Sangtei Enterprise And Anr vs. The State Of Assam And 6 Ors.

Held

The Court held that the police authorities of Assam lacked the jurisdiction to detain and seize trucks on the premise of GST evasion without invoking and following the specific procedures laid down in Section 67 of the Assam Goods and Services Tax Act, 2017. The Court found that the police's action of lodging an ejahar alleging GST evasion and proceeding with detention and seizure on that basis was an aberration of the established legal procedure. Regarding the allegations of fraud and forgery related to GST documents, the Court stated that if the police believed an offense under the Indian Penal Code (IPC) was committed, they should proceed strictly by the Code of Criminal Procedure (CrPC). The Court also clarified that while police can seize property under Section 102 of the CrPC, such seizure must be followed by a report to the Magistrate. Considering the DRI's report on illegal import and bio-security risks, the Court suggested that proceedings under the Customs Act might be appropriate if initiated by empowered officers. 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 on their course of action, strictly adhering to their respective laws. 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, Assam, suspecting they lacked proper documentation. An additional truck was detained later. Investigations revealed potential manipulation of records, forgery of documents, and discrepancies in GST payment documents, leading to the lodging of an ejahar on September 3, 2019. The police alleged evasion of GST dues and the use of forged documents. The petitioners, Sangtei Enterprise and its proprietor, challenged the detention and seizure as illegal and without jurisdiction, arguing that the police lacked the authority to investigate GST evasion. The Directorate of Revenue Intelligence (DRI) also indicated that the betel nuts might have been illegally imported from Myanmar, violating the Customs Act and posing a bio-security risk.

Key Issues

1. Whether the police authorities of Assam had the jurisdiction to detain and seize trucks carrying areca nuts on the premise of alleged evasion of GST dues and forgery of documents, particularly when the AGST Act prescribes specific procedures for search and seizure by designated officers? (Section 67 of the Assam Goods and Services Tax Act, 2017). 2. Whether the detention and seizure of the trucks could be justified under Section 102 of the Code of Criminal Procedure (CrPC) without adhering to the procedural requirements stipulated therein, such as submitting a report to the Magistrate? 3. Whether the Customs authorities should take over the investigation and proceedings concerning the seized areca nuts, considering the allegations of illegal import and bio-security risks? Petitioner's Arguments: The petitioners contended that the search and seizure by police officials were illegal and without jurisdiction, as only proper officers under Section 67 of the AGST Act, not below the rank of Joint Commissioner, are empowered to conduct such actions based on specific beliefs of tax evasion or excess input tax credit claims. They argued that the police's involvement in investigating GST evasion was an aberration of established legal procedures. Revenue/State's Arguments: The police authorities, in their affidavit, referred to a DRI letter suggesting illegal import of betel nuts from Myanmar, implicating smuggling under the Customs Act and raising bio-security concerns. The DRI also opined that the goods were liable for seizure under the Customs Act. The State's position implicitly supported the police action, citing potential violations of GST laws and criminal offenses.