GST officers cannot seize cash during search operations as currency doesn't qualify as goods under Section 67(2)

Delhi HC held that GST officers lacked authority to seize cash during search operations under Section 67(2) of GST Act. The court ruled that cash does not fall within definition of "goods" and cannot be considered as "things useful or relevant" for GST proceedings. The seizure was deemed coercive and illegal, lacking statutory support. Officers had dispossessed petitioners of currency without proper seizure under the Act. Court directed immediate return of balance amount with accrued interest and release of bank guarantee furnished by petitioner.

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Issues:
Challenge to search operation legality
Challenging authority to seize cash
Interpretation of Section 67(2) of the GST Act

Analysis:

Challenge to Search Operation Legality:
The petitioners filed a petition challenging a search operation conducted at their residence by GST officers under Section 67(2) of the GST Act. The officers found and took possession of cash without drawing a seizure memo. The petitioners argued that the officers had no valid reason to believe that goods liable for confiscation or relevant records were present at their premises, questioning the lawfulness of the search operation.

Challenging Authority to Seize Cash:
The petitioners contested the action of the officers in seizing cash, claiming it was without legal authority. They argued that the power to seize goods under Section 67(2) of the GST Act is limited to items liable for confiscation or relevant to proceedings under the Act. Cash, being excluded from the definition of goods, cannot be seized. The petitioners emphasized that currency is not useful or relevant for conducting proceedings under the Act, thus challenging the officers' authority to seize cash.

Interpretation of Section 67(2) of the GST Act:
A crucial issue raised was the interpretation of Section 67(2) of the GST Act regarding the power to seize goods. The court noted that cash does not fall under the definition of goods and questioned whether cash could be considered a 'thing' useful or relevant for proceedings under the Act. The court highlighted that the power to seize items is subject to strict conditions and must be exercised within the statutory framework. The court examined whether the officers' action of taking possession of cash without a seizure memo constituted a lawful seizure.

The court found that the officers' action of dispossessing the petitioners of cash during the search operation was illegal and without legal authority. The court directed the respondents to return the remaining amount seized along with accrued interest to the petitioners. Additionally, the court ordered the release of the bank guarantee furnished by one of the petitioners. The court also directed specific officers to be present in court for further proceedings, emphasizing the need for adherence to legal procedures and statutory provisions in search and seizure operations.

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