TaxTMI 
TaxTMI 
2024 (6) TMI 361
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....i Kutsa and learned counsel for respondents 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 alo....
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.... to conduct the said search and seizure was absent 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....
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....was submitted that the petitioner No. 1 was issued summons to appear on 21.09.2022 on which date her statement was 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 cours....
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....zure.- (1) Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that-- (a) a taxable person has suppressed any transaction relating to supply of 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....
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.... sub-section (2) and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the period of six months may, on sufficient cause being shown, be extended 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....
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....the Act is conferred to unearth any evasion of tax or any attempt to evade tax. Sub-section (1) of Section 67 of the Act is not a provision for recovery of tax or for securing the same. 17. The power to seize goods is specified in Sub-section (2) of Section 67 of the Act. In terms of the said Sub-section, if the proper 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....
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....specified having regard to the perishable or hazardous nature of the goods, constraints of storage space, depreciation in the value of goods with the passage of time, or other relevant consideration. 25. In terms Sub-section (11) of Section 67 of the Act, the proper officer may seize accounts, registers or documents produced before him if he has reason to believe that any 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....
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....ed in Sub-section (75) of Section 2 of the Act 32. Having stated the above, we are of the view that it would not be apposite to construe the word 'things' under Sub-section (2) of Section 67 of the Act to be mutually exclusive to the term 'goods'. The term 'goods' as used in Sub-section (2) of Section 67, essentially, relates to goods, which are subject matter of supplies that are taxable under the Act. Admittedly, the goods that can be seized under Sub-section (2) of the Act are goods, which 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 w....
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....h the proper officer has reason to believe, taxes would not be paid. 36. Sub-section (7) of Section 67 of the Act mandates that the goods seized under Sub-Section (2) would be returned to the person from whose possession the goods were seized, if no notice in respect of those goods is issued within a period of six months. It is apparent that a notice in respect of such goods can be issued only where taxes, interest or penalty in respect of the said goods have not been paid or there are reasons to believe so. 37. If the goods are of the nature specified in Sub-section (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....
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....released. 42. The second proviso, although couched as a proviso, is an integral part of Sub-section (2) of Section 67 of the Act. The same clearly reflects that the legislative intent of empowering seizure of documents or books or things is for enabling their use in aid of the proceedings under the Act. Thus, seizure of such documents or books or things is conditional upon the proper officer's opinion. That the same are "useful for or relevant to" such proceedings. 43. Sub-section (3) of Section 67 of the Act, consistent with the legislative intent of permitting seizure of books or documents or things, 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 ....
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.... word 'things' must be read expansively to include any and every thing notwithstanding that the same may not yield and / or provide any material useful or relevant to any proceedings under the Act as contended on behalf of the Revenue. It is necessary to bear in mind that power of search and seizure is a drastic power; it is invasive of the rights of a taxpayer and his private space. Conferring of unguided or unbridled power of this nature would fall foul of the constitutional guarantees. It necessarily follows that such power must be read as circumscribed by the guidelines that qualify the exercise of such power, and the intended purpose for which 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 194....
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....152, sub-s. (1)(b). In my opinion the words "or any other thing" must be read ejusdem generis as the words "box, bale, package or merchandise". Those words seem to cover merchandise, and things in which merchandise can be packed, and any other thing must be of the same kind or genus and does not include a vehicle. In my view a motor car or a motor lorry or a horse drawn or hand-propelled vehicle, though containing merchandise and left standing in a street, cannot be said to come within the section. The hand lorry of the accused clearly falls within the definition of vehicle contained in s. 3, sub-s. (21), of the Bombay Municipal Boroughs Act. The control of vehicles in streets is dealt with by the 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 Ge....
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.... the machinery for recovery of tax. Section 83 of the Act provides for provisional attachment of any property belonging to a taxable person to safeguard the interests of the Revenue. Section 67 of the Act must be reads chematically along with other provisions of the Act. 55. The Revenue has averred in its counter affidavit that cash and silver bars in question were seized because "the petitioner could not produce any lawful evidence of its purchase / possession and they appeared to be sale proceeds from the good-less / fake invoices being transacted by the petitioner". The search and seizure operations under Section 67 of the Act are not for the purpose of seizing unaccounted income or assets or ensuring that the same are taxed. The said field is 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 unaccount....
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....ivision Bench at Indore had rejected the prayer for release of Rs. 66,43,130/- that were seized from the premises of the petitioner. The Court held that the word 'things' as appearing in Sub-section (2) of Section 67 of the Act is required to be given wide meaning as per Black's Law Dictionary. The Court also referred to Wharton's Law and had noted that the word 'thing' is defined to include 'money'. In addition, the Court had also referred toa decision of the Supreme Court referring to the Heydon's Rule, and concluded that money was included in the word 'things'. With much respect to the Hon'ble Court and its opinion, we are unable to persuade ourselves to adopt the said view. As noted above, the power of search and seizure are drastic powers and are not required to be 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) req....
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.... of Section 67 of the Act. 62. Thus, even if, it is accepted, which we do not, that the proper officer could seize the currency and other valuable assets in exercise of powers under Sub-section (2) of Section 67 of the Act, the same were required to be returned by virtue of Sub-section (3) of Section 67 of the Act because the silver bars and currency have not been relied upon in the notice issued subsequently. 63. In view of the above, the petition is allowed. The respondents are directed to forthwith release the currency and other valuable assets seized from the petitioner during the search proceedings conducted on 28.01.2020. It is, however, clarified that the respondents are not precluded from instituting or continuing any other proceedings under the Act in accordance with law. Nothing stated 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 exclud....
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....lso, I am of the view that cash / currency / money are not "things" within the meaning of the said provision and cannot be confiscated during the course of search and seizure in terms of the said provision. Point No. 1 is accordingly answered by holding that the expression "things" contained in Section 67 (2) of the CGST Act does not include cash / currency / money found or recovered during the course of search and seizure under the said provision. Re-Point No. 2:- 10. A perusal of the impugned seizure order will indicate that the seizure order at Annexure-A2 dated 21.09.2022 will indicate that the same records that a search was conducted on 20.09.2022 and on examination of the Electronic devices viz., laptop, hard disks and mobile phones found during the search, the 1st respondent had reasons to believe that the 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 ....