Sarada Traders And Anr vs. The State Of Assam And 6 Ors.

Held

The Court held that the police authorities of Assam could not continue the detention and seizure of trucks containing areca nuts solely on the plea of alleged violations of the AGST Act without invoking Section 67 of the AGST Act and following its prescribed procedure. Similarly, if the police believed there was fraud or forgery related to GST documents, they should proceed under the Code of Criminal Procedure (CrPC) for offenses under the Indian Penal Code (IPC) by following the prescribed procedure. The Court also clarified that any seizure under Section 102 of the CrPC must be reported to the Magistrate having jurisdiction. Considering the potential violations of the Customs Act and bio-security risks highlighted by the DRI and the Ministry of Agriculture, the Court suggested that if the authorities had reasons to believe so, proceedings should be initiated under Sections 100/101 of the Customs Act. The Court directed that the seized goods be retained by the police for seven days, during which the GST, police, and Customs authorities must decide how to proceed, strictly adhering to their respective laws (GST Acts, CrPC/IPC, or Customs Act). If no decision is taken within seven days, the detention and seizure would be declared illegal and unsustainable.

Facts

The appellants, Sarada Traders and its proprietor, challenged the seizure of 26 trucks carrying areca nuts by the Jalukbari Police Station on August 21, 2019. The police alleged that the trucks lacked proper documentation, including GST payment records, and that the documents were forged, suggesting evasion of GST dues and potential offenses under the Indian Penal Code. The police also noted discrepancies in the identity of consignors, with some firms found to be fictitious. The Directorate of Revenue Intelligence (DRI) also indicated that the areca nuts might have been smuggled from Myanmar, violating the Customs Act and posing a bio-security risk. The appellants contended that the search and seizure by police were illegal and without jurisdiction, as only proper officers under the Assam Goods and Services Tax Act, 2017 (AGST Act) could initiate such actions under Section 67 of the Act.

Key Issues

1. Whether the search and seizure of trucks carrying areca nuts by the police authorities of Assam, alleging violations of the AGST Act and forgery, were legal and within their jurisdiction, or if such actions should have been initiated by designated GST authorities under Section 67 of the AGST Act? Petitioner's arguments: The appellants argued that the police lacked the authority to seize goods or initiate investigations concerning GST evasion. They contended that under Section 67 of the AGST Act, only a proper officer not below the rank of Joint Commissioner, having reason to believe in excess input tax credit claims or tax evasion, could conduct search and seizure. Therefore, the police's actions were an aberration of established legal procedure. Revenue/State's arguments: The police authorities, in their affidavit, referred to a DRI letter suggesting smuggling of betel nuts from Myanmar, violating the Customs Act and posing bio-security risks. They also claimed the power to seize property under Section 102 of the CrPC. The judgment also notes the report from the Ministry of Agriculture and Farmers Welfare regarding phytosanitary risks.