Faith Enterprise And Anr vs. The State Of Assam

Held

The Court held that the police authorities of Assam could not continue with the detention and seizure of trucks on the plea of GST violations without invoking Section 67 of the AGST Act and following its prescribed procedure. If the police believed there was fraud or forgery simpliciter, they could proceed under the CrPC for offences under the IPC, strictly following the prescribed procedure. However, any seizure under Section 102 of the CrPC must be reported to the Magistrate. The Court also noted the involvement of the Customs Department due to potential smuggling and bio-security risks. It directed that the detained goods be retained by the police for seven days, during which the GST, police, and Customs authorities must decide how to proceed. If no decision is taken within seven days, the detention and seizure would be declared illegal. Any proceedings initiated must strictly follow the respective laws (GST Acts, CrPC/IPC, or Customs Act). The judgment of the learned Single Judge was modified accordingly.

Facts

The appellants, Faith Enterprise and its proprietor, challenged the seizure of 26 trucks carrying areca nuts by the Jalukbari Police Station, Assam, on August 21, 2019. The police alleged that the trucks were moving without proper documents and that the appellants were involved in GST evasion, forgery, and use of fake documents. The police lodged an ejahar on September 3, 2019, detailing these allegations. The appellants contended that the search and seizure by police were illegal and without jurisdiction, as only a proper officer under Section 67 of the Assam Goods and Services Tax Act, 2017 (AGST Act) could initiate such action. The Directorate of Revenue Intelligence (DRI) also indicated that the betel nuts might have been smuggled from Myanmar, violating the Customs Act and posing a bio-security risk.

Key Issues

1. Whether the search and seizure of trucks carrying areca nuts by police authorities of Assam, alleging GST evasion and forgery, were illegal and without jurisdiction, considering the provisions of Section 67 of the AGST Act, 2017? Petitioner's arguments: The appellants argued that under Section 67 of the AGST Act, 2017, only a proper officer, not below the rank of Joint Commissioner, with reason to believe tax evasion or excess input tax credit claims, could conduct search and seizure. They contended that the police action was an aberration of established legal procedure. They also argued that the police lacked the authority to seize goods on the premise of GST violations. Revenue/State's arguments: The police authorities, in their affidavit, referred to a letter from the DRI indicating smuggling of betel nuts from Myanmar, violating the Customs Act and posing bio-security risks. The DRI also stated that the goods were liable for seizure under Section 110 of the Customs Act, 1962. The police asserted their 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.