the right to carry on  trade

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by  sub-s.(3)  must therefore be held to,  be  a  reasonable restriction.   We may add that the proviso to sub-s.(3)  has fixed the period for which the officer seizing accounts  can keep  them, namely,’ @o days at a time, and if he  wants  to keep  them  for  has to ’take the  permission  of  the  next additional  safeguard  entitling the dealer  accounts  after every  30  days,’unless’a higher officer has  permitted  the retention  of accounts for a period longer than 30 days.  We cannot therefore agree with the high High Court that sub-ss. (2)   and  (3)  of  s.  41  of  the  Act  are   unreasonable restrictions on the right to hold property or carry on trade for  reasons  indicated.  We are of opinion  that  they  are reasonable restrictions which are protected by cls. (5)  and (6) of Art. 19 of the Constitution. We  now proceed to consider what order should be  passed  in the   appeals   in  the  view  we  have  taken   about   the interpretation and validity of sub-ss. (2) and (3) of s.  41 of  the Act. We have already indicated that the  High  Court held that the warrant issued by the Magistrate for search of the residental accommodation was bad because it showed  that the  Magistrate had not applied his mind to the question  of issuing  it,  inasmuch as there were portions  which  should have  been struck out from the printed form and  gaps  which should have been filled in. But this was not done. 163 That  conclusion  of  the  High   Court  has  xi(4  @re  ,@n challenged before us.  The High Court has further  held’that a  r pr6kr and reasonable opportunity was not given  to  the persons  concerned  to show that the goods seized  Were  not prpperly  accounted for in their account-books, though  this findili’  is not material now for 9 we have held  that  sub- s.(4)  falls  in its entirety.  It  follows  therefore  that anything recovered from the search of the residential accom- modation  on  the basis of this defective  warrant  must  be returned.   It also follows that anything  confiscated  must also be returned, as we have held that sub-s.(4) must  fall. As  to  the  accounts etc. said tot  have  been  seized,  it appears  to us that the safeguards provided under s. 165  of the Code  of Criminal procedure    do  not appear   to  have been followed  when  the  search  was made  for  the  simple reason  that  everybody  thought  that  provision  was   not applicable  to a search under sub-s.(2). Therefore,  as  the safeguards  provided  in  s. 165 of  the  Code  of  Criminal Procedure  were  not   followed,  anything  recovered  on  a defective  search of this kind must be returned. It  follows therefor  that the final order of the High  Court   allowing the writ petitions must stand, though we  do not agree  with the interpretation of the High Court that sub-ss.(2) and (3) are   unconstitutional   on  the  ground  of   their   being unreasonable  restrictons on the right to hold property  and to  carry  on  trade. The appeals therefore  fails  and  are hereby  dismissed.  In  view of our  decision  on  the  main question of law, we order parties to bear their own costs in all the appeals. Appeals dismisyed,, R.K.P.S. 164