MANU/SC/3484/2006

Equivalent Citation: AIR2006SC 2820, 2007(2)ALT28(SC ), 2006(7)SC ALE587, (2006)607SC C 7, (2006)7SC C 607, [2006]Supp(5)SC R353,
[2006]147STC 657(SC ), 2006(2)UJ1111

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 3419 of 2006 (Arising out of SLP (Civil) Nos. 10371-10374 of 2004)
Decided On: 08.08.2006
Appellants: State of Punjab and Ors.
Vs.
Respondent: Amritsar Beverages Ltd. and Ors.
Hon'ble Judges/Coram:
S.B. Sinha and Dalveer Bhandari, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Sarup Singh, Sr. Addl. Adv. Gen., R.K. Pandey and
Arun Kumar Sinha, Advs
For Respondents/Defendant: Vikas Mahajan and Bhaskar Y. Kulkarni, Advs.
JUDGMENT
S.B. Sinha, J.
1. Leave granted.
2 . 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.
3. 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

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 (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.
4. 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.
5. 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.
6. 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 Anr. MANU/SC/0951/2003

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 : (2004)9SCC512 , Union of India v. Naveen Jindal and Anr. MANU/SC/0072/2004 :
AIR2004SC1559 , John Vallamattom and Anr. v. Union of India MANU/SC/0480/2003 :
AIR2003SC2902 and Kapila Hingorani v. State of Bihar MANU/SC/0403/2003 :
(2003)IIILLJ31SC ] Same principle is applicable in respect of some statutes.
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.
7 . 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 therefore, does not deal with all problems which are faced by the officers
enforcing the said Act.
8 . 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.
9 . 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.
I n SIL, Import, USA v. Exim Aides Silk Exporters, Bangalore MANU/SC/0312/1999 :
1999CriL J2276 , notice in terms of Section 138 of the Negotiable Instruments Act was
construed to include notice by fax.
1 0 . I n State of Maharashtra v. Dr. Praful B. Desai MANU/SC/0268/2003 :
2003CriL J2033 , 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

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 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".
11. 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 therefore. In case
of a hard disk, literal compliance of the said provision was impossible. Recourse to
scientific method, therefore, was necessary.
12. 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.
13. 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.

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