Alberta's Montana First Nation, Chief Carolyn Buffalo and Quebec company Rainbow Tobacco have filed a lawsuit demanding the Alberta Gaming and Liquor Commission return 75,000 cartons of cigarettes seized from a Quonset hut in Hobbema, Alta., last month.

In the statement of claim filed Friday in Edmonton Court of Queen's Bench, the plaintiffs state the AGLC and the province lacked the jurisdiction to enter onto a reserve and enforce Alberta's Tobacco Tax Act on status Indians.

RCMP and AGLC officials seized the 14 million cigarettes from the central Alberta reserve on Jan. 5 because they were deemed improperly marked for legal sale in Alberta.

The cigarettes were manufactured by Rainbow Tobacco, a company owned and operated by the Mohawks of Kahnawake, Que., and are marked for federal sale.

Company CEO Rob Dickson said he has a federal license to manufacture and sell tobacco on all First Nations reserves.

"The tobacco was seized without jurisdiction and upon false assertion, contained in an Information to Obtain a Search Warrant, that the cigarettes were counterfeit and contraband," the court document states.

"The AGLC insisted on making these claims regarding the cigarettes, and consequently insinuating that the cigarettes were evading paying tax and duties, despite the cigarettes being marked "CANADA — DUTY PAID — DROIT ACQUITTE."

The Montana First Nation and Rainbow Tobacco also claim they were defamed by an AGLC news release suggesting that the cigarettes were illegal and that they would deprive the Alberta government of $3 million of tax revenue.

The plaintiffs are asking for the AGLC to return the cigarettes and $1million in damages for lost reputation and lost profits.

They also want the court to declare that the Alberta Tobacco Act Tax does not apply under the Federal Indian Act, and that the AGLC acted outside its authority when officials seized the cigarettes.

"They just feel that they were attacked without any foundation — whether it's legal foundation or factual foundation. They felt that they were attacked and the entirety of the events as they unfolded was misrepresented," said their lawyer Chady Moustarah.

These allegations have not been proven in court. The AGLC has not filed a statement of defence.

Moustarah says the parties are prepared to take their fight to the Supreme Court of Canada, if necessary.