Cash Seizure Under GST: Petitioner Must Respond Within 30 Days, Can Challenge Notice While Preserving Potential Refund Rights

SC ruled on GST show cause notice challenging cash seizure. Court directed petitioner to participate in proceedings and respond within 30 days. The seized cash can only be appropriated towards tax liability. Writ petition dismissed, with respondent instructed to pass orders on merits and provide potential refund if petitioner succeeds in challenging the notice.

---

---

Issues:
Challenging show cause notice under GST for assessment period, seizure of cash, relevance of seized cash, jurisdiction of impugned show cause notice, scope of seizure of cash under GST enactments, clarification by Commissioner (GST) Investigation, Department filing statutory appeal, proposal for appropriation of seized amount, entitlement to refund, scuttling of show cause proceedings, appropriating seized amount towards tax liability.

Analysis:
The petitioner challenged show cause notice Nos.106, 107, 108/2023 GST issued for the assessment period from July 2017 to October 2020. The notice was based on a cash seizure of Rs. 1,82,25,000 from one of the petitioner's partners, which was linked to Central Exercise Act and GST Act provisions. Subsequent show cause notices and orders were issued, leading to an appeal before the Tribunal, which ruled in favor of the petitioner and ordered the seized cash to be refunded. However, a backdated show cause notice dated 28.12.2023 was issued after the Tribunal's decision, raising concerns about jurisdiction and intent to defeat the petitioner's rights.

The petitioner argued that there is no scope for seizure or confiscation of cash under GST enactments, citing precedents. They emphasized that the seized amount should be refunded as per the Tribunal's order. The petitioner also referred to a clarification by the Commissioner (GST) Investigation regarding voluntary tax payments during proceedings. The petitioner contended that the impugned show cause notice was without jurisdiction and aimed at circumventing the Tribunal's decision.

On the other hand, the respondent highlighted that the show cause notice did not propose confiscating the seized cash but intended to appropriate it towards tax liability. The respondent asserted that the petitioner would be entitled to a refund if the demand in the notice is dropped. The Department was in the process of filing a statutory appeal against the Tribunal's decision, indicating ongoing legal action.

The Court concluded that the petitioner cannot obstruct the show cause proceedings under GST enactments despite the Tribunal's favorable order. It directed the petitioner to participate in the notice proceedings and provide a reply within 30 days. The Court emphasized that the seized amount could only be appropriated towards the petitioner's tax liability under GST provisions. The judgment dismissed the writ petition, with the directive for the respondent to consider and pass orders on merits, ensuring a refund if the petitioner succeeds.

---