2020 (9) TMI 42 - HC - GST

Court upholds cash seizure under CGST Act, rejects constitutional claims, emphasizes investigation - Petitioner lacks standing.

The court dismissed the writ petition, upholding the seizure of cash under Section 67(2) of the CGST Act, 2017. It found that the authorities had the ... Power to search and seize documents, books or things under Section 67(2) of the CGST Act, 2017 - interpretation of the expression 'things' to include money - purposive construction / mischief rule in statutory interpretation - confessional statements before revenue officers as admissions - limited scope of judicial review in search and seizure at investigation stageInterpretation of the expression 'things' to include money - power to search and seize documents, books or things under Section 67(2) of the CGST Act, 2017 - purposive construction / mischief rule in statutory interpretation - Whether cash seized from the residential premises falls within the expression 'things' in Section 67(2) of the CGST Act, 2017 and whether the seizure of the cash was lawful. - HELD THAT: - The Court examined Section 67(2) in the context of the Act as a whole and relied on definition provisions to ascertain legislative intent. Applying purposive construction and authorities on the meaning of 'thing', the Court held that the phrase 'things' in Section 67(2) is to be given a wide meaning and can include money. Reliance was placed on standard lexical definitions treating 'thing' as including money and on the principle that statutes should be interpreted so as to suppress the mischief and advance the remedy. Having regard to the case diary which recorded reasonable belief that the cash constituted proceeds of illicit supply and would be useful for investigation, the Court concluded that the authorised officers were empowered to seize the cash under Section 67(2) pending further investigation and adjudication. [Paras 18, 19, 20, 25]The expression 'things' in Section 67(2) includes money and the seizure of the cash was lawful; release of the seized amount is not warranted until completion of investigation and adjudication.Confessional statements before revenue officers as admissions - limited scope of judicial review in search and seizure at investigation stage - Whether the husband's retraction of his earlier confessional statements entitled the petitioner to immediate release of the seized cash. - HELD THAT: - The Court noted that statements made before revenue/customs officers operate as admissions and, even if retracted, constitute evidence which must be considered in the investigative and adjudicatory process. Citing precedents, the Court observed that retracted confessions may still constitute admissible admissions and that, at the investigation stage, retraction does not automatically annul the evidentiary value of such statements. Further, because the matter was at the stage of ongoing investigation and evidence collection, the Court held that the petitioner could not obtain relief solely on the ground of subsequent retraction. [Paras 22, 23, 24, 25]Retraction of the confessional statement does not mandate release of the seized cash at the investigation stage; no relief granted on this ground.Limited scope of judicial review in search and seizure at investigation stage - Whether the High Court should interfere with the search and seizure exercise at the initial/investigation stage in exercise of writ jurisdiction. - HELD THAT: - The Court referred to precedent and observed that interference in writ jurisdiction with the sufficiency or adequacy of reasons for conducting search and seizure is limited. Judicial review at the initial stage does not ordinarily permit re-examination of the factual satisfaction underpinning a search warrant; moreover, defects, if any, in authorization do not automatically invalidate material collected during the search. Given that a statutory investigatory mechanism exists and that searches had been conducted on recorded reasonable belief, the Court declined to quash or interfere with the seizure in the writ petition filed at the investigation stage. [Paras 21, 25]Writ court will not ordinarily interfere with search and seizure at the initial investigation stage; the petition seeking release of seized cash is dismissed on this ground.Final Conclusion: The High Court held that the seized cash falls within the term 'things' under Section 67(2) of the CGST Act, 2017 and that the seizure was lawful; retraction of confessional statements did not justify release at the investigation stage; accordingly the writ petition seeking release of the seized amount was dismissed. Issues Involved:1. Legality of the seizure of cash under Section 67(2) of the CGST Act, 2017.2. Alleged violation of Articles 14 and 19 of the Constitution of India.3. Validity of the confessional statements and their subsequent retraction.4. Petitioner's locus standi to challenge the seizure.Issue-wise Detailed Analysis:1. Legality of the Seizure of Cash under Section 67(2) of the CGST Act, 2017:The petitioner argued that the respondents had no authority under Section 67(2) of the CGST Act, 2017, to seize cash as it does not fall under 'Document, Book or Things' as defined in the Act. The court examined the relevant statutory provisions, including Section 2(17) defining 'business,' Section 2(31) defining 'consideration,' and Section 2(75) defining 'money.' It concluded that a conjoint reading of these sections with Section 67(2) indicates that money can be seized by the authorized officer. The court emphasized that the term 'things' in Section 67(2) should be interpreted broadly to include money, citing definitions from Black's Law Dictionary and Wharton's Law Lexicon. The court also referred to the principle of statutory interpretation that aims to suppress mischief and advance the remedy, supporting a wide interpretation of 'things' to include money.2. Alleged Violation of Articles 14 and 19 of the Constitution of India:The petitioner claimed that the seizure of cash and the raid on their residential premises violated Articles 14 and 19 of the Constitution. The court did not find merit in these arguments, noting that the search and seizure were conducted based on specific information and under the provisions of the CGST Act. The court referred to previous judgments, including the Division Bench's decision in Sumedha Dutta & Another Vs. The Union of India & Another, which limited judicial interference in matters of search and seizure, especially at the initial stages. The court emphasized that the statutory mechanism under the CGST Act provides adequate procedural safeguards.3. Validity of the Confessional Statements and Their Subsequent Retraction:The petitioner argued that the confessional statements made by her husband were obtained under duress and were later retracted. The court referred to the Supreme Court's ruling in Surjeet Singh Chhabra Vs. Union of India, which held that confessional statements made before Customs Officers are admissible even if retracted later. The court also cited the Division Bench's decision in R. S. Company Vs. Commissioner of Central Excise, which upheld the validity of confessional statements in favor of the revenue. The court concluded that the retraction of the confessional statement does not invalidate the initial confession, especially at the investigation stage.4. Petitioner's Locus Standi to Challenge the Seizure:The respondents argued that the petitioner does not have the locus standi to file the petition as the seized cash and documents do not pertain to her. The court noted that the petitioner's husband had admitted that the seized cash was the sale proceeds of illegally sold Pan Masala without payment of GST. The court found that the petitioner's challenge to the seizure lacked merit, given the ongoing investigation and the statutory provisions justifying the seizure.Conclusion:The court dismissed the writ petition, holding that the authorities were justified in seizing the cash under Section 67(2) of the CGST Act, 2017. The court emphasized that the investigation must be allowed to proceed, and the question of releasing the seized amount does not arise until the matter is finally adjudicated. The court's decision was based on a comprehensive interpretation of the statutory provisions and relevant case law, ensuring that the seizure was legally sound and within the scope of the CGST Act.