2023 (8) TMI 1263 - HC - GST

Seizure of unaccounted cash u/s 67(2) CGST not authorised; seized amount to be returned with interest.

Whether Section 67(2) CGST empowers seizure of currency: Applying purposive interpretation and following the HC precedent, the court held that the powers ... Search and seizure powers under Section 67(2) of the CGST Act - Illegality of seizure of cash not authorised by statutory power - Precedent reliance and entitlement to restitution of seized property - Direction for remission of seized amount with accrued interestSearch and seizure powers under Section 67(2) of the CGST Act - Illegality of seizure of cash not authorised by statutory power - Precedent reliance and entitlement to restitution of seized property - Direction for remission of seized amount with accrued interest - Seizure of Indian currency amounting to Rs.15,92,000/- during the search at the petitioner's premises was not permissible under the power invoked and the seized amount was to be remitted to the petitioner. - HELD THAT: - The Court examined the challenge limited to the legality of seizure of cash recovered during the search and, relying on the recent decision in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr., held that the seizure was not sustainable under the statutory provision invoked. Applying that precedent, the Court directed the respondent to remit the seized Indian currency to the petitioner's bank account within two weeks together with accrued interest. The Court recorded that this direction is without prejudice to any steps the respondent may take in accordance with law and reserved all rights and contentions of the parties. [Paras 9, 10, 11, 13]The seized currency is to be released to the petitioner with accrued interest and the respondent remains free to take lawful measures thereafter.Final Conclusion: Petition allowed to the extent that the seized amount of Indian currency shall be remitted to the petitioner's bank account within two weeks with accrued interest; respondent's legal remedies are preserved and all rights and contentions are reserved. Issues involved:The issues involved in the judgment are the seizure of Indian currency amounting to Rs. 15,92,000/- during a search conducted under Section 67 of the Central Goods and Services Tax Act, the petitioner's claim of innocence and coercion in signing documents, and the legality of the seizure under Section 67(2) of the CGST Act.Seizure of Indian currency:The petitioner filed a petition seeking the release of Indian currency amounting to Rs. 15,92,000/- seized by the respondent during a search conducted at the petitioner's residential premises. The petitioner claimed that the currency belonged to the family and was kept in a locker due to ongoing renovation/construction work at the premises. The petitioner, along with others, was arrested but later released on bail. The respondent alleged the petitioner's involvement in a fake invoice racket resulting in the availing of approximately Rs. 11 crores in Income Tax Credit (ITC) and claimed that the investigation was incomplete with no show-cause notice issued. The petitioner contended that the seizure was not empowered under Section 67(2) of the CGST Act. The court referred to a recent decision in favor of the petitioner and directed the respondent to remit the seized amount to the petitioner's bank account with accrued interest within two weeks.Claim of innocence and coercion:The petitioner claimed innocence and coercion in signing various documents and statements under threat by the concerned officers. The petitioner asserted not being involved in making supplies, not being a taxpayer, and not being associated with the alleged fake ITC availed by others. Despite the petitioner's claims, the respondent maintained that the investigation was ongoing and no show-cause notice had been issued. The petitioner's rights and contentions were reserved by the court, clarifying that the respondent could take further legal steps as per the law.Legality of the seizure:The petitioner challenged the seizure of Indian currency under Section 67(2) of the CGST Act, arguing that the provision did not empower such seizure. The court, relying on a recent decision, ruled in favor of the petitioner and directed the respondent to remit the seized amount to the petitioner's bank account within two weeks. The court clarified that this decision did not prevent the respondent from taking lawful actions in the future.