Seized Goods Retention Valid: CGST Act Section 67 Permits Asset Holding During Ongoing Assessment Proceedings

HC analyzed a mandamus petition challenging seizure under CGST Act. The court rejected the refund request, holding that authorities can retain seized assets until assessment proceedings conclude. Section 67 interpretation allowed retention of seized amount pending adjudication. The court directed timely completion of proceedings and potential future refund, dismissing the writ petition without imposing costs.

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Issues:
1. Mandamus for refund of seized amount
2. Compliance with timelines set by Division Bench
3. Interpretation of Section 67 of the Central Goods and Services Tax Act, 2017

Analysis:
1. The petitioner sought a mandamus for the refund of an amount seized from his residence, which was collected without any show cause notice or assessment order. The company, where the petitioner is a Director, also filed related Writ Petitions seeking assessment proceedings under the CGST Act and refund of the collected amount. The court directed completion of assessments within a fixed time frame and held the refund subject to anticipated assessment.

2. The revenue filed Writ Appeals against the order, which were partially allowed by extending the time limit for proceedings. Contempt Petitions were filed for non-compliance with timelines, attributed to delays caused by the Covid Pandemic. The Division Bench granted an extended time limit for assessment proceedings, emphasizing cooperation between parties to adhere to timelines.

3. The main issue revolved around the interpretation of Section 67 of the CGST Act concerning the powers of Inspection, Search, and Seizure. The petitioner argued for the return of the seized amount, while the respondents contended that retention was necessary until completion of proceedings. The court analyzed the provisions of Section 67(2) and (3), emphasizing the term "relied upon" in the context of the show cause notice.

4. The court held that the seized amount need not be appropriated towards liability immediately and could be retained until the completion of adjudication proceedings. The language of the second proviso of Section 67 supported this interpretation, allowing the department to retain assets until the conclusion of proceedings. Consequently, the mandamus for the refund was rejected.

5. The court directed completion of proceedings within a specified time frame, addressing the petitioner's request for cross-examination. Both parties assured cooperation in adhering to timelines. It was clarified that upon conclusion of adjudication, the seized amount would be refunded unless appropriated in accordance with the law. The Writ Petition was dismissed, with no costs incurred.

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