TaxTMI 
TaxTMI 
2024 (6) TMI 361
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts and perused the material on record. 3. The petitioner is an employee working as Operations Co-ordinator of M/s. Vihaan Direct Selling (India) Pvt. Ltd. On 20.09.2022, the respondent No. 1 searched her residential premises and a mahazar in this regard was drawn up at Annexure-A1 to the petitioner. During the course of the said search conducted by the respondent No. 1 under Section 67 (2) of the CGST Act, 2017, various goods, electronic devices as well as the subject cash in a sum of Rs. 1,71,07,500/- was seized from the residential premises of the petitioner and recorded in the impugned seizure order at Annexure - A2 dated 21.09.2022. On the same day, the petitioner No. 1 was summoned by the respondents who recorded her statement. It is contended by the petitioner No. 1 that her statement was recorded under coercion by the respondents who attributed the subject cash as belonging to her employer and the petitioner executed an affidavit in this regard on 27.09.2022 withdrawing her statement made before the respondents under coercion. Subsequently the petitioner No. 2 addressed communications dated 01.12.2022, 19.12.2022 and 02.03.2023 along with an affidavit dated 03.11.2022 to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as a result of which the entire proceedings including the impugned seizure order deserves to be quashed. 5.3 Learned Senior counsel also invited my attention in order to point out that while it records that electronic devices are liable for confiscation and/or useful for or relevant to proceedings under the CGST Act, the impugned order does not spell out reasons as to whether the subject cash was "Things" within the meaning of Section 67 (2) of the CGST Act, and that the same was required to be confiscated. It was submitted that absence of any reference to reasons for confiscation of the subject cash in the impugned order is sufficient to vitiate the same and as such, the impugned order deserves to be quashed on this ground also. 5.4 Learned Senior counsel also invited my attention to the second proviso to Section 67 (2) of the CGST Act, as well as Section 67(3) in order to contend that it was incumbent upon the respondents to conduct an enquiry or proceedings under the Act subsequent to search and seizure and after recording the statement of petitioner No. 1 under coercion on 21.09.2022. In this regard, it was submitted that the respondents have not taken any steps to proceed f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as recorded and investigation is in progress and will be completed shortly by taking appropriate action against the company. 6.1 It was also submitted that the subject cash seized from the residential premises of the petitioner No. 1 arose from the financial transactions of the company and consequently, the respondent No. 1 was fully justified in seizing the subject cash which was relevant and necessary for the purpose of proceedings under the CGST Act against the company and as such, there is no merit in the petition which is liable to be dismissed. In support of her contentions, learned counsel placed reliance upon the judgment of the Madhya Pradesh High Court in the case of Smt. Kanishka Matta Vs Union of India - W.P. No. 8204/2020 dated 26.08.2020. 7. I have given my anxious consideration to the rival submissions and perused the material on record. 8. The following points arise for consideration in the present petition: (i) Whether the expression "things" contained in Section 67 (2) of the CGST Act, 2017 includes cash/currency seized during the course of search and seizure? (ii) Whether the impugned seizure order is valid, legal and proper? Re-Point No. 1:- 9. The prim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....goods or services or both or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or the rules made thereunder to evade tax under this Act; or (b) any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act, he may authorise in writing any other officer of central tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place. (2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ended by the proper officer for a further period not exceeding six months. (8) The Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (2), be disposed of by the proper officer in such manner as may be prescribed. (9) Where any goods, being goods specified under sub-section (8), have been seized by a proper officer, or any officer authorised by him under sub-section (2), he shall prepare an inventory of such goods in such manner as may be prescribed. (10) The provisions of the Code of Criminal Procedure, 1973, relating to search and seizure, shall, so far as may be, apply to search and seizure under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word ―Magistrate, wherever it occurs, the word―Commissioner were substituted. (11) Where the proper officer has reasons to believe that any person has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er officer has reasons to believe that any goods, which are liable for confiscation, or any documents or books or things, which in his opinion will be useful or relevant for any proceedings under the Act, are secreted at any place; he may either search and seize the said goods, documents or books or things, or authorize any officer of the Central Tax to do so. 18. It is clear from the plain language of Sub-section (2) of Section 67 of the Act that only those goods can be seized, which the proper officer has reasons to believe are liable for confiscation. Insofar as seizure of documents or books or things is concerned, the same is permissible provided the proper officer is of the opinion that the said documents or books or things shall be useful or relevant to any proceedings under the Act. 19. The first proviso to Sub-section (2) of Section 67 of the Act provides that if it is not practical to seize such goods - that is, goods that are liable for confiscation - the proper officer or any officer authorized by him may direct the owner or custodian of the goods, not to remove or part with the same. 20. The second proviso to Sub-section (2) of Section 67 of the Act clarifies that....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... person has evaded or attempting to evade payment of tax. However, it is necessary for him to record the reasons in writing for seizure of the accounts, register or documents. However, such accounts, registers or documents can be retained only as long as it is necessary in connection with any proceedings under the Act or the rules made thereunder for prosecution. 26. The question whether the proper officer has any power to seize cash or other asset is required to be addressed bearing in mind the aforesaid scheme of Section 67 of the Act. 27. The expression 'goods' is defined in Sub-section (52) of Section 2 of the Act as under: "(52) "goods" means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;" 28. The expression 'goods' covers all movable property other than 'money' and 'securities'. The expression 'securities' as defined in Sub-section (101) of Section 2 of the Act has the same meaning as assigned to it in Clause (h) of Section 2 of the Securities Contract (Regulation) Act, 1956. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich the proper officer believes are liable for confiscation. In this regard, it is relevant to refer to Section 130 of the Act, which provides for confiscation of goods and conveyances. Sub-section (1) of Section 130 of the Act specifies the goods and conveyances that may be liable for confiscation under the said Act and is set out below: "130. Confiscation of goods or conveyances and levy of penalty.-(1) Notwithstanding anything contained in this Act, if any person- (i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (ii) does not account for any goods on which he is liable to pay tax under this Act; or (iii) supplies any goods liable to tax under this Act without having applied for registration; or (iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction (8) of Section 67 of the Act, that is, are perishable or hazardous; or are depreciable with the passage of time; are subject to constraints of storage space and are so specified by the Government, the same may be disposed of, after their seizure. 38. The second category of items - that is, items other than goods, which the proper officer believes are liable for confiscation - which can be seized are 'documents or books or things'. Sub-section (2) of Section 67 of the Act makes it amply clear that such items - that is, documents or books or things - may be seized if the proper officer isof the opinion that it shall be useful or relevant to any proceedings under the Act. The words 'useful for or relevant to any proceedings under the Act' control the proper officer's power to seize such items. 39. Documents and books are also covered under the wide definition of 'goods' under Sub-section (52) of Section 2 of the Act but the same are not goods that are liable for confiscation. Seizure of such documents or books is not contemplated for the reason that they are subject matter of supplies in respect of which tax has been evaded; seizure of books and documents is contemplated onl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....provides that if the documents or books or things seized under Sub-Section (2) are not relied upon for issue of a notice under the Act or Rules made thereunder, the same shall be returned within a period of thirty days. Although, there is no ambiguity in the language of Sub-section (2) of Section 67 of the Act that seizure of books or documents or things is permissible only if the same are considered useful for or relevant to the proceedings under the Act; Sub-section (3) of Section 67 makes it amply clear that the purpose of seizure of books or documents or things is only for the purpose of reliance in the proceedings under the Act. It, thus, posits that if the documents or books or things are not relied upon in any notice that is issued, the same are liable to be returned. 44. It follows from the contextual interpretation of Sub-section (2) and Sub-section (3) of Section 67 that seizure of books or documents or things are only for the purpose of relying on such material in proceedings under the Act. 45. It is also relevant to refer to Sub-section (11) of Section 67 of the Act. The said Sub-section empowers the proper officer to seize, for reasons to be recorded in writing, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... it has been granted. As stated above, it is contextually clear that exercise of such power is restricted only in cases where in the opinion of the proper officer, seizure is useful for or relevant to any proceedings under the Act. The second proviso of Sub-section (2) and Sub-section (3) of Section 67 of the Act makes it amply clear that the purpose of seizure is for the purpose of relying on the same in proceedings under the Act. 48. It is relevant to refer the decision of the Bombay High Court in Emperor v. Hasan Mama: AIR 1940 Bom 378. In the said case, the accused was convicted under Section 152 of the Bombay Municipal Boroughs Act, 1925. The allegation against the accused was that he had allowed the hand driven lorries containing fruits to remain on a public street at Ahmedabad for more than half an hour. Section 152 of the Bombay Municipal Boroughs Act, 1925 reads as under: "(1) Whoever in any area after it has become a municipal district, or borough (a) shall have built or set up, or shall build or set up, any wall or any fence, rail, post, stall, verandah, platform, plinth, step or any projecting structure or thing or other encroachment or obstruction, or (b) shall....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Bombay District Police Act. Whatever the powers of the police may be under that Act, I am of opinion that the learned Sessions Judge was right in the view he took that a vehicle does not fall within the mischief of s. 152." 50. The contextual interpretation of all Sub-sections of Section 67 of the Act clearly indicates that the same do not contemplate seizure of valuable assets, for securing the interest of Revenue. 51. In the case of Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd.: (1987) 1 SCC 424, the Supreme Court held as under: "Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when the object and purpose of its enactment is known. With this knowledge, the statute must be read first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....covered by the Income Tax Act, 1961. Thus, even if it is assumed that the petitioner could not produce any evidence of purchase of the silver bars or account for the cash found in his possession, the same were not liable to be seized under Sub-section (2) of Section 67 of the Act. The power of the proper officer to seize books or documents or things does not extend to seizing valuable assets for the reasons that they are unaccounted for or may be liable to confiscation under any other statute. Concededly, there is no material to indicate that the particular silver bars or cash were received by the petitioner in specie against any particular fake invoice. 56. There may be cases where the Revenue finds that a particular currency note or any particular asset has evidentiary value to establish the Revenue's case. Illustratively, a delinquent dealer supplies goods without invoices only on presentation of a currency note that bears a particular number. The presentation of the currency note is used as a means of authenticating the identity of the purchaser. The number of the particular currency note is recorded in diary maintained by the purchaser. The Revenue Officer ascertains this mo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... construed liberally. Further, we find that the legislative intent of permitting seizure of books or documents or things in terms of Sub-section (2) of Section 67 of the Act is crystal clear and it does not permit seizure of currency or valuable assets, simply, on the ground that the same represent unaccounted wealth. The mischief rule or the Heydon's rule (propounded in the year 1584 in Heydon's case: 76 ER 637) requires a statute to be interpreted in the light of its purpose. The purpose of the Act is not to proceed against unaccounted wealth. The provision of Section 67 of the Act is also not to seize assets for recovering tax. Thus, applying the principle of purposive interpretation, the power under Section 67 of the Act cannot be read to extend to enable seizure of assets on the ground that the same are not accounted for. 58. It is also material to note that the show cause notice dated 10.11.2020 does not refer to any documents or material relied upon by the Revenue for proposing any such demand. According to Mr. Harpreet Singh, the said notice is not relevant as it is issued by State Authorities. He states that Central Tax Authorities have not issued any notice. 59. The a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in this order shall be construed as an expression of opinion on the petitioner's liability to pay any tax, penalty or interest under the Act." 9.2 In the aforesaid judgment at paragraph-57, the Delhi High Court has held that the judgment in Kanishka Matta's case supra, does not correctly interpret Section 67 (2) of the CGST Act and that cash / currency / money is excluded and not included in the expression "things" in the said provision. The Delhi High Court also came to the conclusion that cash / currency / money cannot be treated as "things" which were useful or relevant for proceedings under the CGST Act and consequently, the cash / currency / money seized from the petitioner therein was directed to be returned / refunded back to him. 9.3 A similar view has been taken by the Gujarat High Court in Bharat Kumar's case supra, and the Kerala High Court in Shabu George's case supra, which was confirmed by the Apex Court in SLP Diary No. 27670/2023 dated 31.07.2023. So also, the Delhi High Court in its subsequent judgments in Aravind Goel's case, Gunjan Bindal's case and Baleshwari Devi's case supra, has reiterated the same position of law as also the Kerala High Court in T.H. Fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said electronic devices are useful and relevant for proceedings under the CGST Act and consequently, liable for confiscation. As rightly contended by the learned Senior counsel for the petitioner, except referring to the aforesaid electronic devices and reasons for their confiscation, absolutely no reasons, much less valid or cogent reasons are assigned as to why the subject cash was being confiscated or that the same was necessary / essential / useful / relevant for proceedings under the CGST Act. Under these circumstances, it is clear that the impugned seizure order without recording any reasons that warranted confiscation is contrary to the provisions of Section 67 (2) of the CGST Act and on this ground alone, the impugned order deserves to be quashed. 10.1 A perusal of Section 67 (2) of the CGST Act will indicate that before search and seizure was conducted by the respondent No. 1, it was incumbent upon him to come to the conclusion that he had "reasons to believe" that the subject cash was relevant or useful for any proceedings under the CGST Act. It is relevant state that in the absence of any material to indicate that the respondent No. 1 had such reasons to believe which w....