Dalip Singh and Another vs Dilbagh Rai and Another

S.S. Sandhawalia, J.—This revision petition is directed against the order of the trial court dated 17th October, 1974, whereby it upheld the claim of privilege u/s 26 of the Punjab General Sales Tax Act on behalf of the department in regard to certain documents and books of account.

Though the order under revision does not specifically so mention, the learned counsel for the petitioners has forcefully stated at the Bar and also drawn my attention to the relevant portion of the grounds of revision to contend that the documents and record in question were in fact seized by the sales tax authorities in a raid on the premises of the plaintiff-respondent u/s 14 of the Punjab General Sales Tax Act on 26th August, 1974. On this assumption counsel contends that the provisions of Section 26 of the Act are not attracted to documents and books of account seized by the department. It is pointed out that the relevant documents are not those which have been produced in the ordinary course for the purposes of assessment before the sales tax authorities but are the subject-matter of a seizure under Sub-section (3) of Section 14 of the Act.

There is apparent merit in the contention raised on behalf of the petitioners in view of the reliance on a judgment of the Madras High Court reported as Ramaswami Chettiar v. K.J. Mahadevan [1969] 23 S.T.C. 255. Therein a distinction has been made regarding records produced before the sales tax authorities and those seized by them. It has been held as follows:

But it is clear from the provisions of Section 57, Clause (1), that only those documents which were produced under the provisions of the Act shall be treated as confidential and shall not be disclosed. In my opinion, Section 57(1) of the Act will not apply to the documents seized. The protection given u/s 57(1) of the Act will apply to those documents produced voluntarily but not to the documents compulsorily taken or seized under the provisions of the Act. Section 41 of the Act makes a distinction between production and seizure. Section 41(1) empowers the officers concerned to require a dealer to produce before him the accounts, documents, etc. Under Clause (3) of the same Section, if any officer empowered has reason to suspect that any dealer is attempting to evade the payment of any tax, he may seize the documents, accounts, etc., of the dealer. As already noted, Section 57(1) of the Act applies only to the documents produced u/s 41(1) and not to the documents seized u/s 41(3). The documents mentioned in item (3) of the application are the documents said to have been seized by the officers. I am, therefore, of the view that Section 57(1) will not apply to these documents.

As is apparent the aforementioned decision was made under the Madras General Sales Tax Act, 1959. However, it appears that the relevant provisions of Sections 57 and 41 of that Act are in pari materia with Sections 26 and 14 of the Punjab General Sales Tax Act. The ratio of the abovesaid case is consequently equally attracted in the present one. Learned counsel for the respondents, however, have pointed out that the trial court has not clearly found whether the privilege was claimed expressly in regard to the record which had been only seized by the department. This is indeed so and therefore a clear determination whether the relevant record is the seized one and not the one voluntarily produced before the authorities, is necessary.

I would, accordingly, allow this revision petition and set aside the order under revision with the direction that the trial court should first determine whether the relevant record is a seized one. If it is so, then obviously the claim of privilege by the department would hardly be sustainable. There will''be no order as to costs.