Report No. 61

7.7. Check-posts under State Sales Tax laws.-

So far as the creation of check-posts for the purposes of State Sales Tax Acts is concerned, there are two important decisions of the Supreme Court to be noted. In Check-Post Officer, Coimbatore v. K.P. Abdullah, (1971) 27 STC 1: AIR 1972 SC 792: (1972) 2 SCR 817., a section of the Madras Sales Tax Act1 was at issue. Sub-section (1) of that section authorised Government to set up check-posts or barriers, to prevent or check the evasion of tax. Sub-section (2) of that section empowered the check-post officer to stop the vehicle or boat at the check-post or barrier, to keep it stationary as long as it may be reasonably necessary, to examine the contents of the vehicle or boat, to inspect the records etc. and to take the name and address of the driver, the owner of the vehicle or boat and the consignor and the consignee of the goods.

Sub-section (3) of that section conferred power on the check-post officer to seize and confiscate any goods under transport in such vehicle or boat which were not covered by the specified documents, subject to certain procedural safeguards and subject to an option to the person in charge of the vehicle to pay, in lieu of confiscation, a specified sum, including tax. The Supreme Court found the power to confiscate the goods to be invalid, on the ground that such a power could not be said to be 'fairly and, reasonably comprehended in the power to legislate in respect of taxes on sale or purchase of goods'. The following observations of the Supreme Court are relevant:-

"sub-section (3) assumes that all goods carried in a vehicle near a check-post are goods which have been sold within the State of Madras and in respect of which liability to pay sales tax has arisen, and authorises the Check-post Officer, unless the specified documents are produced at the check-post or the barrier, to seize and confiscate the goods and to give an option to the person affected to pay penalty in lieu of confiscation. A provision so enacted on the assumption that goods carried in a vehicle from one State to another must be presumed to be transported after sale within the State is unwarranted. In any event, the power conferred by sub-section (3) to seize and confiscate and to levy penalty in respect of all goods which are carried in a vehicle whether the goods are sold or not is not incidental or ancillary to the power to levy sales tax2".

1. Section 42, Madras General Sales Tax Act, 1959.

2. Emphasis supplied.