Right against self-incrimination: Taxpayer’s dilemma while statement recording before tax officer - Part I

An activity of evasion of ‘tax’ is always recognized with the monetary loss caused to the government exchequer by the actions of the assesses. As a deterrent for such an offence, the law also prescribes criminal liability in certain scenarios. However, tax evasion is treated differently from conventional crime. It is dealt with by special legislation and has a limited application of criminal laws. However, the entire process of investigation requires the tax officers to don various hats, including that of a police officer, while extracting the necessary information. This obviously leads to a question of whether the criminal jurisprudence on the evidentiary value of such a statement would apply equally to the case where the tax officer records the statement. In this path, it would be necessary to understand the crossroads between the tax laws vis-à-vis the criminal laws.

The issue whether customs officers are police officers was once again examined by the Supreme Court in the case of Radhika Agarwal v. Union of India. The relevance of determining whether customs officers are police officers stems from Section 25 of the Indian Evidence Act, 1872 (“IEA”) (Section 23 of the Bharatiya Sakshya Adhiniyam 2023), a bright line rule protecting the fundamental right against self-incrimination. The said provision stipulates that confessions made by an accused to police officers are inadmissible as evidence.

Even though a plethora of judicial decisions exist on the interpretation of Section 25 of IEA, the persistent confusion as to who is a police officer in terms of Section 25 of IEA continues to exist due to the absence of a definition of the term “police officer” under IEA.

The definition of “police” under the Police Act, 1861, defines “police” to include all persons enrolled under the Act. The expression “includes” indicates that persons other than the officers enrolled under the said Act can also be considered to be “police” and hence the scope of the said expression has been subject matter of judicial scrutiny.

This article critically examines the legal reasoning employed by the courts in assessing whether tax officials possess the status of police officers.

Tax officials are conferred with the powers, amongst others, to search, seize, arrest, summon persons to give evidence and produce documents. Chapter XIII of the Customs Act, 1962 and Chapter XIV of the CGST Act, 2017m empower officers to inspect, search, seize and arrest. The conferment of such powers on tax officials raises the question of their being considered as police officers. If tax officials are considered as police officers any statement made before them shall be hit by Section 25 of the IEA and will be inadmissible as evidence.

Various High Courts examined the issue and gave divergent opinions. Some High Courts ruled that tax officials are police officers, while others opined that such an interpretation would unduly enlarge the scope of police officers under Section 25 of the IEA.

The legal quandary reached the apex court in the case of State of Punjab Vs. Barkat Ram. In the said case, the High Court had set aside the conviction of the respondent on the ground that customs officers are police officers within the meaning of Section 25 of IEA and consequently confessions made before them are inadmissible. The only evidence available to uphold the conviction was the confessional statements of the assessee. On exclusion of statements, no other evidence was available to uphold the conviction.  The Hon’ble Supreme Court by majority in the three-judge Bench opined that customs officers are not police officers. It was observed that powers were conferred on police officers to detect and prevent the crime. On the other hand, powers conferred on the customs officers was to check smuggling and confiscate goods for duty evasion. The majority further observed that the enquiry made by the customs officers are deemed to be judicial proceedings and a police officer never acts judicially. The majority left the question of whether officers of other departments would be considered as police officers open.

With the Bench having left the question open in respect of other laws, the issue once again came before a three-judge Bench of the apex court in the case of Raja Ram Jaiswal v. State of Bihar wherein the Excise inspector recovered five bundles of non-duty paid Nepal Ganja from the car. Upon perusal of the provisions of the Bihar and Orissa Excise Act, 1915, the majority opined that the excise inspector shall be deemed to be an officer in charge of a police station and does not enjoy any judicial power. Therefore, it was held that the confession was inadmissible, and the conviction was set aside.  The Court observed that the test would be to determine whether the powers conferred under the respective law would facilitate the officer to obtain a confession. Justice Raghubar Dayal J, who gave the majority opinion in Barkat Ram (supra) set aside the conviction but did not consider the confession to be inadmissible. He observed that if the legislature intended to include officers of other departments in the expression “police officer” under Section 25 of the Indian Evidence Act, 1872, the statutory language would have reflected the same.

Owing to conflicting decisions rendered by coordinate Benches, the issue was revisited by the Constitution Bench of the apex court in the case of Badku Joti Savant v. State of Mysore, wherein the charge-sheet test was formulated by the apex court. It was held that the Central Excise Officer does not have the power to file a charge sheet under the CrPC and hence cannot be deemed to be an officer in charge of police station. The said position was reaffirmed by the Constitution Bench in the case of Romesh Chandra Mehta Versus State of West Bengal.

By referring to the charge sheet test formulated by the Constitution Bench, the apex court in Radhika Agarwal (supra) turned down the contention that customs officers are police officers.

Section 25 of IEA is a salutary principle to prevent police officers from extorting confessions and the same would apply to tax officers conferred with the power to detect and investigate offences under the relevant laws. To give effect to the fundamental right enshrined in the Constitution, courts must treat statements made before tax officials as legally inadmissible.

Hence, the consequential question which then arises, based on the ratio of the decisions above, is whether the assesses summoned under Fiscal Statutes can be construed to be ‘accused’ as understood in criminal jurisprudence, which will be dealt in the Part-II of the Article.

About the authors: Rishab J is an Associate Partner and Shri Gayathri is an Associate with Shivadass & Shivadass (Law Chambers).

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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