2023 (9) TMI 958 - HC - GST

Dealer Wins: Illegal Cash Seizure Overturned, Funds Ordered Returned Under GST Procedural Limits

GST authorities seized cash from a dealer's premises. HC found the seizure illegal, as authorities lack power to seize cash not considered 'stock in ... Power to seize cash under the Goods and Services Tax regime - seizure limited to stock-in-trade - retention of seized cash pending investigation and issuance of show-cause notice - release of seized property against receipt and credit to accountPower to seize cash under the Goods and Services Tax regime - seizure limited to stock-in-trade - retention of seized cash pending investigation and issuance of show-cause notice - Seizure and continued retention of cash (not being stock-in-trade) from the petitioners' premises by GST authorities was not justified and required release. - HELD THAT: - The court accepted the petitioners' contention that the GST authorities do not have power under the Act and Rules to seize cash which does not constitute stock-in-trade. Reliance was placed on the Division Bench decision in Shabu George (supra), which directed immediate release of seized cash where the respondent had retained it for more than six months without issuing a show-cause notice. The State's challenge to that precedent by way of Special Leave Petition was dismissed by the Supreme Court. Applying that legal position and the facts that the cash seized on 22.12.2020 included currency notes and had been retained without completion of requisite proceedings, the court concluded that continued retention was unjustified and directed release. [Paras 4]The respondents are directed to release the cash seized from the petitioners and credit the same to the petitioners' account within five days.Final Conclusion: Writ petition allowed; seized cash to be released and credited to the petitioners' account within five days, following the legal principle that GST authorities cannot seize cash not being stock-in-trade and cannot retain it indefinitely without issuing requisite proceedings. Writ petition under Article 226 challenged seizure of cash by GST authorities via seizure memos dated 22.12.2020 (Rs.31,50,000 and Rs.3,40,000). Petitioners contended GST authorities lack power under the Act and Rules to seize cash that is not 'stock in trade,' relying on Shabu George v. State Tax Officer. Respondent did not dispute the legal position; seized cash included Rs.2,000 denomination notes that would cease legal tender by September 2023. The Division Bench in Shabu George held: 'Moreover, as the respondent has retained the seized cash for more than six months and is yet to issue a show cause notice to the appellants in connection with the investigation, there can be no justification for a continued retention of the said amount with the respondent. We therefore, allow this appeal by directing the first respondent to forthwith release to the appellant the cash seized from the premises, against a receipt to be obtained from him. The amount shall be released to the appellant without any delay, and at any rate, within a week from the date of receipt of a copy of this judgment.' State's SLP was dismissed. Petition allowed; respondents directed to release/credit the seized cash to petitioners' accounts within five days.