2023 (8) TMI 1263 - HC - GST

High Court Orders Return of Seized Funds, Validates Petitioner's Claim Under CGST Act Section 67(2) Despite Fake Invoice Allegations

Rajeev Chhatwal Versus Commissioner Of Goods And Services Tax (East)

The HC ruled in favor of the petitioner, directing the respondent to remit Rs. 15,92,000/- seized during a search to the petitioner's bank account within ... Seeking release of seized currency - whether Section 67(2) of the CGST Act empower any such seizure? - HELD THAT:- The aforesaid question is covered in favour of the petitioner by the recent decision in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr. [2023 (8) TMI 929 - DELHI HIGH COURT], where it was held that applying the principle of purposive interpretation, the power under Section 67 of the Act cannot be read to extend to enable seizure of assets on the ground that the same are not accounted for. The present petition is disposed of by directing the respondent to remit the amount seized to the petitioner’s bank account within a period of two weeks from today along with accrued interest. 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.