Know Your Limits Part 10 (Conclusion)

Know your limits Part 10 (Conclusion)

Even though the provisions contained in the GST Law are binding on the taxpayer as well as the tax administrator, more than often, many orders are passed in violation of principles of natural justice, exercising powers which are not legally vested on the tax administrators etc. It is a well known fact that there are no provisions under the GST Act for seizure of cash and other valuables during audit/inspection. Despite this clear legal position, officers seized cash and silver in a GST case which is analysed here below.

Facts of the case are that on 17/08/2023, the Delhi high court has held that there are no powers under section 67(2) of the CGST Act for seizure of cash or other valuables and accordingly ordered for release of cash and silver seized on 28/01/2020. The department did not make any reference of the seizure of the Cash or silver in the SCN and accordingly, the same were liable to be returned to the taxpayer from whom the same were seized within 30 days of issuance of SCN.

section 67(2) empowers the Joint Commissioner to seize goods in line with the requirements of law and the powers to seize cash and other valuables which are not the goods being traded by the taxpayer is available only under the Income Tax Act. Despite this clear legal position cash as well as silver was seized on 28/01/2020 and also duly reflected in Form GST INS-02 on which there is no dispute. The dispute is on the fact that cash and silver are not covered as goods under section 67(2) as well as on the powers vested on the GST official for seizure of cash and valuables.

The division bench of the Delhi High Court has examined this issue in detail and accordingly passed orders on 17/08/2023. The operative portion of the order is as below.

2023 (8) TMI 929 - DELHI HIGH COURT

63. In view of the above, the petition is allowed. The respondents are directed to forthwith release the currency and other valuable assets seized from the petitioner during the search proceedings conducted on 28.01.2020. It is, however, clarified that the respondents are not precluded from instituting or continuing any other proceedings under the Act in accordance with law. Nothing stated in this order shall be construed as an expression of opinion on the petitioner’s liability to pay any tax, penalty or interest under the Act.

The revenue was not convinced on this clear legal position and preferred a special leave petition in the Supreme Court for setting aside the order of the Delhi High Court. The Division Bench of the Supreme Court on 14/08/2024 - 2024 (8) TMI 1041 - SC Order itself passed appropriate orders holding that no case for interference is made out by the petitioner and accordingly dismissed the SLP.

Despite the fact that the order of the Delhi High Court was examined in detail by the division bench of the Supreme Court and the fact that Delhi High Court as well as Supreme Court have passed orders uniformly, the Revenue preferred REVIEW PETTION before the Supreme Court. The division bench consisting of the Honorable Chief Justice of India held on 19/08/2025 that there are no merits in the review petition and accordingly DISMISSED the review petition.

Citation : Commissioner of CGST Vs Deepak Khandelwal - 2025 (8) TMI 1293 - SC Order in SLP number 18536 of 2024.

The operative portion reads as below.

1 Delay condoned.

2. We have gone through the Review Petition and the connected papers filed therewith. In our opinion, no case for review of order is made out. The review petition is dismissed.

3. Pending application(s), if any, shall stand disposed of.

Conclusion: It is hoped that CBIC issues necessary circular to all concerned instructing the officials to desist from seizure of cash as well as other valuables which are not goods as contained in section 67(2) of the CGST Act 2017.