Illegal cash seizure cannot be legitimised by later transfer; cash must be released while GST and income-tax proceedings continue.

Cash seized by GST officers without legal authority cannot be retained as a valid seizure merely because it is later transferred to the Income Tax Department under a requisition; Articles 265 and 300A protect against deprivation of property without authority of law. The court held that the unlawful seizure and continued retention could not be cured by the later handover, and the cash had to be released. At the same time, the GST adjudication under the CGST/SGST regime and the income-tax proceedings under the relevant reassessment provisions were permitted to continue independently.

---

---

Issues: (i) whether cash seized by GST officers from the appellants' premises could be retained or transferred to the Income Tax Department when the initial seizure was without authority of law; (ii) whether the cash could be withheld by either department pending completion of the respective proceedings while the GST and income-tax proceedings continued.

Issue (i): whether cash seized by GST officers from the appellants' premises could be retained or transferred to the Income Tax Department when the initial seizure was without authority of law.

Analysis: The seizure of cash from the premises of the appellants was held to be unlawful, as the GST authorities had no authority to seize cash that did not form part of the stock in trade. A subsequent handover of the same cash to the Income Tax Department pursuant to a requisition under Section 132A of the Income-tax Act, 1961 did not validate the original illegal seizure. The restraint on deprivation of property without authority of law was treated as flowing from Articles 265 and 300A of the Constitution of India.

Conclusion: The initial seizure and continued retention of the cash were unlawful, and the transfer to the Income Tax Department did not cure that illegality.

Issue (ii): whether the cash could be withheld by either department pending completion of the respective proceedings while the GST and income-tax proceedings continued.

Analysis: The Court held that the seized amount could not be retained by either the GST Department or the Income Tax Department prior to finalisation of the proceedings. At the same time, the GST adjudication under Section 74(1) of the CGST/SGST regime was directed to continue from the stage then reached, and the Income Tax Department's proceedings under Section 132A and the consequential assessment proceedings under Sections 153A and 153C were also permitted to proceed without treating the seizure as a valid requisition-based seizure.

Conclusion: The cash was ordered to be released to the appellants, while the pending GST and income-tax proceedings were allowed to continue independently.

Final Conclusion: The appeals succeeded to the extent of securing immediate release of the seized cash, but the statutory proceedings under the GST and income-tax laws were left to continue in accordance with law.

Ratio Decidendi: Cash seized by GST officers without authority of law cannot be retained or legitimised by a later requisition or transfer to another department, and it must be released even while the substantive tax proceedings continue.

---