2023 (9) TMI 900 - HC - GST

Illegal Cash Seizure Overturned: Officers Lack Authority to Confiscate Funds Without Substantive Evidence of Wrongdoing

M/s. Goyal Metal Udyog Versus Commissioner Of Central Goods & Services Tax & Anr.

HC ruled that seizure of cash (Rs. 50,70,000) during search operation was illegal. Officers lacked authority to seize cash based on mere suspicion of ... Seeking release of cash and original documents - power under Section 67(2) of the CGST Act of search and seizure - HELD THAT:- In so far as the power under Section 67(2) of the CGST Act, to seize cash on the ground that it is unaccounted cash is concerned, the said issue is covered in favour of the petitioner by the recent decision of this Court in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr. [2023 (8) TMI 929 - DELHI HIGH COURT] - the currency seized is required to be released to the petitioner. In so far as the petitioner’s prayer for adjustment of ₹11,41,750/- against future liability is concerned, it is not disputed that the petitioner had deposited it voluntarily. The respondents have not accepted that the said amount is refundable to the petitioner. Mr Singh, learned counsel appearing for the respondents submits that apparently, no steps were taken by the respondents in regard to the tax deposited as the present petition was pending - it is apposite to clarify that the respondents are not precluded from taking any steps in regard to the said duty so deposited. The petitioner is also not precluded from filing an appropriate application for refund of the said amount, if otherwise due. It is clarified that the period spent by the parties during the pendency of the present petition, that is, from the date this petition was instituted till date, shall be excluded from the period of limitation, as may be applicable to proceedings that may be instituted by either of the parties. The petition is allowed. Issues involved: Seizure of cash during search operation, legality of seizing cash on suspicion of being unaccounted, release of seized cash, adjustment of deposited amount against future liability.Seizure of Cash: The petitioner's business premises were searched by the Officers of the Anti-Evasion Branch, where Indian currency amounting to Rs. 50,70,000/- was found in a locker, claimed to belong to the petitioner's family members. Subsequently, summons were issued under Section 70 of the Central Goods and Services Tax Act, 2017, calling for various documents and the cash seized was deposited by the respondent with Syndicate Bank.Legal Grounds: The petitioner challenged the seizure of cash as illegal, arguing that the respondents had no authority to seize cash based on suspicion of being unaccounted. The petitioner relied on a recent decision of the Court in a similar case, where it was held that the power to seize cash on the ground of being unaccounted is not valid.Release of Seized Cash: The Court ruled in favor of the petitioner, stating that the currency seized must be released to the petitioner. Additionally, the petitioner requested the adjustment of Rs. 11,41,750/- deposited against future liability, which was not disputed as being voluntary. The respondents were directed to remit the proceeds of the fixed deposit to the petitioner's bank account within a week.Future Liability and Refund: The Court clarified that the amount deposited by the petitioner can be subject to further proceedings by the respondents, and the petitioner can file for a refund if applicable. The period during the pendency of the petition was excluded from the limitation period for any future proceedings between the parties.