2019 (11) TMI 1628 - HC - GST

Direction to hand over the investigation to the customs authorities, along with the seized goods and trucks for further investigation - offences of fraud and forgery under the Indian Penal Code - Section 67 of the GST Acts - HELD THAT - From the provisions of Section 67 of the AGST Act and 100 and 101 of the Customs Act, a process for search, seizure, confiscation etc for violating any of the provisions of the AGST Act or the Customs Act can only be initiated upon having reasons to believe by the proper or appropriate officer that a person concerned was involved in violation of any of the provisions of the GST Acts or the Customs Act - In the instant case, the documents made available on record so far as it relates to violation of the provisions of the AGST Act are not being relied upon by the respondents to indicate any such violation of the provisions of the AGST Act. What is contended is that some such documents are either fraudulent or it contains forged signatures resulting in offences under Sections 120(B)/420/467/471 of the IPC. If the authorities under the AGST Act of the State of Assam are of the view that the appellants are required to be proceeded with or prosecuted under the AGST Act, it would be appropriate to invoke the provisions of Section 67 of the AGST Act and proceed accordingly. But without invoking the provisions of Section 67 of the AGST Act and following the procedure prescribed therein, it would be inappropriate to allow the police authorities of Assam to continue with the detention and the seizure of the trucks containing the areca nuts on the plea that the appellants have violated some or any of the provisions under the AGST Act. The detained/seized goods be retained by the police authorities of Assam for a period of seven days from today. In the meantime, the GST authorities of the Government of Assam, the police authorities of the Government of Assam and the Customs authority of the Customs Department, Government of India shall take their respective decisions on how to proceed with the matter of the detained/seized trucks of areca nuts within the period of seven days - Petition disposed off.

Summary

Issues Involved:
1. Jurisdiction and authority of police to seize goods under the GST Act and Customs Act.
2. Validity of the seizure and detention of goods by police.
3. Procedure to be followed for search, seizure, and confiscation under the GST Act and Customs Act.
4. Bio-security concerns related to the seized goods.
5. Legal implications of fraud and forgery allegations under the IPC.

Issue-wise Detailed Analysis:

1. Jurisdiction and authority of police to seize goods under the GST Act and Customs Act:
The appellants contended that under Section 67 of the Assam Goods and Services Tax Act, 2017 (AGST Act 2017), only a proper officer not below the rank of Joint Commissioner could authorize search and seizure if there was a reason to believe in tax evasion. They argued that the police's seizure and investigation were beyond their jurisdiction. The police, however, claimed their authority under Section 4(2) of the CrPC to investigate any offence, including those under the GST Act, and justified the seizure under Section 102(1) of the CrPC.

2. Validity of the seizure and detention of goods by police:
The police detained 26 trucks carrying areca nuts based on information that the trucks were moving without proper documents. The investigation revealed discrepancies and alleged forgery in the GST documents. The learned Single Judge concluded that the police had jurisdiction to investigate IPC offences but should hand over the investigation to the Customs authorities for violations under the Customs Act. The appellants argued that the detention and seizure were illegal as the proper procedure under the GST Act was not followed.

3. Procedure to be followed for search, seizure, and confiscation under the GST Act and Customs Act:
Section 67 of the GST Act and Sections 100 and 101 of the Customs Act outline the procedures for search, seizure, and confiscation. These sections require the proper officer to have reasons to believe in a violation before initiating such actions. The court emphasized that the police should not continue with the seizure without following the prescribed procedures under these Acts. The Customs Act provides specific procedures for dealing with smuggling and bio-security threats, which must be adhered to by the Customs authorities.

4. Bio-security concerns related to the seized goods:
The Directorate of Revenue Intelligence (DRI) and the Ministry of Agriculture and Farmers Welfare raised concerns about the bio-security risks posed by the seized areca nuts, suspecting they were smuggled from Myanmar. The court noted the importance of addressing these bio-security threats and directed the Customs authorities to take appropriate action following the Customs Act.

5. Legal implications of fraud and forgery allegations under the IPC:
The police alleged fraud and forgery in the GST documents, which would constitute offences under Sections 120(B)/420/467/471 of the IPC. The court held that the police could investigate these IPC offences but must follow the CrPC procedures, including submitting a report to the Magistrate. The court also highlighted that the police should not continue the seizure under the guise of IPC offences without following the CrPC procedures.

Conclusion:
The court directed that the detained/seized goods be retained by the police for seven days, during which the GST authorities, police, and Customs authorities must decide on further action. If no decision is taken within this period, the detention and seizure would be declared illegal. Any proceedings initiated must strictly follow the respective laws under the GST Acts, CrPC/IPC, or Customs Act. The judgment in WP(C) No.6762/2019 and connected writ petitions was modified accordingly, and the appeals were disposed of based on these directives.