Ali Trading And Anr vs. The State Of Assam And 6 Ors.

Held

The Court held that the police authorities of Assam could not continue detention and seizure of trucks containing areca nuts solely on the plea of violating AGST Act provisions without invoking Section 67 of the AGST Act and following its prescribed procedure. If the police believed there was fraud or forgery related to GST documents, they should proceed under the Code of Criminal Procedure (CrPC) for offences under the Indian Penal Code (IPC) by following the prescribed procedure. The Court also clarified that any seizure under Section 102 of CrPC must be reported to the Magistrate. Considering the potential violation of the Customs Act and bio-security risks, the Court directed that the detained goods be retained by Assam police for seven days. During this period, GST authorities, Assam police, and Customs authorities must decide how to proceed. If any authority decides to proceed against the appellants, it must be strictly as per the provisions of the GST Acts, CrPC/IPC, or the Customs Act. If no decision is taken within seven days, the detention and seizure would be declared illegal. The judgment of the learned Single Judge was modified accordingly.

Facts

On August 21, 2019, police officials detained 25 trucks carrying areca nuts from Cachar district, suspecting they lacked proper documentation. An additional truck was detained later. Investigations revealed potential forgery of documents and evasion of Goods and Services Tax (GST). An ejahar (complaint) was lodged on September 3, 2019, alleging discrepancies in GST payment documents and the genuineness of submitted documents. The appellants contended that the search and seizure by police officials were illegal as only proper officers under Section 67 of the Assam Goods and Services Tax Act, 2017 (AGST Act) could conduct such actions. The Directorate of Revenue Intelligence (DRI) indicated the areca nuts might have been smuggled from Myanmar, violating the Customs Act and posing bio-security risks.

Key Issues

1. Whether the search and seizure of trucks carrying areca nuts by police officials of Jalukbari Police Station, based on allegations of GST evasion and forged documents, were legal and within their jurisdiction, considering the provisions of the Assam Goods and Services Tax Act, 2017 (AGST Act) and the Code of Criminal Procedure (CrPC)? Petitioner's arguments: The appellants argued that under Section 67 of the AGST Act, only a proper officer not below the rank of Joint Commissioner could conduct search and seizure upon having reason to believe tax evasion or excess input tax credit claims. They contended that police officials initiating investigation and lodging an ejahar for GST evasion was an aberration of established legal procedure. They also argued that any seizure under Section 102 of CrPC must be reported to the Magistrate. Revenue/State's arguments: The police authorities referred to a letter from the DRI suggesting smuggling of betel nuts from Myanmar, violating the Customs Act and posing bio-security risks. The DRI's communication indicated the goods were liable for seizure under Section 110 of the Customs Act. The judgment also notes the report from the Ministry of Agriculture and Farmers Welfare regarding phytosanitary risks.