2024 (2) TMI 762 - HC - GST

Delhi HC orders return of seized cash under CGST Act Section 67 due to invalid seizure without mandatory notice

M/s K.M. Food Infrastructure Pvt Ltd Through Its Director Mukesh Kapoor and Mukesh Kapoor And Others Versus The Director General DGGI Headquarters, New Delhi & Anr.

Delhi HC held that cash/currency seized under Section 67 of CGST Act must be returned to petitioners. Court ruled that cash falls under 'money' ... Validity of seizure of cash/currency u/s 67 of CGST Act - Scope and definition of 'goods / things' - cash was sale proceeds of unaccounted goods or not - whether cash/currency (money), coming under the scope of thing and can be seized or not - Jurisdiction of proper officer for such seizure - Direction for issuance of directions declaring resumption of currency as recorded as illegal, arbitrary and contrary to the provisions of law - seeking directions to the respondents to return the resumed currency to the petitioners - HELD THAT:- Cash is clearly excluded from the definition of the term ‘goods’ as the same falls squarely within the definition of the word ‘money’ as defined in Sub-section (75) of Section 2 of the Act. In the case of Kanishka Matta [2020 (9) TMI 42 - MADHYA PRADESH HIGH COURT], Indore Bench of Madhya Pradesh High Court rejected the prayer for the release of cash that was seized from the premises of the petitioner. The Court held that the word “thing” in Section 67 (2) would include money - Even otherwise, in the facts of this case what is evident is that cash was seized/resumed vide Panchnama dated 04.10.2021 and in accordance with sub section (7) of Section 67 thereof, when no notice in respect thereof is given within six months of seizure of the goods, the goods shall be returned to the person from whose possession they were seized. On this ground also, petitioners are entitled for the return of resumed cash. Undisputedly, petitioners had not handed over the cash to the concerned Officers voluntarily. The action taken by the Officers was therefore a coercive action. CGST Act does not support such an action of forcibly taking over the possession of the currency from the premises of any person. There are no justification for the resumption of the cash and its continued retention by the respondents. Petitions are therefore allowed with directions to the respondents to forthwith remit the proceeds of the fixed deposit (along with interest) to the bank account of the entities/person from whose possession the same was resumed during search conducted on 04.10.2021 - petition allowed. Issues Involved:1. Legality of the resumption of currency as recorded in the Panchnama dated 04.10.2021.2. The power of CGST Officers under Section 67(2) of the CGST Act to seize cash.3. The interpretation of the term 'things' under Section 67(2) of the CGST Act.4. The requirement to return seized goods if no notice is issued within six months.Summary of Judgment:Issue 1: Legality of the Resumption of CurrencyThe petitioners sought directions to declare the resumption of currency recorded in the Panchnama dated 04.10.2021 as illegal, arbitrary, and contrary to the provisions of law. The petitioners also requested the return of the resumed currency totaling Rs. 1,90,66,000/-.Issue 2: Power of CGST Officers to Seize CashThe petitioners argued that CGST Officers had no power to seize cash under Section 67(2) of the CGST Act, as cash is excluded from the definition of 'goods.' The respondents contended that the cash was seized because the petitioner could not provide a satisfactory explanation for its possession, leading to a bona fide belief that the cash resulted from illegal activities.Issue 3: Interpretation of 'Things' Under Section 67(2)The court examined whether the term 'things' in Section 67(2) of the CGST Act includes money. The court referred to the Madhya Pradesh High Court's judgment in Kanishka Matta Vs. UOI, which included money under 'things.' However, the Kerala High Court in Shabu George Vs. State Tax Officer held that cash could not be seized under the GST Act, a view supported by the Supreme Court.Issue 4: Requirement to Return Seized GoodsThe court noted that under Section 67(7) of the CGST Act, if no notice is issued within six months of the seizure, the goods must be returned. The respondents had not issued any notice within this period, and therefore, the petitioners were entitled to the return of the resumed cash.Conclusion:The court concluded that the term 'things' in Section 67(2) of the CGST Act does not include money, and thus, the seizure of cash was illegal and arbitrary. The court directed the respondents to remit the proceeds of the fixed deposit (along with interest) to the bank accounts of the entities/persons from whom the cash was resumed. The respondents were not precluded from taking further action under the law.