2023 (9) TMI 900 - HC - GST

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 ... Legality of cash seizure under power to seize unaccounted cash - release of seized currency - voluntary deposit of tax, interest and penalty and right to refund/adjustment - exclusion of period of pendency from limitationLegality of cash seizure under power to seize unaccounted cash - release of seized currency - Seized currency held in custody of the respondent is to be released to the petitioner. - HELD THAT: - The Court applied the principle laid down in the recent decision of this Court in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr., concluding that the power under Section 67(2) of the CGST Act to seize cash on the ground that it is unaccounted cash does not sustain in the facts of this case. Having found that the seizure is covered by that precedent in favour of the petitioner, the Court directed release of the seized currency and ordered the respondent to remit proceeds of the fixed deposit (with interest) to the petitioner's bank account within one week, thereby finally disposing of the challenge to the seizure. [Paras 13, 14, 18]Seized cash to be released and proceeds remitted to the petitioner's bank account within one week.Voluntary deposit of tax, interest and penalty and right to refund/adjustment - The respondents are not precluded from taking steps in relation to the amount voluntarily deposited by the petitioner, and the petitioner may apply for refund or seek adjustment as per law. - HELD THAT: - The Court recorded that the petitioner had deposited a sum on assurance of release of the seized cash, but the deposit was voluntary. The respondents have not accepted that the amount is refundable. The Court clarified that it does not preclude the respondents from taking any steps regarding the amount deposited while the petition was pending, nor does it preclude the petitioner from filing an appropriate application for refund or seeking adjustment if otherwise due. No determination on the substantive claim for refund or adjustment was made; the parties retain their respective remedies under law. [Paras 15]Respondents may take lawful steps regarding the deposited amount; petitioner may file for refund or adjustment if entitled.Exclusion of period of pendency from limitation - The period during which the petition was pending is to be excluded from the period of limitation for any proceedings instituted by either party. - HELD THAT: - The Court directed that the time consumed in the pendency of the present petition, from institution to date, shall be excluded from limitation for any future proceedings that may be initiated by either party, thereby preserving limitation rights affected by the litigation. [Paras 16]Period of pendency of this petition excluded from limitation for future proceedings.Final Conclusion: The petition is allowed: the seized currency is ordered released and the fixed deposit proceeds (with interest) remitted to the petitioner's bank account within one week; the respondents remain free to take lawful action regarding the voluntarily deposited tax, interest and penalty and the petitioner may seek refund or adjustment if entitled; the period of pendency of this petition is excluded from limitation for any future proceedings. 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.