Seizure and Provisional Release

In one line

Seizure is the taking of goods into departmental custody pending adjudication, and it is time limited. Precisely: section 110 empowers seizure of goods, documents and things and imposes the six-month notice clock; section 110A permits provisional release pending adjudication; and section 110AA, inserted in 2021, provides for the transfer of proceedings to the proper officer after an inquiry, investigation or audit.

Why seizure needs a clock

Because seizure is a taking without adjudication. The officer forms a reasonable belief and the goods pass out of the owner's hands before anything has been decided. For a trader whose stock is his business, seizure is often more damaging than the eventual penalty.

So the Act does not leave the goods in limbo. It requires the department to commit itself, by issuing a show cause notice under section 124(a), within six months, and if it does not, the goods must be returned. The clock is not a technicality; it is the discipline that stops seizure being used as a punishment in itself.

And because a trader may not be able to wait even six months, section 110A allows the goods to be released provisionally on security, so the dispute can proceed without destroying the business while it does.

The provisions

Section 110(1), the power to seize goods. If the proper officer has reason to believe that any goods are liable to confiscation under the Act, he may seize such goods.

The proviso provides that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods or any person holding them an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. That is the detention order, used where the goods are too bulky or where seizure would be disproportionate.

Section 110(1A), 110(1B) and 110(1C) deal with goods which are hazardous, perishable, or prone to depreciation in value, or for which storage space is a problem: the Central Government may notify such goods, and the proper officer may, having regard to their perishable or hazardous nature or depreciation, and after following the prescribed procedure including preparation of an inventory certified by a magistrate and taking photographs, dispose of them before the conclusion of the proceedings. The certified inventory and photographs then stand as evidence in place of the goods.

Section 110(2) is the clock. Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized.