By CA Ritesh Arora
No, the Honorable Delhi High Court in the case of M/s. K.M. Food Infrastructure Pvt. Ltd. v. The Director General, DGGI [Writ Petition (Civil) 328 of 2024 dated February 13, 2024] held that the word “things” appearing in Section 67 of the Central Goods and Services Tax, 2017 does not include ‘money’. The CGST Act does not support such an action of forcibly taking over the possession of currency from the premises of any person.
Therefore, the action on the part of the DGGI to seize the cash was illegal and arbitrary.
The Honorable Delhi High Court observed that sub-section (2) of Section 67 of the CGST Act specifies the power to seize the goods. 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 would be useful and relevant for any proceedings under the CGST Act are secreted at any place, he may either search or seizure the said goods, documents or books or things. The Second Proviso to sub-Section (2) of section 67 of the CGST Act clarifies that insofar as the seized documents or goods or things are concerned, the same shall be retained only so long as it is necessary for their examination and any inquiry or proceedings under the Act. Further opined that sub-section (7) of Section 67 of the CGST Act specifies that where the goods are seized under sub-section (2) of section 67 of the CGST Act and no notice, in respect thereof is given within six months of the seizure of the goods, the goods are required to be returned to the person from whom the same was seized. This period of six months can be extended by a further period not exceeding six months on sufficient cause being shown under proviso to Section 67(7) of the CGST Act. Further, in the current case the cash was seized vide Panchnama dated October 04, 2021, and in accordance with sub-section (7) of Section 67 of the CGST Act therefore, when 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. On this ground also, the Petitioners are entitled to the return of resumed cash. The Honorable Court opined that cash is clearly excluded from the definition of the term ‘goods’ as the same falls squarely within the definition of the word “money” as defined in sub-section (75) of Section 2 of the Act and relied on the judgement in case of Shabu George v. State Tax Officer (IB), State GST Department, Aluva (2023) 9 Center 28 (Ker.), where the question was whether the word “thing” in the CCGST Act would include cash, the Division Bench of the Kerala High Court held that the power of any authority to seize any “thing” while functioning under the provisions of a taxing stature must be guided and informed in its exercise by the object of the statute concerned. The aforesaid decision of the Kerala High Court received the stamp and approval of the Honorable Supreme Court, since as the Special Leave Petition was dismissed.
Further relied on Deepak Khandelwal Vs. Commissioner of CGST Delhi West (2023) 9 Centax 244 (Delhi), the Court held that the power under Section 67 of the CGST Act cannot be read to extend to enable the seizure of assets on the ground that the same are not accounted for.
The Honorable Court observed that there is no evidence that the cash so seized was representing the sale proceeds of unaccounted goods. Therefore, it could not have been seized under the provision of the CGST Act as the seizure is limited to the goods liable for confiscation. Therefore, there is no reason for the retention of the cash amount by the Respondents and held that the action on the part of the Officers of the Respondents seizing the cash was illegal and arbitrary.
Author’s Comments:
It is important to note that even cash must be ‘secreted’ to quality for the seizure but, more importantly , cash is not goods liable to confiscation’ under section 130(1) but are ‘things’ which are considered ‘useful or relevant’ by the Authorized Officer to carrying out “any further proceedings”. What, therefore, can be the ‘use or relevance’ of cash to be seized? There is a popular, mysterious, and erroneous understanding that ‘cash’ is illicit if discovered in search proceedings. Officers tend that seize cash without even ascertaining to whom it belongs. ‘Cash’ seizure does not directly point to proceeds from unaccounted ales. That would have been easy but the Legislature wisdom is that (i) ‘Evasion of tax is a must for proceedings under section 67 to be with the jurisdiction and lawful and (ii) No presumption flows in favour of the Revenue, especially, when cash may be treated to be ‘things’ and not ‘consideration from supply’. After all, ‘things’ seized can only be if they are ‘useful or relevant’ for that Authorized Officer in carrying out ‘any further proceedings’.
A similar decision was given by the Honorable Gujarat High Court in the case of M/s. Bharat Kumar Pravin Kumar and Co. v. State of Gujarat [Special Civil Application No. 26222 of 2022 dated October 26, 2023, and by the Honorable Kerala High Court in the case of Shabu George v. State Tax Officer (IB) [WA No. 514 of 2023 dated March 23, 2023].
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