2023 (7) TMI 1230 - HC - GST

Tax Authorities Illegally Seized Senior Citizen's Cash Without Proper Documentation, Must Refund Full Amount Immediately

HC ruled that tax authorities illegally seized Rs. 19,50,000 from a senior citizen's residence without proper documentation. The court found no legal ... Search under Section 67 of the CGST Act - seizure versus mere dispossession/possession without seizure - statutory authority and compliance with procedural rules - refund and restoration of property taken during search - premature encashment of fixed deposit held by revenue pending adjudicationSearch under Section 67 of the CGST Act - seizure versus mere dispossession/possession without seizure - statutory authority and compliance with procedural rules - Respondents acted without lawful authority in taking possession of cash from the petitioner's locked room without recording any seizure and such dispossession is illegal. - HELD THAT: - The court recorded that, although there is a broader controversy whether currency can be seized under the CGST Act, it was unnecessary to decide that question on merits because the respondents themselves did not record any seizure of the cash. Instead the respondents took possession of the currency by what the court described as a practice of 'resume'-forcible dispossession without any statutory basis. The CGST regime requires authorities to act strictly in accordance with the statute and rules; there is no provision permitting dispossession of assets without a formal seizure. Consequently the respondents' continued possession of the currency collected from the petitioner's residence was unlawful and cannot be sustained. [Paras 8, 9, 10]The action of the respondents in dispossessing the petitioner of the currency without recording seizure or any statutory authority is illegal and their continued possession of the currency cannot be permitted.Refund and restoration of property taken during search - premature encashment of fixed deposit held by revenue pending adjudication - The cash placed in fixed deposit by the respondents must be returned to the petitioner and, subject to attendance and statements, the respondents shall take steps to encash and transfer the proceeds to the petitioner. - HELD THAT: - The record showed the currency taken from the petitioner's premises was deposited by the respondents in a fixed deposit account. Having found the possession impermissible, the court directed restitution. To avoid further controversy the court ordered the petitioner and the family member present during the search to appear before the designated officer on a specified date. If the family member does not dispute that the money belongs to the petitioner, the respondent shall immediately effect pre-mature encashment of the fixed deposit and transfer the proceeds to the petitioner's account. The order implements immediate refund/restoration while providing a limited procedural step (personal appearance and opportunity to the person present during the search) before encashment and transfer. [Paras 11, 14, 15]Respondents are directed to refund the amount to the petitioner; the petitioner and the family member shall appear before the respondent on the stated date and, if the family member does not dispute ownership, respondent shall prematurely encash the fixed deposit and transfer the proceeds to the petitioner.Final Conclusion: The petition is allowed: the respondents' retention of the cash taken from the petitioner's locked room without any recorded seizure or statutory authority is illegal and the respondents are directed to refund the amount, with procedural steps for appearance and, if uncontested, immediate premature encashment of the fixed deposit and transfer of proceeds to the petitioner. Issues involved:The petitioner challenges the removal of a sum of Rs. 19,50,000 during a search under Section 67 of the Central Goods and Service Tax Act, 2017 and seeks directions for refunding the amount.Details of the Judgment:Issue 1: Removal of Cash during SearchThe petitioner, a senior citizen and proprietor of M/s Bishan Saroop Ram Kishan, had cash amount seized during a search at her residence. The respondents seized the cash but did not officially record the seizure. The court found that the respondents had no authority to dispossess assets without seizure, deeming their actions illegal.Issue 2: Possession of Seized CashThe respondents claimed to have placed the seized cash in a fixed deposit without initiating any proceedings for its return. However, it was found that the assumption that the cash belonged to the petitioner's daughter-in-law was erroneous, as it was recovered from a locked room where she did not have access. The court directed the respondents to refund the amount to the petitioner and instructed both the petitioner and her daughter-in-law to appear before the respondent for further proceedings.Conclusion:The court ordered the refund of the seized amount to the petitioner, emphasizing the illegality of the respondents' actions in dispossessing assets without proper seizure procedures. Additionally, instructions were given for the transfer of the fixed deposit proceeds to the petitioner's account if the daughter-in-law does not dispute the ownership of the money. The petition was disposed of accordingly.