2023 (8) TMI 929 - HC - GST

GST officers cannot seize silver bars, currency, and valuables from homes under Section 67 without proper authority

The Delhi HC ruled that proper officers lacked authority under Section 67 of the GST Act to seize silver bars, currency, and mobile phones from ... Power of search and seizure - seizure of goods, documents or things - interpretation of 'goods' and 'things' under Section 67 - goods liable for confiscation - evidentiary seizure (useful for or relevant to proceedings) - ejusdem generis reading of 'things' - return of seized items not relied upon in notice under Section 67(3) - provisional release of seized goods and six month notice rule - confiscation under Section 130Interpretation of 'goods' and 'things' under Section 67 - goods liable for confiscation - ejusdem generis reading of 'things' - Scope of power under Section 67(2) to seize goods, documents or things and the meaning of 'goods' and 'things'. - HELD THAT: - Section 67(2) permits seizure only of (i) goods which the proper officer has reasons to believe are liable for confiscation, or (ii) documents, books or things which, in the officer's opinion, shall be useful for or relevant to any proceedings under the Act. The word 'goods' in Section 67 must be read with the qualifying condition of being liable for confiscation; mere movable assets found during search (e.g., furniture, appliances) cannot be seized absent reasons to believe they are subject matter of evasion. The term 'things' must be read ejusdem generis with 'documents' and 'books' and therefore denotes items that store information or records (for example, electronic devices, pen drives, mobiles) which are useful or relevant to proceedings under the Act. The legislative scheme (including provisions for provisional release, confiscation under Section 130, and return of documents not relied upon) and the remedial purpose of Section 67 support a contextual and purposive interpretation that limits seizure to material evidentiary to proceedings or goods suspected to be liable for confiscation. [Paras 18, 36, 38, 46, 47]Section 67(2) does not vest an unfettered power to seize any movable asset; seizure is limited to goods believed to be liable for confiscation and to documents/books/things that are useful or relevant to proceedings, with 'things' to be read ejusdem generis with 'documents' and 'books'.Interpretation of 'goods' and 'things' under Section 67 - goods liable for confiscation - Whether the silver bars seized are 'goods' or 'securities' and thus whether they could be seized under Section 67(2). - HELD THAT: - The definition of 'goods' in Section 2(52) excludes 'money' and 'securities'. The expression 'securities' (as per the Securities Contract (Regulation) Act) comprises marketable instruments (shares, bonds, government securities, units, etc.) and does not include bullion such as silver bars. Silver bars, being movable property not falling within the definition of 'securities', fall within the term 'goods'. However, inclusion within 'goods' does not by itself permit seizure under Section 67(2) unless the proper officer has reasons to believe those goods are liable for confiscation under the criteria in Section 130. [Paras 28, 29, 30, 33, 34]Silver bars are 'goods' (not 'securities') under the Act; they can be seized under Section 67(2) only if the officer has reasons to believe they are liable for confiscation.Power of search and seizure - evidentiary seizure (useful for or relevant to proceedings) - return of seized items not relied upon in notice under Section 67(3) - provisional release of seized goods and six month notice rule - Whether currency and the silver bars seized from the petitioner should be returned where they were not relied upon in the subsequent notice and no reasons showing confiscation were made out. - HELD THAT: - Cash is expressly excluded from the definition of 'goods' (it is 'money'); therefore cash cannot be seized as 'goods' unless it has specific evidentiary relevance as a 'thing' (e.g., a particular note correlative to modus operandi). The court found no material that the seized currency or silver bars could be traced in species to any transaction relevant to proceedings under the Act, and that the Revenue's asserted basis was merely that they were 'unaccounted wealth'. Section 67(3) requires that documents, books or things not relied upon for issue of a notice under the Act be returned within thirty days of the notice. Further, Section 67(7) mandates return of goods if no notice in respect thereof is given within six months (subject to extension). Because the notice dated 10.11.2020 (which includes a demand for April, 2019) did not rely on the seized items, the seized currency and silver bars fell to be released. The court emphasised that Section 67 is not a recovery provision and cannot be used to seize valuable assets merely as unaccounted wealth; seizure must be tied to evidentiary relevance or confiscation criteria. [Paras 31, 43, 56, 61, 62]The seized currency and silver bars are to be released because they were not shown to be goods liable for confiscation nor were they relied upon in the subsequent notice; documents/books/things not relied upon must be returned under Section 67(3) and goods must be returned if no notice is issued within six months.Final Conclusion: The petition is allowed: the respondents are directed to forthwith release the currency and other valuable assets seized on 28.01.2020, while preserving the Department's right to proceed in accordance with law; nothing in the order expresses any view on the petitioner's liability for tax, penalty or interest. Issues Involved:1. Legality of the search and seizure of silver bars, Indian currency, and mobile phones.2. Authority of the proper officer under Section 67 of the Central Goods and Services Tax Act, 2017 (the Act) to seize currency and other valuable assets.3. Requirement to issue notice within six months of seizure and its implications.4. Interpretation of the term 'goods' and 'things' under the Act.Summary:Issue 1: Legality of the Search and SeizureThe petitioner requested the release of two silver bars, Rs. 7,00,000/- Indian currency, and mobile phones seized from his residence, arguing the search and seizure were illegal. The petitioner was arrested on 29.01.2020 for alleged offenses under Section 132(1)(i) of the Act and released on bail on 21.03.2020. The petitioner contended that no reliance was placed on the seized items in the notice issued under Section 74 of the Act, and thus, the seized goods should be restored.Issue 2: Authority Under Section 67The petitioner argued that currency is not 'goods' as defined under the Act and thus cannot be seized. The proper officer's power to seize under Section 67(2) is limited to goods liable for confiscation and documents or things useful for proceedings under the Act. The court examined Section 67 and concluded that the power to seize cash or other assets is not for securing revenue interests but for aiding proceedings against tax evasion.Issue 3: Requirement to Issue NoticeThe court noted that under Section 67(7), if no notice is issued within six months of the seizure, the goods must be returned. The petitioner argued that no notice was issued within the stipulated period, making the seized goods liable for release. The court agreed, stating that the seized items were not relied upon in any subsequent notice, thus requiring their return.Issue 4: Interpretation of 'Goods' and 'Things'The court clarified that 'goods' under Section 2(52) of the Act exclude money and securities, and silver bars do not qualify as securities. The term 'things' in Section 67(2) must be read ejusdem generis with 'documents' and 'books,' implying items containing information useful for proceedings under the Act. The court rejected the expansive interpretation of 'things' to include currency and valuable assets without evidentiary value.Conclusion:The court directed the respondents to release the seized currency and valuable assets, emphasizing that the purpose of Section 67 is to unearth tax evasion, not to secure unaccounted wealth. The court also noted that the respondents could continue other proceedings under the Act as per the law.