Case Law Details
HIGH COURT OF MADHYA PRADESH
Elora Tobacco Co. Ltd.
Versus
Deputy Director, DGCEI
WRIT PETITION NO. 3497 OF 2011
MAY 20, 2011
ORDER
Shantanu Kemkar, J.
By this petition under Article 226 of the Constitution of India, the petitioner has challenged the search dated 24-2-2011 conducted under Section 105 of the Customs Act, 1962 by the authorities of the respondents at its factory premises situated at 14-B, Sector F, Sanwer Road, Indore and also seizure of the documents effected during the course of the said search.
2. Briefly stated the petitioner is engaged in the business of manufacture and sale of cigarettes, which is a Tobacco product. According to the petitioner, the authorisation for conducting the search has been ordered by the authorising officer without recording satisfaction of the condition precedent for invoking powers under Section 105(1) of the Customs Act. The search of its premises has been conducted by the respondents without there being any “reason to believe” for issuance of authorisation for search that any goods liable for confiscation or any documents or things which in the opinion of the authorising officer will be useful for or relevant to any proceedings under the Act are “secreted” in any place. In the circumstances, according to the petitioner the search is without jurisdiction and the entire proceedings based upon the same are liable to be quashed.
3. On 28-4-2011 when this matter came up for hearing, Shri Abhishek Tugnawat, learned counsel and Shri Jaidev Singh, Senior Intelligence Officer, Directorate General of Central Excise, Regional Unit, Indore appeared and sought time to produce the relevant record about the compliance of Section 105(1) of the Customs Act. On 10-5-2011 when the matter came up for hearing on the question of admission the said officer of the respondents has produced the relevant record in a sealed cover about recording of the satisfaction of the condition precedent for issuance of the order of authorisation by the competent authority.
4. We have heard learned counsel for the parties at length and perused the relevant record produced before us during the course of the hearing.
5. On going through the said record we find that the Additional Director General, in his proceedings/orders dated 15-2-2011 has recorded that on the basis of the various searches conducted at various premises of manufacturers, godowns and dealers of various cigarette manufacturers in the country, different brands of cigarettes which were kept without any duty paying documents were seized. Huge stock of cigarettes of various brands manufactured by the petitioner without any duty paying documents were also found during the searches at Coimbatore etc. and were placed under seizure. In view of seizures of non-duty paid cigarette manufactured by the petitioner, a decision was taken to search the petitioner’s premises immediately to resume incriminating records.
6. On going through the aforesaid satisfaction recorded in the said order and the record produced before us, we find that there was sufficient reason to believe about the existence of the requirement necessary for issuance of authorization for search under Section 105(1) of the Customs Act.
7. The petitioner’s reliance on the order passed by this Court in the case of Akash Namkeen (P.) Ltd. v. CCE 1997 (30) VKN 180 which has been passed on the basis of a judgment of Supreme Court in the case of Madhya Pradesh Industries Ltd. v. ITO [1965] 56 ITR 18 is wholly misconceived in view of the fact that in both these cases the petitions were summarily dismissed without verifying the correctness of the allegations made by the petitioner. However in the present case, the respondents have produced the relevant record before us to show that on what basis the authorisation for search as contemplated under Section 105(1) of the Customs Act, 1962 was issued and on the basis of the same, as observed we are satisfied that the authorization has been duly issued by the authorising officer after recording satisfaction as provided under Section 105(1) of the Customs Act.
8. Recently in the case of M. Manoj Kumar & Co. v. DIT [2011] 200 Taxman 12 this Court had occasion to deal with similar provision under Section 132A(1) of the Income Tax Act. In paras 8, 10, 11, 12, and 13, it has been held thus :-
“8. It is almost a settled law that in exercise of powers under writ jurisdiction, High Court has inherent powers to enter into question of existence of information, which would provide a basis to form a reason to believe that the amount seized has not been or would not have been disclosed for the purpose of IT Act. In a recent case of Suman Singhai v. Director of Income Tax (Investigation) reported as [2011] 17 Income Tax Judgments 22 (MP) a Division Bench of this Court consisting of Hon’ble the Chief Justice Shri S.R. Alam and Hon’ble Shri Justice Alok Aradhe, the scope and ambit of powers under Section 132A of the IT Act has been clarified in the following passage :-
“10. At this stage we deem it appropriate to deal with the scope and ambit of powers under Section 132A of the Income Tax Act with regard to search and seizure. In Seth Brothers (supra), the Supreme Court while dealing with the provisions of Section 132 of the Income Tax Act relating to search and seizure which is pari materia to Section 132A of the Income Tax Act has held that Section does not confer any arbitrary power on revenue officers. It was further observed that if the action of the officer issuing the authorization or of the designated officer is challenged, the officer concerned must satisfy the court about the regularity of the action. If it is found that action has been taken maliciously or power is exercised for collateral purpose, the same is liable to be struck down by the Court. It has been further held that power exercised by the Commissioner under Section 132 is not a judicial or quasi judicial power and that the Court cannot substitute its own opinion for that of the Commissioner.”
10. Scope of writ jurisdiction in a case containing the challenge to authorization under Section 132A of the IT Act is in our opinion well explained by the Rajasthan High Court in the case of Sohanlal Mundra v. Union of India reported as [1996] Tax Law Reporter 960 (Raj.) in the following passage :-
“It is further true that when issuance of an authorisation under Section 132A of the Income Tax Act, 1961, is challenged in a court of law, it will be open to the petitioners to contend that on the facts or information disclosed no reasonable man could have arrived at the conclusion that the action under Section 132A was called for although formation of opinion under the said Section is subjective. It is well to remember that jurisdiction under Article 226 of the Constitution of India of this court is very limited. In fact this court cannot afford to act as an appellate or revisional court and as such has no justification to examine meticulously the information in order to decide for itself as to whether action under Section 132A was called for or not. Suffice it to say that in exercise of extraordinary jurisdiction this court can examine whether the act or issuance of an authorisation under Section 132A is arbitrary or mala fide or whether the subjective satisfaction which is recorded is such that it indicates lack of application of mind of the appropriate authority. According to me the reason to believe must be based on definable material or materials and if the information or the reason to believe has no nexus with the belief or there is no definable material or tangible information for formation of such belief then in such a case action taken under Section 132A of the Income Tax Act, 1961, would be treated as illegal.”
11. In the case of Jai Bhagwan Om Prakash v. Director of Inspection [1994] 208 ITR 422 (P & H), it has been observed that in case there is information with the authorities and the department had satisfied itself with regard to the authenticity of the information available and bona fide belief was found, it is not for the Court to make interference.
12. Thus, existence of information having nexus with the reason to believe that assets have not been or would not have been disclosed for the purpose of the Act, is sufficient. Sufficiency of the information is not to be gone into by this Court, which is not empowered to substitute its opinion. Sufficiency of reasons for belief cannot be equally questioned before this Court.
13. Single Bench of this Court in the case of Krishnagopal v. Director of Income Tax (Investigation) & Another reported as [2009 (222) CTR (MP) 100] has observed :-
“6. A statutory functionary must act in a manner laid down in a statute. A bare reading of Section 132A(1) makes it clear that the power conferred on the authority is conditional and the conditions precedent for authorising action are possession of information by the authority and in consequence of which the authority must have reason to believe that the person concerned has assets which have not been or would not have been disclosed for the purpose of the Act.”
9. In the circumstances, having regard to the scope of interference in the matter and on going through the original record made available to us by the respondents, we find that it cannot be said that the authority which had issued the warrant of authorisation, was not having enough material to form opinion about reason to believe that any goods liable to confiscation, or any documents or things which in his opinion will be useful for or relevant to any proceedings under the Customs Act are secreted in any place as contemplated under Section 105(1) of the Customs Act or that the said authorisation was issued without application of mind. Thus in our view, no case is made out to interfere in the matter at this stage of seizure.
10. In the result, the petition fails and is hereby dismissed.
