# J., R. S. _BACHAWAT v. RAMASWAMJ, B

- **Citation:** [1968] 1 S.C.R. 148
- **Court:** Supreme Court of India
- **Decided:** 1967-08-09
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/j-r-s-bachawat-v-ramaswamj-b-4094
- **Pages:** 16

## Headnote

148
THE COMMISSIONER OF COMMERCIAL TAXES AND A
OTHERS ETC.
[K. N.
v ...
R. S. JHA VER AND OTHERS ETC.
August 9, 1967
WANCHOO C.
J., R. S. _BACHAWAT V. RAMASWAMJ, B
G. K. MITTER AND K. S. HEGDE, JI.]
Madras General Sales TlllX' Act, l of 1969, •. 41-ocope 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 too: plus an additional amount before stage
of first sale when ~
ordinarily becomes due-Whether !'epugnant
to scheme of Act and invalid-Sub-sec. (3) authorising seizure and C
sub-6<?ction (4) authorising confiscation.-Whether unreasona~le . restrictions and violative of Art. 19 (1) (f) and (g) of the Constitution.
On August 19, 1964. officers belon~g to the Department of th_e
appellant raided and searched the premises of a company and fore1blv removed certain accounts and goods. 'I'he respondents challenged
the department's action by wrU petitions filed in the High Court
under Art. 226 of the Constitution praying that the articles seized D
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 Li~t II of the Seventh
Schedule to the Constitution relating to "taxes an the sale or pur- E
chase 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 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
inspectiion; the power of seizure or confisc.,tion in s. 41(4) was beyond the legisla!JWe competence of the State Legislature; and that I'
sub-sections (2),
(3) and (4) of s. 41 contained unreasonable restriction3 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 G
the P:"titioners 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 Cou:t that the search warrant issued by the magistrate
was bad on vanous grounds was not challenged; furthermore anything confiscated must also be returned as sub-section (4) of s 41
must fall. fl63 B-D].
·
Clause (a) of the second proviso to sub-section (4) gives power B
to the officer ordering confiscation to give the person affected an
option tv pay in lieu of confiscation, tin 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 tlie first sale in
l
COJDIISSIONER OF COMltERCIAL TAXES v. JHAVl<R (JVanc/100, 0. J,)
149
A 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 be.fore 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 Sectio.n
and is not therefore severable. [l59F-160Dl.
B
(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

## Text

_Characters 0–39,987 of 47,957. This is a partial read: ask again with offset=39987 for what follows._

148
THE COMMISSIONER OF COMMERCIAL TAXES AND A
OTHERS ETC.
[K. N.
v ...
R. S. JHA VER AND OTHERS ETC.
August 9, 1967
WANCHOO C.
J., R. S. _BACHAWAT V. RAMASWAMJ, B
G. K. MITTER AND K. S. HEGDE, JI.]
Madras General Sales TlllX' Act, l of 1969, •. 41-ocope 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 too: plus an additional amount before stage
of first sale when ~
ordinarily becomes due-Whether !'epugnant
to scheme of Act and invalid-Sub-sec. (3) authorising seizure and C
sub-6<?ction (4) authorising confiscation.-Whether unreasona~le . restrictions and violative of Art. 19 (1) (f) and (g) of the Constitution.
On August 19, 1964. officers belon~g to the Department of th_e
appellant raided and searched the premises of a company and fore1blv removed certain accounts and goods. 'I'he respondents challenged
the department's action by wrU petitions filed in the High Court
under Art. 226 of the Constitution praying that the articles seized D
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 Li~t II of the Seventh
Schedule to the Constitution relating to "taxes an the sale or pur- E
chase 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 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
inspectiion; the power of seizure or confisc.,tion in s. 41(4) was beyond the legisla!JWe competence of the State Legislature; and that I'
sub-sections (2),
(3) and (4) of s. 41 contained unreasonable restriction3 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 G
the P:"titioners 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 Cou:t that the search warrant issued by the magistrate
was bad on vanous grounds was not challenged; furthermore anything confiscated must also be returned as sub-section (4) of s 41
must fall. fl63 B-D].
·
Clause (a) of the second proviso to sub-section (4) gives power B
to the officer ordering confiscation to give the person affected an
option tv pay in lieu of confiscation, tin 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 tlie first sale in
l
COJDIISSIONER OF COMltERCIAL TAXES v. JHAVl<R (JVanc/100, 0. J,)
149
A 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 be.fore 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 Sectio.n
and is not therefore severable. [l59F-160Dl.
B
(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 office!l, shops etc., these two powers together ·amount to givt>ng the c-oncerned officer the power to enter and
search the offices etc. and if he finds any accounts or goods in the
offices, shops, etc., to ,:.nspect them. The High Court was therefore
C wrong in holding that there was no power of search whatsoevel'
under sub-section (2). f154H-155f:l.
The proviso to sub-section (2) in providing that all searches
under "this sub-section" shall be made in actordance with the provisions of the Code of Criminal Procedure, bears out the construction tha' the main part of sub-section
(2) contemplates searches.
Siniilarly it is clear kom sub-section (3) which gives power to seize
D accounts etc., in certain circumstances. that sub-section
(2) must
include the power of search for a seizure tinder sub-section
(3) is
not possible unless there is a search. fl56D-E. 158B-Cl
The contention that as the main piirt 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
proviso is an exception to the main part of the section, it ls recognisJ ed that in exceptional cases, as in the present case, the proviso may
be a substantive pro\<ision itseU. fl56D-Fl.
Blwndda U•ban District Council v. Taff Vale Railway Co .. L.R.
(1909] A.C. 253: Commissioner of Income-tao: v. Nandlal Bhandari &
Sons (1963) 47 I.T.R. 803, and State of Raiasthan v. Leela Jain.
[1965] 1 S.C.R. 276, referred to.
r
(ii) Sub-9ections (2) and (3) of s. 41 are not violative of Art. 19
as they are j)l'Otected by cJ.auses (5) and (6) of Art. 19 of the Constitution. fl62F -<n
The High Court had wrongly assumed that the pmvisions of the
Criminal Procedure Code did not apply to a search under s. 41(2) .' fo
view of the safeguards provided in s. 165 Cr. P.C. and in Chapter
Vlt ot that Code. it cannot be !laid tlrnt the power to search provi·
G · ded in sub-seotim (2) lis not a reasonable restriction keeping in vi:ew
the object of the search, namely, prevention of evasion of tax fl61E-
<Jl.
.
B
The mere fact that the Act gives power to <Jovernment to empower any officer to conduct the search is no reason to strike down
the provision for· it cannot be assumed that Government \\'$11
not
empower officers of proper status to make search.es. rt61J..H].
To exercise the power of seizure under sub-section (3) the off\.
cer concerned has to rieco,rd his reasons in writing, has to give a r&-
ceipt for the .accounts seized, ~d can only retain. the items seized
beyond a peruod of 30 days with the permission of the next higher
ofll.cer, These are sufficient safeguards and the restriction, if any, on
100
SUPREME COURT REPORTS
(1968) l S.C.R.
the right to hold property and the right to carry on trade by sub- A
section (3) must therefore be held to be a reasonable restriction. [162D-Gl.
[While. the court 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 did not decide the general question whether a power to confiscate goods which are found on search and
which are nQI entered in account books of the dealer is an ancillary B
power necessary for the pwrp06e of stopping evasl.on of tax. [159C-D].
K. S. Papanna and another v. Deputy Commercial Tax Officer,
Gunkakal, (1967) XIX S.T.C. 506; referred to.
Qvn. APPELLATE JURISDICTION: Civil Appeals Nos. 150-154
of 1961.
Appeals from the judgment and order dated February 26, o
1965 of the Madras High Court in Writ Petitions Nos. 1321, 1456.
1495, 1496 and 1553 of 1964.
S. V. Gupte, Silicitor-General, V.
Ramaswamy and A. V.
Rangam, for the appellant (in C:As. Nos. 150, 153 of 1967).
K. N. Mudaliyar, Advocate-General, Madras, V. Ramaswamy D
and A. V. Rangam, 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 commcm questions of law and
will be dealt with together. We .shall give brief facts in one of the
appeals (No. 150 of 1967) arising out of writ petition No. 1321 al
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., l
the officers of the Commercial Tax Department (hereinafter referred to as the Department) raided the premises of Zenith Lamps
and Electricals Ltd., (hereinafter referred to as the Ccmpanyl. 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 41
any palJers 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 tlie authorities concierned on infonnation 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 B
articles. seized should be returned to him was under three heads.
It was first contended that on a proper constr.uction of section 41
of the Madras General ·Sales Tax Act, No. 1. of 1959 (hereinafter
OOKMISSIONER OF COMMERCIAL TAXES •. JIU.VER (Wanchoo, O.J.)
151
A 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 cont.ended that if
sedion 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 Sche·
B dule to the Constitutioo 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
G 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
D enact s.41(4) under item 54 c-f list II 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(51 and (6).
The High Court held that s. 41(2) did not allow searcli being
made thereund'er, as it only provided for inspection, and that
i search was a different thing altogether from inspection. The High
Court further held that if s.41 (2) pro\lided for search it would be
within the legislatve 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 he
ancillary and incidental to the power to tax sale or purchase of
1 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 resiG dential 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 pril)ted search warrant which
should have been struck out were not so struck out. Further the
gaps in the printed form which should have been filled in before
the warrant was issμed had not been filled in. From these two cir·
~ cumstances the High Court cdii.cluded 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 resi
dential h,ouse. Ute l{igb Court further found that s.41(4) was no
complied with Sirictlv ~fpre conliscation was ordered and no pro
lli2
SUPREllE COURT REPORTS
[1968] l s.c.B.
per opportunity was given to the dealer to show that the goods .&.
seized and confiscated were not accounted for in his accounts. I11
~e result therefore the High Court allqwed 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 accoonts etc. The State of Madras then applied for and B
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 0
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 D·
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 has to be paid
at the point of first sale in the State, though in some cases it has B
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 he 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 appoint- I'
ment 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:
"(!) 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, reG
cords and other documents and to furnish any other information 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) shall be entered
A
B
c
D
E
F
G
L
COJIM.lBSlONhll OF COllMERCIAL TAXES v. JHAVER ( ll'anchoo, v. J.)
HIS.
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 subsection 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 offic~r 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 ns he
may consider necessary, and shall give the dealer a receipt
for the same. The accounts, registers, records and ao:c:·
ments, so seized shall be retained by such officer cn!y 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 bv \he dealer in his accounts. re~isters. records and
other documents maintaim:d in the -course cf hi> 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 taking action under sub-sections (1), (?.1 and (3)'"
JM
SUPREME COUH'l' REPORTS
[1968) l S,C.R.
It will be seen from the above brief review of the provisions A
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(I)
is concerned, there is no difficulty. It empowers any officer, empowered by the Government in this behalf. to require any dealer B
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 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 c
tlie 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. (I) 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 be exercised fcir 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 D
that the power under sub·s. (!) can only be exercised to require a
de1ler L> produce accounts etc. relaing to his busine>s and net that
of any body else.
The main dispute centres round the interpretation of sub-s.(2)
cf s.4 l. The contention on beh,lif of the respondents is that that
provision did not authorise search of nremises but merely provid- E
ed for inspection thereof at ali reasonnble times by the empowereu officer. We shall first deal with the main part of sub-s. (2) to
see what it p~ovic>s withc1,1t reference to
the
proviso.
Clearly
s11b-s(2) prov' c:es for three things. namely-(i) all accounts. registers. records and other documents maintained bv a dealer in the
ccurse of his business shall be open to inspection at all reasonable F
times, (ii) the goods in the possession of the dealer shall also be
open to inspection, :•nd (iii\ the dealer's offices, shops, godowns,
vessels er \·ehicks shall also be open tci
inspection. There is no
doubt that there are no specific words in sub-s. 12) giving power
of search. But if we read the three powers conferred by sub-s.12>
it should not be difficult to hold that search is included therelin.
It will be seen that sub·s.(2) differs from sub-s.(]) in one respect. G
In sub-s.(I) 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 wh:it accounts he may say he has. The
legislature was however cognizant of the fact that a dealer may
not produce all accounts or furnish all information even though H
required to do so under sub-s.(]). Therefore, sub-s.(2) provides that
all accounts etc. of the dealer shall be open to inspection. It also
provides that the dealer's offices. shops. godowns, vessels C1r vehicles shall be open to inspection. It is true that generally speaking a
power to inspect does not necessarily give power ta search. But
·COi\t:.'uJ~SlO!\t:Jt OF COMl\ilERCTAL TAXI:.:S v • . JHAVER. t ll'ani:.:1100,
('. J.)
155
A where. as in this case, the power has oew given to inspect not
merely accounts, registers, re.cords and other documents maintaine:I by a dealer but also to inspect his offices, shops, godowns, vessel> or '.<ehicles, it follows that the empowered officer would have
the right to enter the Gf!ices etc. for purposes of inspection. Naturnlly his inspection will be for purposes of the Act i.e., for the purB pose 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
-0
power to inspect them. and to see if they relate to tk business.
These two powers taken together in our opinion me<1n that the empowered 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 powers of entering the
offices etc. for inspection and of inspecting. every kind of account
n maintained by a dealer with respect to
his bu.siness together
amount to giving the officer concerned the power to enter
2 ,,d
search the offices etc. and if he finds any account in the 1.>ffices,
shops etc. to inspect them. Otherwise we can see no sense in the
legislature giving power to the empowered officer to enter the
office> etc. for the purpose of inspection as the officer ClmCerned
would only do so for the purpose of finding out all accounts etc.
E maintained by the dealer and if necessary to in>pcct them for the
purposes of the Act. We cannot therefore a.,rree with the
High
Court that there is no pow~r of search whatscever in sub-s(2) because the sub·section in terms does not provide for search.
Similarly the officer has be•~n given the power to inspect the
goods in the possession of the dealer. He has also the power to
F 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 gc-0ds also
and to inspect them if found in the offices etc. of the dealer. We
have therefore no hesitation in coming to the conclusic,n that th~
power of search is implicit in sub-s.(2) with reference both to the
G accounts etc. maintained by the dealer and the goods in the pc'S·
session of the dealer. It also seems to us that this power in sub-s.
12) 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
H dealer's residential premises. But we do not agree with this contention, for we have found the power of search by reading the p<.1Wer
of inspection of offices etc. with the power of inspection ctf accounts etc. and the power of inspection of goods. Sub-s. (2) docs
not give any power of inspecting the residential accommodation
156
SUPREME COURT REPORTS
(1968) l S.C.R.
of the dealer and therefore it cannot be read as giving the power A
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 suJ:>.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 cf B
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 searci1 warrant issued by a Magistrate having jurisdiction over the area and (ii) that all searches under this suJ:>.section shall, so far as m''Y be, be made in accordance with the pro- C
visions cf the Code of Criminal Procedure. 1898. The latter part
of the proviso clearly shows that the main part of sub-s.(2) contemplates 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 D
be made in accordance with the provisions of the Code of Criminal Procedure." The proviso therefore bears out the construction
that we hsve 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 what the High Court also seems to E
have held. Generally speaking, it is true that the proviso is rn ~;:
ception to the main part of the section; but it is recognisecl that in
exceptional cases a proviso may be a substantive provision itself.
We may in this connection refer to Bilondda Urban District Council v. Taff Vale Railway Co.('), where s.51 of the Act there under
consideration was framed as a proviso to preceding sections. The F
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
& Som(') it was observed that 'thogh ordinarily a proviso restricts rather than enlarges the meaning of the provision 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
G
an exception or a condition to the substantive provision, or whether it is in itself a substantive provision, must be determined on H
the substance of the provisq and not its form.".
(') J,, l\. [1909] A.C. 2.;~.
(') (l!l63)47 I. 1·. R. 803.
COllllISSIONER OF COMMERCIAi· TAXES v.
JHAVER (lfonchoo, 0. J.)
Ui7
A
Finally in State of Rajasthan v. Leela Jain(') 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
B 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.
c
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 inD dependent of the main part of the sub-section. Further the second
part of the proviso which talks of searches made under this subsection 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
E
interpretation is correct. We may add that we are not precluded
from looking at the proviso in interpreting the main part of the ·
sub-sectiop. We may in this connection refer to the following passage in Maxwell on lriterpretation of Statutes, Eleventh Edition,
at p.155 where it is observed-
"There is no rule that the first or enacting part is to be
r
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 sound interG
pretation 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 thereR fore cannot agree with the High Court that sub-section(2) does not
provide for search of the business premises of a dealer, in the shape
ol offices etc.
·
(') [1961l] 1 S.O. R. 276
158
SUPREME COUR1' REPORTS
[1968] l s.c.n.
Then we come to sub-section(3). That provides for the seizure A
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 B
search. W0 have already held that sub-s.(21 gives the pcwer of
search ancl 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 cert·;in circumstances. !f anything, sub-s.!3)
alsc• bears out that sub-s.12) 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 rnb-s.(3) together we C
l'rc of opinion that they provide fer search and seizure without
'.>'arrant except that if the place searched is a purely resic'.ential
accommoJation 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 acccmmodation for he D
cannot enter and search it unless he has a warrant from a Ma2istrate to do so.
-
The next question relates to the legislative competence of the
State legislature to enact sub-s.(4). This sub-sectic·n provides for
seizure and confiscation of any goods found in any office etc .• including purely residential accommodation after search if they E
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 (I) and gives authority to the empowered officer to sei?e and confiscate. gocds 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 F
competence of
the State Legislature under item 54, List Il,
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 ground 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 t::ix and make it unprofitable. The
Hi2h Court held that the Act was not a law on goods and that a Q:.
provision for confiscation of goods found on search was Jleither
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 Jaw under any entry in the H
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 of a
taxing statute it is open to the legislature to enact provisions which
C0l4MISSIO!IER OF COMMERCIAL.1'AXES v. JH.lVEI• (ll'anclwo, c. J.)
15!)
A 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
B entered in accounts is merely a provision of ancillary nJture to
chec~ evasion of H•x by making it unprofitab:e fer deal~rs to
secrete goods in which they ar~ c\e·11ing. Reliance in this connection is placed on K. S. Papimna and another v. Deputy Commercia! Tax Officer, Guillaka!.('l where the Andhra Pradesh High
Court upheld an analogom provision
in the Andhra Pradesh
General Sales T<lx Act. C"fo. 6 of 19571, in s.2S (I"'
c
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 r.ccCiunt books of the dealer
is an ancillary power necessuy for the purp~se of stopping evasi0n of tax. Assuming that is so. we have still to see whthet'
sub-s.(4) of the AcLcan be upheld read along with the second proD viso 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 abow decision of the Andhra Pradesh High
Court. Sub-s;(4l of s.41, before it wa' amended by the Madras
General Sales Tax (Second Am~ndm~nt) Act, from April 1. 1961,
E had only the first proviso with respect to giving an opportL!nity of
being heard and making an enquiry in the matter before ordering
confiscation. By the amendment of 196 l, the second proviso was
added. That provides that the officer
ordering the conf)scation
shall give the person affected option to pay in lieu of confiscation.
in cases where the goods are taxable under th~ Act. in addition
F to the tax recoverable, a sum of money not exceeding: one thou~
sand rupees or double the amount of tax recoverable., whiciiever
is greater. '[bis 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 l'f tax recoverable,
whichever is greater. We haYe nlreach ir,dicated that in a lar::e
G
I
...
.-
....
majority of cases covered by the Act the tax is payable at the
point of first sale in the State. nut under cUal of the second nroviso the tax is ordered -to be recdvered even before the Sl\fo, - in
addition to the peJla 119 not exceeding
Rs. l,000 or dlmble the
amount of tax ·recoverable whichever is greater. Therefore d .(al
of the second. prn\'iso~is clearly repugnant to the general scheme
U C'f the Act which in lbe majority of the •ases provides for recovery
of tax at the point of first sale in the State. In view of thi:; rcrmg:·
nancy one or other of these two pnwisce>11~ must fall C!earlv it
(1) l!QG7) XIX 8.T.C. 50l'.
160
SUP.REM:B COU.RT REPORTS
[1968] l s;c.R.
is cl. (a) in the proviso which under the circumstances must fall, A
.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 entire scheme of the Act, in so far as it provide9 for B
.recovery of tax even before the first sale in the State which is the
point of time in a large majority of cases for reccivery of tax, must
fall, on the ground of repugnancy.
It is next urged that in any case the seccmd proviso is severable and therefore only this pro"<iso 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 original- C
ly 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 D
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 pro- E
visos must falJ 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 F
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) G
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 Gov- B
ermnent 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
'COMMISSIONER OF COMMERCIAL TAXES v . . JHAVER (Wanchoo. c. J.)
161
JI.