2023 (9) TMI 958 - HC - GST

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

T.H. Fazil, T.A. Hassan, Noufal Hassan Versus State Tax Officer, The Intelligence Officer Unit-II, Office Of The Intelligence Officer (Intelligence) State Goods & Services Department, Commissioner Kerala State Goods & Services Tax Department, Ernakulam,

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 ... Seizure of Cash - Power of the GST authorities to seize the cash of a dealer - cash seized is not ‘stock in trade’ - HELD THAT:- The Division Bench of this Court in SHABU GEORGE, GIGI MATHEW VERSUS STATE TAX OFFICER (IB) STATE GOODS & SERVICES TAX DEPARTMENT, JOINT COMMISSIONER (IB) STATE GOODS & SERVICE TAX DEPARTMENT, COMMISSIONER OF STATE TAXES STATE GOODS & SERVICE TAX DEPARTMENT [2023 (4) TMI 252 - KERALA HIGH COURT] has held 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. Against the said judgment, the State had preferred an SLP before the Supreme Court and the same was dismissed. The respondents are directed to release the cash seized from the petitioners and credit the same to the account of the petitioners within a period of five days from today - Petition allowed. 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.