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 trade'. Following precedent in a prior case, the court directed immediate release of seized funds and credited the amount to the petitioner's account within five days, dismissing the state's appeal.

---

---

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.

---