P K ABOOBACKER Vs. STATE OF KERALA

JUDGEMENT

(1.) THE constitutional validity of section 29a of the Kerala General Sales Tax Act (hereinafter referred to as the Act) is challenged in all these writ petitions and, to appreciate the point raised, the facts in O. P. No. 999 of 1973 alone are stated in brief hereunder :

(2.) THE petitioner is doing business in hill produce such as pepper, ginger, etc. , in Tellicherry Town. He purchases the goods locally and sells those goods to registered dealers outside the state in the course of inter-State trade. THE petitioner has been registered as a dealer both under the provisions of the Central Sales Tax Act and the General Sales Tax Act on the file of the Sales tax Officer, Special Circle, Tellicherry. On 9th March, 1973, he despatched 84 bags of pepper and 8 bags of dry ginger to M/s. Chakrapani and Co. , who is acting as the agent of the petitioner in Bangalore. According to the petitioner, the goods were despatched on consignment basis by a lorry. One Ahammed was its driver and he took with him the invoice and the way-bill relating to the consignment. THE lorry left Tellicherry at 22. 00 hours and was to reach Bangalore on the 10th morning as there was an urgent demand for the supply of pepper and ginger. But the Sales Tax Inspector, Chavasseri, intercepted the goods vehicle at Chavasseri in Tellicherry-Kuthupuzha road at about 23. 30 hours on 9th March, 1973. THE driver produced the invoice and the way-bill to the officer concerned. But the Sales Tax Inspector - the second respondent herein - directed the lorry driver to unload the goods at Kuthupuzha check post and issued a notice to the driver pointing out certain defects in the documents produced by him and also proposing to take action in accordance with sub-section (2) of section 29a of the Act. THE notice issued by the second respondent further contained a statement that an opportunity is given to the driver to prove that the documents produced by him are ginger. But before the driver could produce the necessary documents for that purpose, the Sales Tax Inspector changed his camp from Chavasseri to Tellicherry and at about 11. 15 A. M. on 10th March, 1973, inspected the petitioner's place of business and demanded for the account books. At that time, the petitioner was not present in the shop. His employee could not give any details of the accounts to the officer concerned. Following this, the Inspector issued exhibit P-6 notice calling upon the petitioner to produce certain records within 3 hours. On coming to know of exhibit P-6 notice, the petitioner produced the ledger for the year 1972-73, the way-bills, and the sales and purchase bill be before the second respondent at his came office at Tellicherry at 1. 30 P. M. THEse records were received by the officer, but were not returned after perusal. After these, the officer issued another notice on 10th March, 1973, granting an opportunity to the petitioner to furnish security for an amount equal to double the tax in respect of the goods detained within 14 days from the date of stopping the vehicle. THE notice, inter alia, stated that, as the driver of the vehicle failed to adduce any evidence, the goods have been detained and the petitioner is called upon to furnish security for an amount of Rs. 2,818, which, according to the officer, represented double the tax due on the value of the goods. THE petitioner furnished the security under protest and transported the goods to Bangalore as originally arranged. THEreafter, this petition is filed challenging the action of the Sales Tax Officer. THE Sales Tax Inspector - the second respondent - has apparently acted in exercise of the powers conferred under section 29a of the Act. Under this section, the officer is given power to stop the vehicle, to detain the goods, to demand security in any form for double the amount of tax likely to be evaded as may be estimated by the officer, to seize the goods if security is not furnished, and a power to impose penalty equal to twice the amount of tax attempted to be evaded and to recover the penalty, if imposed, by the sale of the goods seized. THE conferment of these powers, according to the petitioner, on the authorised officer are unconstitutional and they are not comprehended by the legislative entry 54, List II, of the Seventh Schedule to the Constitution, and are an unreasonable restriction on the freedom to carry on trade or business. THE provisions conferring such powers directly affect the free flow of trade and violate article 301 of the Constitution. This provision, according to the petitioner, does not remove the vice in section 29 pointed out by the Full Bench decision reported in Yogesh Trading Co. v. Intelligence Officer of Sales Tax ([1970] 26 S. T. C. 45 (F. B.); 1970 K. L. T. 154 (F. B. ). ). This Court had declared in that decision that sub-sections (3), (4) and (5) of section 29, and sub-rules (3) to (12) and (15) of rule 35 of the Kerala General Sales Tax Rules are unconstitutional and, therefore, invalid. THE provisions in section 29a introduced thereafter contain the same vice pointed out by the Full Bench decision ([1970] 26 S. T. C. 45 (F. B.); 1970 K. L. T. 154 (F. B. ). ).

(3.) UNCONSTITUTIONALITY was attributed to this on two grounds, namely, that the provision is beyond the filed of legislation covered by entry 54 and also that it is an unreasonable restriction on the freedom of trade and commerce violative of article 301 of the Constitution. The question whether the provision of confiscation contained in section 29 is beyond the filed of legislation under entry 54 of List II of the Seventh Schedule to the Constitution was left open by the Full Bench, in view of the fact that sub-sections (3), (4) and (5) were found to violate article 301 and that was enough to strike down those provisions. The attempt of the State to salvage those provisions as amounting only to a reasonable restriction on the freedom of trade and commerce within the meaning of article 304 (b) of the Constitution was not successful as it was found, firstly, that the Act had not received the assent of the President as provided in article 304 and, secondly, what amounts to a reasonable restriction in public interest will have to be considered in the light of article 19 (1) (f) and (g) of the Constitution, and in the light of the above articles, the view of the Full Bench was that the section amounts to an unreasonable restriction. The Full Bench observed as follows : " They amply being out that unless owner travels with the goods, the notice provided is hardly likely to reach him in time to avoid the catastrophe of confiscation. We have already noticed the disparity between section 29 (4) and rule 35 (6) in providing for notice to the owner, the former directing notice if the owner is 'ascertainable', and the latter, only, if he is 'present'. The further provisions in rule 35 (8) to ascertain the address and particulars of the owner, and afford him an opportunity are, in the nature of things, illusory and ineffective, unless the owner travels with the goods or is near at hand to the check post. It is little consolation for the owner that confiscation can be avoided by tendering twice the amount of tax payable on the goods under clause (5) of section 29 read with clause (15) of rule 35. The effectiveness of these provisions as a sufficient safeguard stands considerably attenuated, if not entirely destroyed, by the prospect of his having to do so at successive check posts, or in respect of successive consignments of goods at the same check post, to allay the suspicious of the officers-in-charge. Both by the terms of the section and the rule, the confiscated goods are to be sold in public auction, and all that the deprived owner can get in case he eventually succeeds in appeal against the order of confiscation would be, not even the market value of the goods, but the proceeds fetched at the auction, less the charges incurred for conducting the same. We have no doubt that these provisions operate as unreasonable restrictions on the fundamental right of a person with respect to his property and with respect to his right to carry on a trade or business in goods. " Some of the provisions in rule 35 were also found to be invalid for the same reason and finally the Full Bench held thus : " We hold that the provisions of section 29 (4) and (5) and of rule 35 (5) to (12) and (15) violate the rights guaranteed by article 19 (1) (f) and (g) of the Constitution and cannot be saved as reasonable restrictions on the exercise of the said rights. Some of the provisions of rule 35 may, by themselves, be innocuous, but they are so integrally connected with the process of confiscation provided therein, that portions of them alone cannot be allowed to stand. The whole of clauses (5) to (12) of rule 35 must be struck down. "