Seizure of cash from silver bar sales under CGST s.67(2) challenged; cash ordered released after six months without notice.

HC held that cash could be seized under CGST Act s.67(2) only if the proper officer had "reason to believe" it was useful or relevant to proceedings under the Act; the record showed the cash was merely sale consideration for silver bars and not treated as stock-in-trade, undermining any basis to treat it as an unexplained GST transaction. HC further held that continued retention beyond six months without issuance of notice attracted s.67(7), mandating return of seized goods/things, and absence of any requisition under Income-tax law did not justify continued custody. Consequently, HC directed immediate release of the seized cash to the petitioner against receipt and allowed the petition.

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Issues Involved:
1. Legality of the seizure of cash under the GST Act.
2. Applicability of Section 67 of the GST Act to the seizure of cash.
3. Compliance with procedural requirements for seizure and retention of cash.
4. Entitlement of the petitioner to the return of seized cash.

Summary:

1. Legality of the Seizure of Cash under the GST Act:
The petitioner challenged the action of the respondents in not releasing the cash seized from them, arguing that the seizure was contrary to law. The petitioners sought the return of Rs. 69,98,400/- seized, along with appropriate interest/compensation for illegal retention.

2. Applicability of Section 67 of the GST Act to the Seizure of Cash:
The petitioners argued that under Section 67 of the GST Act, cash does not qualify as "goods, documents, or things" that can be seized. They cited the Kerala High Court's decision in Shabu George Vs. State Tax Officer (IB), which held that cash could not be seized under the GST Act if it is not part of the stock in trade. The respondents, however, relied on the Madhya Pradesh High Court's decision in Smt. Kanishka Matta Vs. Union of India, which included cash under the term "things" in Section 67(2).

3. Compliance with Procedural Requirements for Seizure and Retention of Cash:
The Court noted that the proper officer must have reasons to believe that the seized items are useful for or relevant to any proceedings under the Act. The petitioners contended that the cash was not shown as stock in trade and that the seizure memo was issued under Section 67(2) without proper justification. The Court observed that the seizure memo dated 13.11.2020, and no notice was given within six months as required by Section 67(7), necessitating the return of the seized goods.

4. Entitlement of the Petitioner to the Return of Seized Cash:
The Court found that the cash did not form part of the stock in trade and could not have been seized under the GST Act. The Kerala High Court's interpretation, supported by the Supreme Court's dismissal of the SLP, was persuasive. The Court directed the respondents to return the amount of Rs. 69,98,400/- to the petitioner, allowing the petition and permitting the respondents to transmit the amount through digital mode.

Conclusion:
The petition was allowed, and the respondents were directed to return the seized cash to the petitioner, emphasizing that the seizure was not justified under the GST Act and procedural requirements were not met.

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