The detention and seizure of goods and vehicles is a reasonable restriction on the exercise of free trade and movement and it should not be exercised strictly only in order to prevent possible tax evasion. Kerala High Court gave the above-cited reasons for giving the judgment in the case of M/s.Podaran foods India Pvt.Ltd. vs. State of Kerala [WP(C).No.17379 OF 2020(V)], presided over by Hon’ble Justice A.K.Jayasankaran Nambiar.
In the above-cited case, the High Court stated that a lot of writ petitions were being filed against the detention orders even though the scheme is provided in the Act which provides an alternative remedy.
High Court explained the provision when the seizure of the goods or the vehicle can be exercised in a case where there seems a doubt of evasion in taxes. It was stated that if the proper officer finds that the goods have been transported in contravention to the rules then, it should be considered as the direct case of evasion of taxes. HC elaborated “If the situations envisaged in the legislation for detention are met, the goods should be seized or detained without any laxity”.
HC explained that the consignee can choose to make the stipulated payments as per the notice, after which the notice would be concretized in the form of another order and the proceedings closed. But if the consignee wishes to challenge the detention/seizure, he can furnish security in the form of a bank guarantee covering the prescribed sum and get his goods/vehicle released provisionally, and then make his representation. And when it comes to making an appeal in the High Court, it was clearly specified that only after the consignee is given an opportunity to be heard and his objections considered can the concerned authority issue an order. If aggrieved, the consignee can approach the relevant authority under the legislation in appeal, but cannot approach the High Court at this stage.
The Court further stated that “the High Court could not be approached in a writ petition at any of these stages”. Court also suggested that a bank guarantee cannot be invoked for a period of three months from the date of service of the adjudicating order.
Therefore, the Court discussed in its judgment that whether or not a misdescription of goods in any of the documents accompanying a consignment could render it liable to be detained.
Hence, it was decided that detention and seizure of goods and vehicles is a reasonable restriction on the exercise of free trade and movement, but shouldn’t be exercised strictly only in order to prevent possible tax evasion.
The Court opined that the need for strict construction of detention laws was “what is at stake is a constitutional right, fundamental or otherwise, of a citizen”.