SUPREME COURT OF INDIA
State of Punjab and Others
Vs
Messrs Amritsar Beverages Limited and Others
Appeal (Civil) 3419 of 2006 (Arising Out of Slp (Civil) No. 10371-10374 of 2004)
(S. B. Sinha and Dalveer Bhandari, JJ)
08.08.2006
S. B. SINHA, J.
Leave granted.
Situational change how far could give rise to a new interpretation of a
statutory provision is the question involved in this appeal which arises out of
the judgment and order dated 21.10.2003 passed by the Division Bench of the
High Court of Punjab and Haryana at Chandigarh in CWP No. 14659 of 2003.
The Respondent is a dealer within the meaning of the Punjab
General Sales Tax Act, 1948 (for short "the Act"). A raid was
conducted in his premises and a larger number of books and documents were
seized by the officers of the Sales Tax Department of the State of Punjab. The
documents were in the form of the cash book ledger or other registers. They
were contained in a hard disk. Seizure of documents indisputably was done in
exercise of the powers of the authorities under Section 14 of the Act,
Sub-section (3) whereof reads, thus:
"14. Production and Inspection of Books, Documents and Accounts:
(1)
(2)
(3) If any officer referred to in sub-section (1) has reasonable ground for
believing that any dealer is trying to evade liability for tax or other dues
under this Act and that anything necessary for the purpose of an investigation
into his liability may be found in any book, account, register or document, he
may seize such book, account, register or document, as may be necessary. The
officer seizing the book, account, register or document shall forthwith grant a
receipt for the same and shall
(a) In the case of book, account, register or document which was being used at
the time of seizing, within a period of ten days from the date of seizure, and
(b) in any other case, within a period of sixty days from the date of seizure,
return it to the dealer or the person from whose custody it was seized after
examination or after having such copies or extracts taken therefrom as may be
considered necessary, provided the dealer or the aforesaid person gives a
receipt in writing for the book, account, register or document returned to him.
The officer may, before returning the book, account, register or document,
affix his signatures and his official seal at one or more places thereon, and
in such case the dealer or the aforesaid person will be required to mention in
the receipt given by him the number of places where the signature and seal of
such officers have been affixed on each book, account, register or
document"
The officers of the Sales Tax Department asked the Respondents to appear on
several occasions so as to enable them to verify the contents thereof.
Cooperation from the Respondents was not forthcoming as a result whereof the
documents were not returned within the period stipulated thereunder.
A writ petition was filed by the Respondents herein praying for issuance of a
writ of or in the nature of mandamus directing the Respondents to return the
seized books, accounts, documents, computer disk in terms of the said
provision. Applying the principle of literal interpretation and following an
earlier precedent, the High Court not only issued mandamus as had been prayed
for but also imposed costs of Rs. 2, 500/- in each case. It was directed that
the costs would be paid by the officers responsible for withholding the books,
accounts, etc. personally from their pockets and the same shall not be a burden
on the State exchequer.
Contention of Mr. Sarup Singh, Addl. Advocate General, appearing on behalf of
the State of Punjab, is that Section 14 of the Act is directory in nature and
not mandatory.
Mr. Vikas Mahajan, learned counsel appearing on behalf of the Respondents, on
the other hand, supported the judgment of the High Court.
Before adverting to the rival contentions, we may at the outset notice that
pursuant to or in furtherance of the directions of the High Court, the
Appellants have returned the hard disk upon keeping a copy thereof. The
Respondents in their counter-affidavit stated:
"That it may be mentioned here that dealer was always willing to
cooperate with the department and the only reason for not complying with the
notices of assessment or proceedings taken were that in absence of return of
book it was not feasible or practical to give any statement or verify the
entries in the seized documents.
Although the seized documents
have been returned the answering respondent have no objection even if now in
presence of their representative the departmental authorities want to obtain
any copy of the returned documents. But this copy must be counter signed by the
representative as well as the respondents."
The Act was enacted in the year 1948. Information Technology at that time far
from being developed was unknown. Constitution of India is a living organ. It
had been interpreted differently having regard to different societal
situations. [See Liverpool & London S.P. & I Association Ltd. v. M.V.
Sea Success I and Another, 6, Union of India
v. Naveen Jindal and Another, John Vallamattom and Another v. Union of
India, , and Kapila Hingorani v. State of Bihar,
Creative interpretation had been resorted to by the Court so as to achieve a
balance between the age old and rigid laws on the one hand and the advanced
technology, on the other. The Judiciary always responds to the need of the
changing scenario in regard to development of technologies. It uses its own
interpretative principles to achieve a balance when Parliament has not
responded to the need to amend the statute having regard to the developments in
the field of science.
Internet and other information technologies brought with them the issues which were
not foreseen by law as for example, problems in determining statutory
liabilities. It also did not foresee the difficulties which may be faced by the
officers who may not have any scientific expertise or did not have the
sufficient insight to tackle with the new situation. Various new developments
leading to various different kinds of crimes unforeseen by our legislature come
to immediate focus. Information Technology Act, 2000
although was amended to include various kinds of cyber crimes and the punishments
therefor, does not deal with all problems which are faced by the officers
enforcing the said Act.
We may notice some recent amendments in this behalf. Section 464 of the Indian
Penal Code deals with the inclusion of the digital signatures. Sections 29,
167, 172, 192 and 463 of the Indian Penal Code have been amended to include
electronics documents within the definition of 'documents'. Section 63 of the
Evidence Act has been amended to include admissibility of computer outputs in
the media, paper, optical or magnetic form. Section 73A prescribes procedures
for verification of digital signatures. Sections 85A and 85B of the Evidence
Act raise a presumption as regards electronic contracts, electronic records,
digital signature certificates and electronic messages.
Section 14 of the Act although has been amended, the problem, in our opinion,
should be dealt with keeping in view of the fact that the procedural laws
should be construed to be ongoing statutes similar to the Constitution and,
thus, creative interpretation according to the circumstances is permitted. The
Court in view of development of science has to meet and contend with challenges
as an intermediary between the litigant and the court.
In SIL, Import, USA v. Exim Aides Silk Exporters, Bangalore, 5, notice in terms of Section 138 of the Negotiable
Instruments Act was construed to include notice by fax.
In State of Maharashtra v. Dr. Praful B. Desai , this Court opined that
recording of evidence through video conferencing is permissible in terms of
Section 273 of the Code of Criminal Procedure; stating:
"This Court has approved the principle of updating construction, as
enunciated by Francis Bennion, in a number of decisions. These principles were
quoted with approval in the case of CIT v. Podar Cement (P) Ltd. They were also
cited with approval in the case of State v. S.J. Choudhary. In this case it was
held that the Evidence Act was an ongoing Act and the word
"handwriting" in Section 45 of that Act was construed to include "typewriting".
These principles were also applied in the case of SIL Import, USA v. Exim Aides
Silk Exporters 9. In this case the words "notice in writing", in
Section 138 of the Negotiable Instruments Act, were construed to include a
notice by fax. On the same principle courts have interpreted, over a period of
time, various terms and phrases. To take only a few examples: "stage
carriage" has been interpreted to include "electric tramcar";
"steam tricycle" to include "locomotive";
"telegraph" to include "telephone"; "banker's
books" to include "microfilm"; "to take note" to
include "use of tape recorder"; "documents" to include
"computer databases".
The officers of the Sales Tax Department of the State of Punjab must have felt
immense difficulties in giving effect to the provisions of Section 14 of the
Act. It no doubt mandates the authorities to return to the dealer all documents
after examination or after having such copies or extracts taken therefrom as
may be considered necessary within a period of 60 days of seizure but in the
instant case even for the said purpose, not only a copy was required to be made
from the hard disk, the same was required to be verified. The Respondents were
asked by the authorities of the department that they should come and verify the
contents but they did not do so. Active cooperation of the Respondents was
necessary having regard to the proviso appended to Sub-section (3) of Section
14 of the Act inasmuch as in terms thereof the officer was entitled not only to
affix his signature and his official seal at one or more places thereupon but
also the dealer was required to give a receipt therefor.
In case of a hard disk, literal compliance of the said provision was
impossible. Recourse to scientific method, therefore, was necessary.
It may be true that even in absence of cooperation from the Respondents nothing
prevented the authorities of the Sales Tax Department to make out copies of the
said hard disk or obtain a hard copy and fix their signatures or official seal
in physical form thereupon and furnish a copy thereof to the Respondents.
However, the High Court failed to notice that as problem arose for the first
time, the officers of the Sales Tax Department might not have been able to
formulate or lay down their own procedure as indicated hereinbefore or
otherwise.
For the reasons aforementioned, although we are of the opinion that fulfillment
of the conditions laid down in the proviso contained in Clause (b) of
Sub-section (3) of Section 14 of the Act are imperative in character, the authorities
may take recourse to the aforementioned procedure in respect of seizure of a
hard disk.
We, in the facts and circumstances of the case, think that it is necessary to
explain the legal position so that the complications arising out of seizure of
hard disk may be avoided in future. The hard disk, however, has already been
returned. We have noticed hereinbefore the offer made by the Respondents and,
thus, the authorities may now ask the representative of the Respondents Company
to make themselves available and obtain his signatures on the receipt or
otherwise of the hard copies; in terms of their undertaking in the
counter-affidavit.
We, however, set aside that portion of the impugned judgment whereby and
whereunder personal costs have been imposed upon the officers. The appeal is
allowed to the aforementioned extent and with the aforementioned observations
and directions. The parties shall pay and bear their own costs.