2024 (2) TMI 1367 - HC - GST

Cash Seizure Deemed Unlawful: Funds Must Be Returned to Petitioner with Interest Under GST Act Interpretation

SC ruled that cash seized during a search and seizure operation was unlawfully retained. The court determined that cash does not constitute 'goods' under ... Seizure and retention of cash - definition of 'goods' and 'money' under the CGST Act - seizure limited to goods liable for confiscation - restitution of unlawfully seized property with interestSeizure and retention of cash - definition of 'goods' and 'money' under the CGST Act - seizure limited to goods liable for confiscation - Lawfulness of seizure and continued retention of cash seized from the petitioner's residential premises and office under the CGST Act - HELD THAT: - The Court applied the ratio in K.M. Food Infrastructure Pvt. Ltd. which interpreted the CGST Act to hold that 'cash' is excluded from the definition of 'goods' and falls within the definition of 'money'. Since the power of seizure under the Act is confined to goods liable for confiscation, cash cannot be lawfully seized or retained under those seizure provisions. Applying that principle to the facts-where cash was seized from the petitioner's residential premises and office-the Court found no justification for the resumption or continued retention of the cash by the respondents and directed its return to the petitioner. The Court clarified, however, that this determination does not preclude the respondents from initiating any other proceedings under the Act in accordance with law. [Paras 5, 6]Seizure and retention of the cash was unlawful; respondents directed to return the seized cash to the petitioner with interest, without prejudice to other lawful proceedings.Final Conclusion: Petition allowed; cash seized from the petitioner held to have been unlawfully retained and directed to be returned with interest, respondents remaining free to initiate other proceedings as permissible by law. Issues involved:The issues involved in the judgment are the legality of the seizure of cash by respondent no. 2 from the residential premises and office of the petitioner.Judgment Details:Issue 1: Presence of Counsel in ProceedingsMr. Sanjib Kumar Mohanty, learned counsel for respondent no. 1, raised concerns about his presence not being noticed in previous orders. The court acknowledged his appearance through VC and directed that his presence shall be read in the relevant orders.Issue 2: Unlawful Seizure of CashThe petitioner sought a declaration that the seizure of cash by respondent no. 2 from their residential premises and office was unlawful. A search and seizure operation conducted on the premises resulted in the seizure of significant amounts of cash.Issue 3: Interpretation of Legal ProvisionsReferring to a previous judgment, the court highlighted that cash falls under the definition of 'money' and is not considered 'goods' under the Central Goods and Services Tax Act. As cash is not subject to seizure under the Act, the court concluded that there was no justification for the continued retention of the seized cash by the respondents.Final Decision:Based on the interpretation of legal provisions and previous judgments, the court allowed the petition, directing the respondents to forfeit/remit the seized cash back to the petitioner along with interest. It was clarified that the respondents could still take lawful actions or institute proceedings under the Act. The petition was disposed of accordingly.