CGST search powers u/s 67(2): cash seized as "unaccounted" held unlawful; currency released, no deposit adjustment ordered

Section 67(2) CGST Act was construed as not authorising seizure of cash merely on the allegation that it is "unaccounted"; applying the HC's binding precedent on the point, the seized currency was directed to be released. As to the taxpayer's request to adjust a voluntarily deposited amount against future liability, the Court noted the tax authority did not admit refundability; it therefore declined to order adjustment, clarified that the authority may proceed in accordance with law regarding the deposit, and that the taxpayer may seek refund through an appropriate application, with limitation for any such proceedings excluding the period of pendency of the writ. Petition allowed.

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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.

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