2019 (12) TMI 158 - HC - GST

Detention of truck - Power of police officer for inspection, search and seizure - Section 67 of the Assam Goods and Services Tax Act, 2017 - requirement of presence of the authorities under the Customs Department to respond the present appeal - direction to hand over the investigation to the customs authorities, along with the seized goods and trucks for further investigation - commission of the principal offences under the Customs Act. HELD THAT - Provisions of Section 67 of the AGST Act contains a clear provision that prior to any inspection, or as a matter prior to any search and seizure, a recording of reasons by the proper officer for such belief is a requirement of the law and only thereupon the process for search, seizure or confiscation can be undertaken - A reading of Sections 100 and 101 of the Customs Act shows that if the proper officer or the empowered officer has reasons to believe that a person to whom the provision applies has secreted about his person any goods or documents liable for confiscation, a search may be conducted and pursuant thereto the subsequent actions be taken which may result in arrest, seizure or confiscation. 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 - we are of the view that 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. By taking note of the report of the Ministry of Agriculture and Farmers Welfare, Government of India as regards the bio-security aspects of the areca nuts and also the stand of the Customs department that the areca nuts may have been smuggled in from across the Myanmar border in violation of the provisions of the Customs Act, we are of the view that if the proper officer or the empowered officer has reasons to so believe, it would be appropriate to initiate proceedings under Section 100/101 of the Customs Act and thereafter follow the procedures prescribed in the Act as regards search, arrest, seizure or confiscation. 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. If any such decision is taken to proceeded against the appellants, the same be done by the respective authorities strictly as per the provisions of the GST Acts, the CrPC/IPC or the Customs Act, as the case may be - petition disposed off.

Summary

Issues Involved:
1. Legality of the seizure and detention of trucks carrying areca nuts.
2. Jurisdiction of police authorities under the GST Act and the Customs Act.
3. Application of Section 67 of the GST Act and Sections 100 and 101 of the Customs Act.
4. Allegations of fraud and forgery under the IPC.
5. Bio-security concerns related to the areca nuts.

Detailed Analysis:

1. Legality of the Seizure and Detention of Trucks Carrying Areca Nuts:
The police officials of Jalukbari Police Station detained 25 trucks carrying areca nuts without proper documents. The appellants contended that the seizure was illegal and without jurisdiction, seeking a declaration for the release of the goods. The court noted that the initial seizure by the police authorities could not be said to be without authority. However, it emphasized that any further detention and seizure must comply with the relevant legal provisions under the GST Act, Customs Act, and CrPC.

2. Jurisdiction of Police Authorities Under the GST Act and the Customs Act:
The appellants argued that the police authorities lacked jurisdiction to investigate offences under the GST Act and Customs Act. The court highlighted that under Section 4(2) of the CrPC, police authorities could investigate offences, including those under the GST Act, if they involved fraud and forgery. However, for violations of the Customs Act, the investigation should be handed over to the Customs authorities.

3. Application of Section 67 of the GST Act and Sections 100 and 101 of the Customs Act:
Section 67 of the GST Act stipulates that a proper officer, not below the rank of Joint Commissioner, must have reasons to believe that a violation has occurred before authorizing search and seizure. Similarly, Sections 100 and 101 of the Customs Act require the proper officer to have reasons to believe that goods or documents liable for confiscation are secreted. The court noted that the police authorities did not follow these provisions and emphasized that any action under the GST Act or Customs Act must be initiated by the respective authorities following the prescribed procedures.

4. Allegations of Fraud and Forgery Under the IPC:
The ejahar lodged by the police alleged fraud and forgery related to GST documents, implicating offences under Sections 120(B)/420/467/471 of the IPC. The court stated that if the police authorities believed that fraud and forgery had occurred, they could proceed under the IPC following the CrPC procedures. However, the seizure under Section 102 of the CrPC must be reported to the Magistrate as required by Section 102(3).

5. Bio-Security Concerns Related to the Areca Nuts:
The Ministry of Agriculture and Farmers Welfare reported that the areca nuts posed a phytosanitary risk, recommending destruction or deportation of the consignment. The court acknowledged the bio-security threat and held that the Customs authorities should take appropriate action following the Customs Act provisions.

Conclusion:
The court directed that the detained goods be retained by the police for seven days, during which the GST authorities, police, and Customs authorities must decide on proceeding with the matter. If no decision is taken within seven days, the detention and seizure would be declared illegal. Any action taken must strictly follow the respective legal provisions under the GST Act, CrPC/IPC, or Customs Act. The judgment in WP(C) No.6762/2019 was modified accordingly, and the appeals were disposed of.