Svil Mines Limited vs State of M.P. and Others

Krishan Kumar Lahoti, J.—The petitioner has sought following reliefs :-

"(i) To call for the records from the respondents for the perusal of the Hon''ble Court for the satisfaction that there were proper reasons to constitute a reason to believe for initiation of search.

(ii) That, it may please be held that the search conducted in violation of the procedure as laid down in the Criminal Procedure Code, 1973 renders the search illegal and void and it may please be held that the search was illegal should be quashed.

(iii) That, entire search proceedings being illegal and void all subsequent proceedings undertaken by the Commercial Tax Department may please be quashed.

(iv) That, a writ of mandamus may kindly be issued directing the respondents to return all the seized documents in possession of the officers of the M.P.V.A.T. Department.

(v) That, it may kindly be held that the search carried out by the M.P.V.A.T. Department is illegal and void.

(vi) Any other relief considered necessary and expedient under the facts of the case alongwith the cost of this litigation may kindly be allowed to the petitioner."

The petitioner has challenged the letter of authorization, issued by respondent no. 2, authorizing the search of premises of petitioner u/s 55 of the M.P. Value Added Tax Act, 2002 and the search conducted in the premises on 28.8.2010.

The aforesaid letter of authorization and search are assailed by the petitioner in this petition on the ground that search of business and residential premises of petitioner Company were made without any valid reasons, illegal authorization and without showing the authorization for search to the persons present at the business premises and residential premises of the Managing Director of petitioner. The search is also assailed on the ground that procedure as laid down u/s 100 of the Code of Criminal Procedure, 1973 (hereinafter referred to as ''Cr.P.C.'' for short) was not followed and the entire search, conducted violating the provisions u/s 100 of Cr.P.C., vitiates. The petitioner has also raised allegations in respect of behaviour, use of language by the authorized officers, and challenged the same on the grounds, that procedure at the time of conduction of search and seizure was not followed. Engagement of private security personnel, avoiding local police to help the aforesaid persons for the search and seizure is also a ground to challenge the search.

The facts of the case are :

(a) that petitioner is a body Corporate registered under the Companies Act as a limited company and is engaged in the business of mining operations at village Gudri, Tahsil Bahoriband, District Katni. It is having mines at village Pipraud, National Highway No. 7, Katni and processing unit for marbles at Gudri. The Company is having its registered office at E-3, Mangolpuri, Industrial Area, New Delhi and work site at village Bahoriband, District Katni. The petitioner is a registered dealer under the M.P. Value Added Tax, 2002 (hereinafter referred to as ''VAT Act'' for short) having TIN No. 23606206423 and is regularly paying the Value Added Tax by filing return to the concerned authority. The petitioner''s assessments have been completed upto the assessment period 2007-08. The petitioner was not penalized in the past for any breach of law or default in payment of Commercial Tax.

(b) That on 28.8.2010 the team of near about 40 persons under the authorization of respondent no. 2 and headed by respondent no. 3 made entry in the various premises of petitioner. These persons were allowed ingress and were provided facility of inspection of documents, however no authorization letter was shown by the group leader to the person Incharge at various places.

(c) During the search, the team collected various documents, papers and stacked in two rooms. The documents were brought by another group of search party from residential bungalow situated at Anand Vihar Colony, Katni, from Unit no. 2 at village Niwas, Unit No. 3 and 4 at Village Pipraud. Some of the documents were stored in 3 boxes and remaining were sealed in two rooms. A request was made on behalf of petitioner to draw a proper panchnama and give receipt of documents which were intended to be taken away by the search parties, stored in 3 boxes, but it was denied by the search party. When insistence was made for issuance of receipt and it was denied then it gave rise to a dispute with the staff present at the site and search party. The staff of the petitioner approached to the Incharge of Police Station Saleemnabad, District Katni made a complaint in respect of non issuance of receipt of documents, which were intended to be taken away from the factory premises. On this information, the T.I., Saleemnabad reached to the site and a letter was handed over to him at 10.30 in the night on 28.8.2010. A copy of the letter is enclosed as Annexure P-1.

(d) On the intervention of Incharge of Police Station, Saleemnabad a letter, addressed to the person Incharge to the search party requesting him to give the receipt of boxes those were taken away by the search party, was served, but by putting a note on the same application that no such procedure is provided u/s 55 of the VAT Act and the receipt was not issued. A copy of letter dated 28.8.2010 addressed to the Incharge of Enforcement Team along with his reply is filed as Annexure P-2.

(e) That the search party was under the leadership of P.K. Singh, Assistant Commissioner of Commercial Tax, Bhopal. The search party was also accompanied by a private security agency belonging to ISF (Indian Security Force, Jabalpur). These persons were dressed in black clothes. Section 55 of the VAT Act does not provide any assistance to such search party of private security forces. Sub-section 7 of section 55 of the VAT Act authorizes the Commercial Tax Officer to take assistance from the local police officers.

(f) That during the search and till the aforesaid records were intended to be taken away by the search party, the entire staff was cooperative with the search party.

(g) That because of the aforesaid request made by the employees of petitioner to the search party for issuance of receipt, the behaviour of search party changed and the private security force manhandled the staff of petitioner. Derogatory and abusive languages were used by respondent no. 5 with the staff of petitioner.

(h) That the procedure as envisaged u/s 55 of the VAT Act and section 100 of the Cr.P.C., was not followed. Neither two independent witnesses were called at the time of search, nor panchnama was prepared and no receipt was issued by the search party, which was contrary to the statutory provisions and mandate of section 100 of Cr.P.C. The search party ought Jo have prepared a list of all the documents, properties seized, which should have been duly signed by the independent witnesses, but neither independent witnesses were called nor any search panchnama was prepared. On the contrary when the receipt was asked from the respondents in respect of seized documents, which were intended to be taken away from the factory premises, the respondents denied it and misbehaved and abused with the employees of petitioner, who were present at the time of search and seizure.

(i) That u/s 55 sub-section 5 of the VAT Act, the rocedure as envisaged u/s 100 of Cr.P.C., was to be followed, but the entire provision were given go-bye while conducting search and seizure by the search party.

(j) Sub-section (1) of section 55 of the VAT Act specifically provides for recording of reasons by the Commissioner before issuing an authorization for search. The case of petitioner is that no reasons were before the respondent no. 2 to constitute a reasonable belief that petitioner was evading payment of Tax or indulged in evasion of tax to constitute a reason to believe for initiation of search action.

(k) That the respondents while conducting the search took the help of private security agents, while under sub-section (7) of section 55 of the VAT Act, it was mandatory on the part of search party to take assistance of local police officers and no where it provides to take help of private security agencies.

(l) That the petitioner moved an application before the Commercial Tax Officer, Anti Evasion Bureau, Jabalpur requesting him to inspect the search file, so that petitioner may satisfy itself that the search was conducted under the proper authorization of Commissioner, but no permission was granted, as was prayed by Annexure P-4.

On the aforesaid grounds, petitioner has prayed that the uthorization, search and seizure made by the respondents may be declared as illegal and void and the entire proceedings may be quashed.

The respondents have filed reply in which they have justified their action in respect of issuance of letter of authorization, search and seizure. In nutshell the reply filed by the respondents is as under :-

(a) That as per the requirement of section 55(1) of the VAT Act, the Commissioner, Commercial Tax had directed for initiating proceedings to investigate into the matter of tax evasion by the petitioner. On 18.8.2010 the Deputy Commissioner, Anti Evasion Bureau (A.E.B.) Jabalpur had confidentially communicated to the Commissioner, Commercial Tax that "there are sufficient material to believe that the petitioner is evading huge tax with respect of sale of marbles." On such information, the Commissioner, Commercial Tax, had directed investigation into the complaint of tax evasion by the petitioner.

(b) That the preliminary report dated 7.9.2010 was sent by the Deputy Commissioner, A.E.B. Jabalpur to Commissioner, Commercial Tax, which reveals that there was sufficient material so as to reasonably belief that the petitioner was indulged in tax evasion, while showing the sales to be of "inter-State" instead of "intra-State".

(c) That the A.E.B. was constituted vide order dated 24.4.2007 Annexure R-l. The Commissioner, Commercial Tax on 25.8.2010 in exercise of powers conferred u/s 55 of the VAT Act had delegated his powers to the officers mentioned in order to exercise the powers u/s 55(3) to 55(7) of the VAT Act with respect to investigation into tax evasion by the petitioner. A copy of the orders dated 25.8.2010 are filed as Annexure R-2 and R-3.

(d) That on 28.8.2010 the inspection team went to the petitioner''s place and carried out the inspection of petitioner''s premises. During inspection the petitioner''s officers namely Anil Gupta, Jayant Goswami, Pushpraj Singh and Fotedar were available, but they had not cooperated in the inspection. Anil Gupta in his statement has stated that regular books of accounts were not kept at Katni, but were kept at company''s headquarter at Delhi. Only second copies of invoices were found. There was no record with respect of bilties to show that the sales were made. Anil Gupta in his statement has stated that he will produce the regular books of accounts after collecting the same from Delhi office. A copy of statement of Anil Gupta is filed as Annexure R-4.

(f) As regular books of accounts were not made available, as they were stated to be at Delhi, therefore it was not possible for the respondents to scrutinize the record, so they prepared the seizure in exercise of powers u/s 55(4) of the VAT Act. The documents were kept in a box for the purpose of seizure.

(g) That it is evident that the seizure of documents were not effected at the spot and the documents were sealed for the purposes of effecting proper seizure as per the proviso of sub-section (4) of section 55 of the VAT Act. That on 28.8.2010 the available officers of petitioner caused obstructions to the inspecting team while returning back from the main gate. The main gate was closed and the other employees of the petitioner came over there. The inspecting team, thereafter, intimated the police, local administration and with the help of police and District Administration the sealed container/boxes were carried out by the inspecting team. That immediately at Police Station Saleemnabad the report with regard to the obstructions caused by the employees of petitioner was lodged as Annexure R-5. A Criminal case as crime no. 287/2010 u/s 147, 353 and 342 of I.P.C., was registered against Jayant Goswami, Pushpraj Singh, Fotedar Mishra and Anil Gupta. The accused persons had made an application for grant of bail before the C.J.M., Katni and vide orders dated 30.8.2010 and 31.8.2010 they were granted bail with the condition that they would fully cooperate with the investigation of the case. The copies of the orders are enclosed as Annexure R-6.

(h) That thereafter on 31.8.2010 again the inspection continued and the documents which were kept in two rooms were put up in two boxes, and were carried out from the petitioner''s premises.

(i) That on 1.9.2010 the investigation for Tax Evasion at the petitioner''s site was completed by taking physical stock. On 3.9.2010 a notice was issued to the petitioner for seizure of documents as required under the proviso of sub-section (4) of Section 55 of the VAT Act. A copy of notice is enclosed as Annexure R-7. The case was fixed for 7.9.2010 and on 7.9.2010 an Advocate Shri Manoj Agrawal along with company Accounts Executive appeared and because of absence of regular books of account they sought time to produce the regular books of accounts. Time till 23.9.2010 was granted to them as per Annexure R-8.

(j) That on 10.9.2010, another Advocate Shri Abhishek Oswal, appeared on behalf of petitioner and filed an application dated 9.9.2010 Annexure R-9, in which a request was made to inspect the record which were sealed in boxes. As another Advocate Shri Manoj Agrawal had already sought time on earlier occasion, therefore, in absence of production of any regular books of accounts the application was not entertained.

(k) That on 13.9.2010 another application was filed by the Advocate of petitioner that they do not want to inspect the seized documents, but they only want to peruse the file for investigation made by A.E.B. A copy of application is on record Annexure R-10. This application was also not entertained on the ground that the file was confidential and considering the importance of file and its non-availability at the level of Deputy Commissioner, A.E.B., the application was rejected.

(l) That on 23.9.2010 the Accounts Executive Shri Ravi Kumar Khare appeared on behalf of company and filed an application for adjournment of the case for the reasons that regular books of accounts could not be produced and time was sought. Time period upto 30th September, 2010 was granted.

(m) That on 29.9.2010 again the application was filed for grant of time and time period upto 6.10.2010 was granted.

(n) That so far as deployment of private security guard for search is concerned, it was denied. It is explained that the help of private security guard was restricted only upto the entrace gate of administrative building. There was no reason to accompany them within the premises of petitioner. The respondents seek the assistance of police officers when ever they feel resistance by the dealer. In the present case there was no reason for obstructing or objecting the investigation by the dealer and accordingly on 28.8.2010 the Police was not intimated, however, after the obstruction was caused by the petitioner, the police was intimated immediately and a report was lodged. The petitioner has not made any averment with regard to participation in the investigation process by the security people in his earlier complaints. The security guards were engaged for ensuring the security of the vehicles of the officers and other allied purposes. It is stated that the security guard do not in any way were allowed to participate in investigation and they being unskilled employee cannot in any manner could be useful for the investigation purposes. During investigation some times the officers require to continuously work for hours together and they need refreshment and food. In the situations of investigation it is not possible to get any cooperation from the dealer and the atmosphere normally becomes tense, so it is necessary for the officers to have some people to provide them refreshment and water etc. The private security people were allowed for the aforesaid purposes and no other work was taken from them. The vehicles of the officers were also required to be parked under the supervision of some person other than the person associated with the dealer. In case of any resistance only the Police officers are called for. In this regard the Commissioner had issued instructions Annexure R-l5.

(o) That under the proviso of sub-section (4) of section 55 which requires that for seizure, the Commissioner shall serve upon the dealer, a notice in the prescribed form, and on the date fixed, he shall open the seal of the seized box or bag or container or packet in the presence of the dealer or any agent of the dealer entitled to appear in accordance with the provisions of section 23. Thereafter in presence of at least two other persons, the examination of the document is required to be done. Thereafter a receipt of seizure is required to be given to the dealer. This stage of seizure has not yet come till the date of filing of reply on 5.10.2010. In absence of petitioner''s cooperation no seizure was made. The sealed containers are lying as they are.

(p) In para 11 of the reply it is submitted that no seizure u/s 55(4) of the VAT Act was made. The regular books of accounts were not submitted by the petitioner till the date of filing of reply.

(q) That Section 55 A of the VAT Act provides for assessment of the case relating to detection and provision of tax evasion. In this case, scrutiny report as per Rule 68 is required to be sent to the Assessing Officer, who shall follow the provision of section 55 A of the VAT Act. Thereafter respondents will require to provide opportunity of hearing before passing an order of assessment. The petitioner thereafter may avail remedy of appeal u/s 46 of the VAT Act.

Submitting aforesaid, it is contended that this petition is pre-mature and may be dismissed.

The petitioner has filed rejoinder to the return filed by the respondents in which in para 3 of the rejoinder, it is stated that in this case the authorization was given as per Annexure R-3 u/s 55(3) to section 55(6). Section 55(6) empowers the authorities to search a place of business of such dealer or any place whether such place is the place of business or not, where the Commissioner believes that documents, registers or stock of the business is kept. He is also authorized to break open the lock of any door, box, locker, safe almirah or any other in order to continue inspection where the keys thereof are not produced on demand or not available. Section 55(8) provides that while making entry, search and seizure u/s 55 of the VAT Act the authorities exercise the same power and have to follow the same procedure as are exercised by and or required to be followed by police officer in relation to entry, search and seizure under the provisions of the Code of Criminal Procedure, 1973. Thus the procedure as laid down u/s 100 of the Cr.P.C., is to be mandatorily followed. Section 100(4) of the Cr.P.C., mandatorily requires presence of two independent witnesses of the locality before commencement of search. No independent witnesses were called by the authorities. Sub-section 5 of section 100 requires the search party to prepare a list of all things seized in the course of search and other places, in which they are respectively found the list shall be prepared by such officer and signed by such witnesses. In this case though the list was not prepared but the documents were placed in boxes. The search party was duty bound to prepare a list duly signed by two independent witnesses recording the facts of taking possession of the documents and a copy of the same ought to have been supplied to the petitioner as provided in sub-section 7 of Section 100 of the Cr.P.C.

In para 5 it is stated that the employees of petitioner had not caused any obstruction during the course of search or thereafter, expect making a request to the officers of the search party for providing a copy of the receipt of documents taken in possession by the search party. The F.I.R., was made at 1.35 a.m., on 29.8.2010, while the staff of petitioner itself had called the police around 10.00 p.m., on 28.8.2010, which is evident from Annexure P-1 a copy of the letter addressed to T.I. Saleemnabad. Another letter was addressed to search party has been also filed as Annexure P-2 with the petition, by which the search party was requested to give the receipt of three boxes, which were sealed by them, but the same was denied by the search party on the same letter, which is evident from the perusal of Annexure P-2. The F.I.R., lodged by the officers of the search party was an after thought to cover up the mis deeds of manhandling the security officers and use of unparliamentary, threatening language to them.

The respondents have filed additional reply in the matter, in which it is stated by the respondents thus :-

(a) That non-showing of authorization warrant to the petitioner was denied in para 6 of the additional reply.

(b) That respondents had acted in accordance with the provisions of section 55 of the VAT Act. The applicability of section 100 of Cr.P.C., was not disputed, but it was stated that the procedure as contained in section 55 of the VAT Act was followed by the officers in respect of preparation of list of documents, which were kept in a box. It is explained that the proviso of sub-section (4) specifically provides that if the Commissioner cannot examine the documents on spot, the same can be sealed in a box. The list of document has to be given only when the seal of the seized box is opened in the presence of dealer or his agent in presence of at least two other persons and after examination of the documents, the Commissioner shall seize such documents and grant a receipt thereof. So it is clear that the respondents have collected the documents, accounts and registers relating to the business of the petitioner and put them in a box, duly sealed in the presence of the officers of the Company. This finds support with the statement of Anil Gupta Annexure R-4. At the time of seizure of the box, containing documents, the officers of the petitioner were present and they have duly signed the slip, which was affixed on the box.

(c) The officers and staff of the petitioner had created all the possible hindrances to the stop the inspection and faced with such a situation, the inspection party had lodged an F.I.R., and the case was registered against the officers and employees of the petitioner.

(d) That as per section 55 the sealed documents, in boxes which were containing documents recovered at the time of inspection, were opened in the presence of authorized representative of petitioner Pushpraj Singh and two independent witnesses on 7.10.2010 and after examination of the documents, the Commercial Tax Officer, Anti Evasion Bureau, Jabalpur has seized the documents necessary for the purpose of scrutiny and receipt thereof was issued to the authorized signatory of the petitioner on 7.10.2010 itself. A copy of seizure memo and statement of Shri Pushpraj Singh is filed as Annexure R-17.

(e) That thereafter the competent officer, the Assistant Commissioner, Commercial Tax, Katni has undertaken the proceedings for scrutiny of documents, but inspite of extending more opportunities the petitioner has not rendered co-operation.

That the respondent no. 5 has filed separate return reiterating same contentions, which were raised by other respondents.

From the perusal of aforesaid, we find that this petition involves following questions for our consideration :-

(1) Whether the authorization/search letter was issued in accordance with law?

(2) Whether before inspection/search such authorization was shown to the persons in occupation of the premises of petitioner?

(3) Whether independent witnesses were called at the time of search and seizure ?

(4) Whether any receipt was issued by the respondents before taking over seized documents from the premises of petitioner, if not then, effect of aforesaid ?

So far as the first contention of the petitioner that search warrant was not issued by the respondent no. 2 after applying his mind and no reasons were recorded by the respondent no. 2 before issuance of search warrant are concerned, we have perused the documents produced before this Court. A report dated 18.8.2010 was submitted before the respondent no. 2 by the Deputy Commissioner, Anti Evasion Bureau, Commercial Tax, Jabalpur that the petitioner is engaged in intra state sale, but was showing the sale as inter state sale and thereby evading the tax. In the said report it was intimated that the petitioner was not possessing required documents to send the goods to Rajasthan and was preparing forged documents in this regard so that intra State sale may be shown as inter state sale. The respondent no. 2 on the basis of aforesaid information formed the opinion that there were sufficient reasons to believe that the petitioner was indulged in evasion of tax and on the basis of this directed issuance of authorization letter u/s 55 of the VAT Act and thereafter authorization letter Annexure R-2 dated 25.8.2002 was issued. Various officers whose names are appearing in Annexure R-2 were authorised u/s 55(3) to 55(7) for search and seizure of accounts books documents and goods. From the perusal of aforesaid, it is apparent that there was sufficient material before respondent no. 2 for issuance of authorization in respect of search and seizure. From the perusal of order dated 25.8.2010 it is also apparent that the respondent no. 2 applied his mind and after recording his satisfaction in this regard, the letter of authorization was issued. In these circumstances, the first contention of petitioner that the letter of authorization was issued without recording sufficient reasons or without applying mind by respondent no. 2 has no force.

Now the second contention of the petitioner may be looked into. The petitioner''s contention is that before the conduction of search by the authority, letter of authorization was not shown to any of the officers/employees of the petitioner is concerned, no material is produced before this Court in respect of the contention of respondents that before commencement of inspection/search such letter of authorization was shown to any of the employees of the petitioner, who were present on various premises of the petitioner, which were searched by the respondents. If the authorization letter was shown to any of the employees then a specific note/panchnama ought to have been prepared by the officers of the respondents about showing such authorization to the employees of the respondents. So far as the contention of respondents that no such ground was raised by the petitioner in the petition is concerned in this regard para 5.3 may be looked into, in which petitioner has specifically stated that "it is pertinent to note that no authorization was shown by the group leader to the persons in-charge at various places." The respondents in reply nowhere stated that such letter of authorization was shown to any of the employee of petitioner. Though initially a short reply was filed by the respondents, but later on the respondents have filed additional reply in which also this fact has not been mentioned by the respondents that such authorization was shown to the employees of the petitioner, in possession of various premises, which were inspected and search was carried out. Apart from this in para 6.1 of the additional reply the respondents stated thus :-

"6(i) In relation to the contention of the petitioner that no warrant of authorization was shown to the staff of the petitioner, while entering into the premises, it is respectfully submitted that the same is specifically denied and respectfully submitted that the officers, who have conducted inspection are the public officers and understand the provisions of law and therefore the aforesaid contentions is without any substance more so the same is a disputed questions of fact."

Even from the perusal of aforesaid it is apparent that the respondents have not come with specific case that such authorization was shown to any of the employee. If such authorization could have been shown then the respondents ought to have disclosed this fact specifically in the reply, disclosing the name of the employee to whom such authorization was shown. So the contention of petitioner that before carrying out inspection/search such authorization letter was not shown to the staff/employee of the petitioner cannot be disbelieved.

Now the third contention of the petitioner is, that at the time of search and seizure independent witnesses were not called, in this regard the reply of respondents may be looked into. The respondents in para 5 of the reply have stated thus :-

"5. That, bare perusal of the provisions recorded by the inspection team and also on the perusal of the provisions of sub-section 4 of section 55 of the VAT Act 2002, it is evident that the seizure of the documents has not been effected at the spot and the documents have been sealed for the purposes of effecting proper seizure as per the proviso of sub section 4 of section 55 of the Act of 2002. It is respectfully submitted that on 28.8.2010 the available officers of the petitioner''s caused obstructions to the inspecting team while returning back from the main gate. The main gate was closed and the other employees of the petitioner came over there. The inspecting team, thereafter, intimated the police and administration and with the help of police and District Administration the sealed container/boxes were carried out by the inspecting team. It is submitted that immediately at police station Saleemnabad the report with regard to the obstructions caused by the petitioner was lodged. A copy of the FIR is being filed herewith as Annexure R-5. Bare perusal of the FIR, it is apparent that Crime No. 287/2010 dated 29.8.2010 has been registered at police station Saleemnabad for offence punishable u/s 147, 353, and 342 of IPC against Jayat Goswami, Pushpraj Singh, Fotedar Mishra and Anil Gupta. The answering respondents respectfully submit that the accused persons of the aforesaid crime have made an application for grant of bail before the court of CJM Katni and the learned CJM vide order dated 30.8.2010 and 31.8.2010 has granted bail with the condition that they should fully cooperate with the investigation of the case. A copy of the order dated 30.8.2010 and 31.8.2010 are being filed herewith as Annexure R-6."

From the perusal of aforesaid, it is apparent that though documents were sealed for the purposes of effecting seizure, but no witness was called on the spot for seizure of the documents. The contention of petitioner is, that without preparing seizure of documents when the officers of the respondents were taking over the boxes, in which documents were kept, they demanded the receipt and insisted for the seizure memo and then the dispute occurred. In this regard, certain documents may be looked into. Annexure P-l is the report which was lodged by the employees of petitioner at 10.30 p.m. on 28.8.2010 itself, reveals following facts:-

"The Town Inspector, Saleemnabad, District Katni

Sub: - Mr. P.K. Singh Asst Commissioner Sales Tax and Staff Exceeding 40 persons

Sir,

This is to intimate that officers of above department have turned up at various premises at Katni and without handing over a proper letter of raid/seizure, they have taken possession of our documents in three tin boxes without indicating the list of whatsoever nature documents they have taken. On simply being asked to issue a list, all the members of sales tax team threatened and used force on employees/ staff besides warned for dire consequences, as a result of which we requested you to come over to the premises and thereafter the situation is known to you.

It is height of things that a respected officer of Asst Commissioner Level/CTO level have used slang language and threatened closure of the company and functioning of the unit.

Kindly as such take suitable action under rules.

Yours faithfully, Sd/- For SVIL Mines 28/08/2010"

From the perusal of aforesaid, it is apparent that the employees immediately intimated to the Police in respect of non seizure and non issuing receipt of documents which were taken into possession by the respondents and were tried to be taken over from the premises of petitioner. It is apparent from the perusal of aforesaid that when the employees asked the list and receipt of documents, which were taken over by the respondents the dispute arose. Even from the perusal of report lodged by the respondents at police station, which is on record as Annexure R-5, there is no reference that the authorization letter was shown to the employees of the petitioner. There was no obstruction or resistance by the employees till the documents were taken over by the respondents from the premises of petitioner. It appears that the employees resisted for taking over the seized and sealed boxes of documents and at that time obstruction was made by the aforesaid employees. At that time the employees of the petitioner resisted to take over the three boxes which were sealed. At that time, the police was intimated. It appears that this report was lodged on 29.8.2010 at 1.35 AM. Meaning thereby that the dispute arose at the time when the officers of the respondents tried to take over the sealed boxes from the premises of petitioner. Even in Annexure R-5 it is not stated that the seizure memo was prepared or any receipt was issued in respect of the taking over of three boxes from the premises of the petitioner. The aforesaid circumstances reveals that the documents were sealed in three boxes and the respondents were taking over the aforesaid documents from the premises of the petitioner. No seizure memo was prepared. No receipt was issued to the employees present on the spot in respect of the boxes containing documents, from the premises of petitioner. It is also apparent that till 1.35 A.M. on 29.8.2010 police was not informed, in respect of inspection and seizure, by the respondents.

In the light of aforesaid facts the statutory provision may be looked into. Section 55 of the VAT Act is relevant, which provides power of Commissioner to investigate into tax evasion by the dealer. Section 55 is quoted as under :-

"55 : Detection and checking of evasion of tax by dealers liable to pay tax and power of commissioner to investigate into tax evasion by a dealer

(1) If upon any information which has come into the knowledge of Commissioner and he has reason to believe that any dealer has evaded payment of tax or is indulging in evasion of tax under this Act or under the Act repealed by this Act, for reasons to be recorded in writing, he may direct any of the officers referred to in clauses (c) to (g) of sub-section (1) of section 3 to proceed to investigate into the tax evasion by such dealer.

(2) Omitted

(3) In pursuance of the provisions of sub-section (1), the Commissioner shall, subject to such conditions as may be prescribed,-

(a) require the dealer to produce before him any accounts, registers or documents relevant to his business or to furnish such other information as he may deem fit for scrutiny, or

(b) inspect the place of business of such dealer and for this purpose all accounts, registers and documents relating to the business of such dealer and all the goods kept in such place of business shall be open to inspection by the Commissioner.

(4) If on scrutiny of the records produced by the dealer or on inspection of his place of business under sub-section (3), the Commissioner is satisfied that the dealer has evaded payment of tax payable by him for any year, he may for reasons to be recorded in writing, seize such accounts, registers or documents relating to the business of such dealer as he considers necessary, and grant a receipt therefor to the dealer and shall detain them only for so long as may be necessary, for examination thereof or for assessment of tax or for prosecution.

Provided that if the Commissioner can not examine the documents relating to the business of such dealer on the spot, he may, for reasons to be recorded in writing, seal such documents in a box or bag or container or packet and seize the box or bag or container or packet and after the seizure, the Commissioner shall serve upon the dealer, a notice in the prescribed form, and on the date fixed, he shall open the seal of the seized box or bag or container or packet in the presence of the dealer or an agent of the dealer entitled to appear in accordance with the provisions of section 23 and in the presence of at least two other persons examine the documents kept in the box or bag or container or packet and after examination of the documents, the Commissioner may seize such documents as he considers necessary and grant a receipt thereof to the dealer.

(5) For the purpose of clause (b) of sub-section (3), the Commissioner may-

(a) enter and search any place of business of such dealer or any other place whether such place be the place of his business or not, where the Commissioner has reason to believe that the dealer keeps or is for the time being keeping any accounts, registers or documents of his business or stock of goods relating to his business and the Commissioner may, for exercising the powers under this clause, seal or break open the lock of any door, box, locker, safe, almirah or any other receptacle in order to continue the inspection subsequently or where the keys thereof are not produced on demand or are not available;

(b) also search any person who leaves or is about to enter or is already in the place referred to in clause (a), if the Commissioner has reason to suspect that such person has secreted about his person, books of account or other documents relating to the business of such dealer; and

(c) if considered necessary, get the search proceedings video graphed or recorded in suitable electronic medium for use as evidence.

(6) (a) If in the course of scrutiny of accounts, registers or documents produced by the dealer or in the course of inspection of the place of business of such dealer, the Commissioner has reason to believe that the dealer has stored or kept goods liable to tax, without accounting for them in books, registers or accounts maintained by him in the course of his business, with a view to their surreptitious sale in order to evade payment of tax, in any building, place or vehicle under the ownership or control of the dealer in either case whether exclusively or in association with some other person or in any building, place or vehicle in each case belonging to some other person with express or implied permission of such other person, the Commissioner may enter any such building, place or vehicle and inspect and verify if the goods have been accounted for and in the event of his reasonable belief that the dealer has not accounted for such goods with the intention of evading tax, the Commissioner may seize all such goods and take all necessary steps for their removal, proper custody and preservation:

Provided that a list of all goods seized under this clause shall be prepared by the Commissioner in presence of at least two respectable persons and a copy thereof shall, on demand, be furnished to the dealer or, as the case may be, to the person from the whose possession or custody they were seized.

(b) The Commissioner shall as soon as possible, after seizure of the goods under clause (a), serve upon the dealer, a notice in the prescribed form to show cause within a period or thirty days of service of such notice as to why a penalty equal to 3.5 times amount of tax payable and calculable on the price which such goods would have fetched on their assumed sale in Madhya Pradesh, on the date of seizure, be not imposed on him for the dealers default in not making entries in respect of such goods in his books of account or register or other documents, as the case may be, maintained by him in the course of his business.

(c) If the Commissioner, after taking into consideration the explanation of the dealer and after giving him an opportunity of being heard, is satisfied that the entries relating to the said goods were not made in the books of accounts, registers or other documents of the dealer without any proper justification, the Commissioner shall pass an order imposing a penalty not less than three times but not exceeding 3.5 times the amount of tax referred to in clause (b).

(d) The Commissioner may, at any time after the service of the notice under clause (b) and before passing an order imposing penalty under clause (c), release the goods seized if the dealer or the person from whom the goods were seized furnishes security in the form of cash security or bank guarantee to the satisfaction of the Commissioner, in each case for such reasonable amount as the Commissioner may specify by order in writing with due regard to the amount of penalty proposed. On payment by the dealer of the penalty imposed upon him under clause (c), if the security furnished is in the form of bank guarantee, the bank guarantee shall be released and if such security has been furnished in the form of cash security, it shall be adjusted towards the penalty so imposed and the balance, if any, shall be refunded to the dealer.

(e) Where no security is furnished under clause (d), the dealer shall pay the amount of penalty, within thirty days of the service of the order imposing penalty on him and on payment of such amount goods seized shall be released forthwith.

(ea) Subject to such restrictions and conditions and in such manner as may be prescribed, a dealer, on whom a penalty has been imposed under clause (c), may opt to pay in lieu of penalty a lump sum amount, which shall be twice the amount of tax referred to in clause (b) and once the dealer has exercised the option he shall not have any right to challenge the order of penalty in any forum.

(f) If the dealer fails to pay within the period specified in clause (e) the penalty imposed under clause (c), the Commissioner shall, subject to other provisions of this Section, dispose of the goods by way of sale in such manner as may be prescribed and apply the sale proceeds thereof towards the penalty imposed and the expenses incurred on account of and incidental to the custody, protection, preservation and sale of such goods and shall refund the balance, if any, to the dealer or person entitled.

(g) The penalty imposed under clause (c) shall be without prejudice to any other action under any other provision of this Act.

(h) Where any objection is made to the seizure of the goods seized under clause (a) on the ground that such goods do not belong to the dealer or are not otherwise liable to seizure, the Commissioner shall proceed to decide the objection:

Provided that no such objection shall be entertained -

(i) where, before the objection is made, the goods seized had already been sold, or

(ii) where the Commissioner considers that the objection was designedly or unnecessarily made.

(i) All questions including question relating to right, title or interest in the goods seized arising between the parties to such proceeding or their representatives and relevant to the adjudication of the claim or objection, shall be determined by the Commissioner dealing with the claim or objection.

(j) Upon the determination of the question referred to in clause (i), the Commissioner shall, in accordance with such determination:-

(i) allow the claim or objection and release the seized goods either wholly or to such extent as he thinks fit, or

(ii) disallow the claim or objection, or

(iii) pass such order as, in the circumstances of the case, he deems fit.

(k) where any claim or objection has been adjudicated upon under clause (j) or where the Commissioner refuses to entertain a claim or objection under the proviso to clause (h), any such order made shall be deemed to be an order relating to assessment of tax against a dealer u/s 20 and shall be subject to the same condition as to appeal, revision or any other remedy under this Act.

(7) Where the Commissioner, apprehends any resistance to entry, search or seizure of goods he may for reasons to be recorded in writing requisition the services of any police officer of the State Government, having jurisdiction over the local area in which such entry, search or seizure is to be made, to assist him for all or any of the purposes specified in sub-section (3) or clause (a) of sub-section (5) or clause (a) of sub-section (6) and it shall be the duty of such police officer to comply with such requirement.

(8) The Commissioner while making entry, search and seizure under this Section shall, unless otherwise expressly provided by or under this Act exercise the same power and follow the same procedure as are exercised by and are required to be followed by a Police Officer in relation to entry, search and seizure under the provisions of the Code of Criminal Procedure, 1973 (No. 2 of 1974)"

The aforesaid provision specifically provides that an inspection can be carried out by the officers of the respondents when an authorization is issued under sub-section (1) of section 55 of the VAT Act. Sub-section (4) provides that if on the scrutiny of records produced by the dealer or on inspection of his place of business under sub-section (3), the Commissioner is satisfied that the dealer has evaded payment of tax payable by him for any year, he may for reasons to be recorded in writing, seize such accounts, registers or documents relating to the business of such dealer as he considers necessary, and grant a receipt there for to the dealer and shall detain them, only for so long as may be necessary, for examination thereof or for assessment of tax or for prosecution. Though the proviso of sub-section (4) provides that if the commissioner cannot examine the documents relating to the business of such dealer on the spot, he may for reasons to be recorded in writing, seal such documents in a box or bag or container or packet and seize the box or bag or container or packet and after the seizure, the Commissioner shall serve upon the dealer a notice in the prescribed form and on the date fixed, he shall open the seal of the seized box or bag or container or packet in the presence of the dealer or an agent of the dealer entitled to appear in accordance with the provisions of section 23 and in presence of at least two other persons examine the documents kept in the box or bag or container or packet and after examination of the documents, the Commissioner may seize such documents as he considers necessary and grant a receipt thereof to the dealer.

From the perusal of aforesaid provision, it is apparent that sub-section (4) takes care in respect of seizure of documents, but before it the Commissioner has to record his reasons in writing. No such satisfaction note is produced before us that the Authorized officer after inspection of the premises of the petitioner was of the view that seizure of the documents was necessary. The provision also provides that at the time of seizure a receipt of document shall be issued to the dealer and the Commissioner can detain them for examination or for assessment of tax or for prosecution. Though the proviso provides that at the time of inspection the Commissioner can seize the documents or at the time of search he can seize the documents and keep them in a box but it does not provide that the commissioner can take over the sealed documents along with him without issuance of any receipt to the dealer. In both the circumstances he was required to record his reasons in writing, but as stated hereinabove no material is produced before this Court that after the search any such reasons in writing were recorded by the officer incharge of the search. Apart from this, there is no material before this Court to show that before taking over the sealed boxes from the premises of the petitioner any receipt was issued in this regard. Sub-section (8) provides that the commissioner while making entry, search and seizure under this section shall, unless otherwise expressly provided by or under this Act exercise the same power and follow the same procedure as are exercised by and are required to be followed by a Police Officer in relation to entry, search and seizure under the provisions of Code of Criminal Procedure, 1973. The relevant provision in this regard is section 100 of Cr.P.C., which provides for search of premises. For ready reference we quote section 100 of Cr.P.C., which reads thus :-

"100. Persons in charge of closed place to allow search.

(1) Whenever any place liable to search or inspection under this Chapter is closed, any person residing in, or being in charge of, such place, shall, on demand of the officer or other person executing the warrant, and on production of the warrant, allow him free ingress thereto, and afford all reasonable facilities for a search therein.

(2) If ingress into such place cannot be so obtained, the officer or other person executing the warrant may proceed in the manner provided by sub-section (2) of section 47.

(3) Where any person in or about such place is reasonably suspected of concealing about his person any article for which search should be made, such person may be searched and if such person is a woman, the search shall be made by another woman with strict regard to decency.

(4) Before making a search under this Chapter, the officer or other person about to make it shall call upon two or more independent and respectable inhabitants of the locality in which the place to be searched is situate or of any other locality if no such inhabitant of the said locality is available or is willing to be a witness to the search, to attend and witness the search and may issue an order in writing to them or any of them so to do.

(5) The search shall be made in their presence, and a list of all things seized in the course of such search and of the places in which they are respectively found shall be prepared by such officer or other person and signed by such witnesses; but no person witnessing a search under this section shall be required to attend the court as a witness of the search unless specially summoned by it.

(6) The occupant of the place searched, or some person in his behalf, shall, in every instance, be permitted to attend during the search, and a copy of the list prepared under this section, signed by the said witnesses, shall be delivered to such occupant or person.

(7) When any person is searched under sub-section (3), a list of all things taken possession of shall be prepared, and a copy thereof shall be delivered to such person.

(8) Any person who, without reasonable cause, refuses or neglects to attend and witness a search under this section, when called upon to do so by an order in writing delivered or tendered to him, shall be deemed to have committed an offence u/s 187 of the Indian Penal Code (45 of 1860)."

Now in the light of statutory provision as quoted hereinabove and factual position of the present case, legal position may be examined. In Radhakishan Vs. State of U.P., the Apex Court considering the question in respect of search in contravention of section 103 and 165 of Cr.P.C., held that where the provisions of section 103 and 165 of Cr.P.C., are contravented, the search can be resisted by the person whose premises are sought to be searched. It may also be that, because of the illegality of the search, the Court may be inclined to examine carefully the evidence regarding the seizure. But beyond these two consequences no further consequence ensues, and the seizure of the articles is not vitiated.

In Pooran Mal Vs. The Director of Inspection (Investigation), New Delhi and Others, the Apex Court while considering the provision of Income Tax in respect of search and seizure held that provisions of section 132(1)(5), 132A and Rule 112A are directed against persons who are believed on good grounds to have illegally evaded the payment of tax on their income and property, drastic measures to get at such income and property with a view to recover the government dues would stand justified in themselves. The Apex Court further held in para 26 of the judgment that even assuming as was done, that the search and seizure were in contravention of the provisions of section 132 of the Income Tax Act, still the material seized was liable to be used subject to law before the Income Tax authorities against the person from whose custody it was seized and therefore, no writ of prohibition in restraint of such use could be granted.

In Dr Partap Singh and Another Vs. Director of Enforcement, Foreign Exchange Regulation Act and Others, the Apex Court held that the illegality of search would not render the seizure effected pursuant to the search also illegal so as to enable the accused to claim return of the seized material, however the Courts must be cautious while dealing with evidence collected during the illegal search.

In The Commissioner of Commercial Taxes and Others etc. Vs. R.S. Jhaver and Others etc., the Apex Court held thus in para 17:-

"We are therefore of opinion that safeguards provided in section 165 also apply to searches made under sub-sec. (2). The safeguards are (i) the empowered 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) he 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 apply to searches under sub-section (2) also clearly show that the power to search under sub-section (2) is not arbitrary. In view of these safeguards and other safeguards provided in Chapter VII of the Code of Criminal Procedure which also apply so far as may be to searches made under sub-section (2), we can see 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-section (2), is not a reasonable restriction keeping in view the object of the search, namely, prevision of evasion of tax."

The Apex Court in State of Punjab Vs. Baldev Singh, etc. etc., held thus :-

"23. In Mohinder Kumar Vs. The State, Panaji, Goa, a three-Judge Bench (to which one of us, Sujata V. Manohar, J., was a party) once again considered the requirements of Sections 42 and 50 of the Act. In that case the police officer "accidentally" reached the house while on patrol duty and had it not been for the conduct of the accused persons in trying to run into the house on seeing the police party, he would perhaps not have had any occasion to enter the house and effect search. But when the conduct of the accused persons raised a suspicion, he went into the house and effected the search, seized the illicit material and caused the arrest. The Court opined that in the facts and circumstances of the case, when the investigating officer accidentally stumbled upon the offending articles and himself not being the empowered officer, then on coming to know that the accused persons were in possession of illicit articles, then from that stage onwards he was under an obligation to proceed further in the matter only in accordance with the provisions of the Act. On facts it was found that the investigating officer did not record the grounds of his belief at any stage of the investigation, subsequent to his realising that the accused persons were in possession of charas and since he had made no record, he did not forward a copy of the grounds to his superior officer nor did he comply with the provisions of Section 50 of the Act, inasmuch as he did not inform the person to be searched that if he required, his search could be conducted before a Gazetted officer or a Magistrate. The Bench held that for failure to comply with the provisions of Sections 42 and 50, the accused was entitled to an order of acquittal and consequently the appeal was allowed and the order of conviction and sentence against the accused was set aside.

To be searched before a Gazetted Officer or a Magistrate, if the suspect so requires, is an extremely valuable right which the legislature has given to the person concerned having regard to the grave consequences that may entail the possession of illicit articles under the NDPS Act. It appears to have been incorporated in the Act keeping in view the severity of the punishment. The rationale behind the provision is even otherwise manifest. The search before a Gazetted Officer or a Magistrate would impart much more authenticity and creditworthiness to the search and seizure proceeding. It would also verily strengthen the prosecution case. There is, thus, no justification for the empowered officer, who goes to search the person, on prior information, to effect the search, of not informing the person concerned of the existence of his right to have his search conducted before a Gazetted Officer or a Magistrate, so as to enable him to avail of that right. It is, however, not necessary to give the information to the person to be searched about his right in writing. It is sufficient if such information is communicated to the person concerned orally and as far as possible in the presence of some independent and respectable persons witnessing the arrest and search. The prosecution must, however, at the trial, establish that the empowered officer had conveyed the information to the person concerned of his right of being searched in the presence of a Magistrate or a Gazetted Officer, at the time of the intended search. Courts have to be satisfied at the trial of the case about due compliance with the requirements provided in Section 50. No presumption u/s 54 of the Act can be raised against an accused, unless the prosecution establishes it to the satisfaction of the court, that the requirements of Section 50 were duly complied with.

The safeguard or protection to be searched in the presence of a Gazetted Officer or a Magistrate has been incorporated in Section 50 to ensure that persons are only searched with a good cause and also with a view to maintain the veracity of evidence derived from such search. We have already noticed that severe punishments have been provided under the Act for mere possession of illicit drugs and narcotic substances. Personal search, more particularly for offences under the NDPS Act, are critical means of obtaining evidence of possession and it is, therefore, necessary that the safeguards provided in Section 50 of the Act are observed scrupulously. The duty to inform the suspect of his right to be searched in the presence of a Gazetted Officer or a Magistrate is a necessary sequence for enabling the person concerned to exercise that right u/s 50 because after Mrs. Maneka Gandhi Vs. Union of India (UOI) and Another, it is no longer permissible to contend that the right to personal liberty can be curtailed even temporarily, by a procedure which is not "reasonable, fair and just" and when a statute itself provides for a "just" procedure, it must be honoured. Conducting a search u/s 50, without intimating to the suspect that he has a right to be searched before a Gazetted Officer or a Magistrate, would be violative of the "reasonable, fair and just procedure" and the safeguard contained in Section 50 would be rendered illusory, otiose and meaningless. Procedure based on systematic and unconscionable violation of law by the officials responsible for the enforcement of law, cannot be considered to be a "fair", just or reasonable procedure. We are not persuaded to agree that reading into Section 50, the existence of a duty on the part of the empowered officer, to intimate to the suspect, about the existence of his right to be searched in the presence of a gazetted officer or a Magistrate, if he so requires, would place any premium on ignorance of the law. The argument loses sight of a clear distinction between ignorance of the law and ignorance of the right to a "reasonable, fair and just procedure".

This Court cannot overlook the context in which the NDPS Act operates and particularly the factor of widespread illiteracy among persons subject to investigation for drug offences. It must be borne in mind that severer the punishment, greater has to be the care taken to see that all the safeguards provided in a statute are scrupulously followed. We are not able to find any reason as to why the empowered officer should shirk from affording a real opportunity to the suspect, by intimating to him that he has a right "that if he requires" to be searched in the presence of a Gazetted Officer or a Magistrate, he shall be searched only in that manner. As already observed the compliance with the procedural safeguards contained in Section 50 are intended to serve a dual purpose - to protect a person against false accusation and frivolous charges as also to lend creditability to the search and seizure conducted by the empowered officer. The argument that keeping in view the growing drug menace, an insistence on compliance with all the safeguards contained in Section 50 may result in more acquittals does not appeal to us. If the empowered officer fails to comply with the requirements of Section 50 and an order or acquittal is recorded on that ground, the prosecution must thank itself for its lapses. Indeed in every case the end result is important but the means to achieve it must remain above board. The remedy cannot be worse than the disease itself. The legitimacy of the judicial process may come under a cloud if the Court is seen to condone acts of lawlessness conducted by the investigating agency during search operations and may also undermine respect for the law and may have the effect of unconscionably compromising the administration of justice. That cannot be permitted.

43......... Prosecution cannot be permitted to take advantage of its own wrong. Conducting a fair trial for those who are accused of a criminal offence is the cornerstone of our democratic society. A conviction resulting from an unfair trial is contrary to our concept of justice. Conducting a fair trial is both for the benefit of the society as well as for an accused and cannot be abandoned. While considering the aspect of fair trial, the nature of the evidence obtained and the nature of the safeguard violated are both relevant factors. Courts cannot allow admission of evidence against an accused, where the court is satisfied that the evidence had been obtained by a conduct of which the prosecution ought not to take advantage particularly when that conduct had caused prejudice to the accused.

55.....(4) That there is indeed need to protect society from criminals. The societal intent in safety will suffer if persons who commit crimes are let off because the evidence against them is to be treated as if it does not exist. The answer, therefore, is that the investigating agency must follow the procedure as envisaged by the statute scrupulously and the failure to do so must be viewed by the higher authorities seriously inviting action against the official concerned so that the laxity on the part of the investigating authority is curbed. In every case the end result is important but the means to achieve it must remain above board. The remedy cannot be worse than the disease itself. The legitimacy of the judicial process may come under a cloud if the court is seen to condone acts of lawlessness conducted by the investigating agency during search operations and may also undermine respect for the law and may have the effect of unconscionably compromising the administration of justice. That cannot be permitted. An accused is entitled to a fair trial. A conviction resulting from an unfair trial is contrary to our concept of justice. The use of evidence collected in breach of the safeguards provided by Section 50 at the trial, would render the trial unfair."

In view of aforesaid settled law it is apparent that in the present case letter of authorization was not shown to the officers/employees of the petitioner. Independent witnesses were not called during the search and seizure and the respondents took over the boxes, without issuing any receipt, from the premises of petitioner, which vitiates the entire search and seizure conducted by the respondents. The aforesaid provisions have been made to safeguard the interest of persons who are effected by such search and seizure. It was obligatory on the part of the officer about to execute the search warrant to call on two or more respectable inhabitants of the locality where the search was to be conducted, as has been held by the Apex Court in Sunder Singh Vs. State of Uttar Pradesh, . It was the legal obligation on the part of respondents to call two independent respectable inhabitants of the locality to attend the search and seizure, made by them. But it is apparent that the entire procedure was given go by by the respondents. Even they have not cared to call any of the witness at the time of search and seizure. It is not the case of the respondents that no witness was available or attended the aforesaid search and seizure, in absence of which the entire seizure can be held to be illegal.

In the aforesaid circumstances, the action of the respondents in respect of search and seizure cannot be approved by this Court and it is held that the entire search and seizure was illegal. Now after declaring the search and seizure as illegal what directions can be issued is to be seen.

The respondents have seized various documents alleging evasion of tax by the petitioner. Though the entire search and seizure has been held to be illegal, but the respondents may proceed on the basis of documents seized by them to find out whether there was any evasion of tax by the petitioner. However, the evidence so collected by the respondents in respect of evasion of tax by the aforesaid search and seizure, which has been held to be illegal, the authority considering the matter shall evaluate the evidence with great caution, as per the law laid down by the Apex Court in Baldev Singh (supra).

In view of aforesaid, this petition is allowed in part and following directions are issued :-

That the search and seizure effected by the respondents is held to be illegal. However the respondents may proceed, on the basis of documents seized to examine, but with great caution, that whether there was any evasion of tax by the petitioner, in accordance with law.

Considering the facts of the case, there shall be no order as to costs.

Petition Partly allowed