9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (6) TMI 361 - HC - GSTValidity of seizure order - contrary to the provisions contained in Section 67 (2) of the CGST Act - scope of expression things contained in Section 67 (2) of the CGST Act, 2017 - 'things' includes cash/currency seized during the course of search and seizure or not. 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? - HELD THAT - The expression things has not been defined under the CGST Act and interpretation of the said expression came up for consideration before the Madhya Pradesh High Court in SMT. KANISHKA MATTA VERSUS UNION OF INDIA AND OTHERS 2020 (9) TMI 42 - MADHYA PRADESH HIGH COURT , relied upon by the respondents, wherein it was held that the said expression things included cash / currency confiscated during search and seizure under Section 67 (2) of the CGST Act. The Delhi High Court in DEEPAK KHANDELWAL PROPRIETOR M/S. SHRI SHYAM METAL VERSUS COMMISSIONER OF CGST, DELHI WEST ANR. 2023 (8) TMI 929 - DELHI HIGH COURT has held that the judgment in Kanishka Matta s case, 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. On careful perusal of the provisions contained in Section 67 (2) of the CGST Act and the statutory scheme envisaged therein and other relevant provisions, the views taken by the High Courts of Delhi, Gujarat and Kerala have laid down the correct law and the judgment of the Madhya Pradesh High Court in Kanishka Matta s case supra, is not based on the correct interpretation of the said provision - It is also significant to note that the object of Section 67 (2) of the CGST Act is not unearth unaccounted wealth (as in income tax) nor can it be said to be a mechanism for recovering tax by seizing assets, especially when there are separate mechanisms in Sections 73, 74, 78 and 79 of the CGST Act for that purpose and on this score also, the 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. Thus, 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. Whether the impugned seizure order is valid, legal and proper? - HELD THAT - 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 were recorded in writing by the respondents prior to conducting of search and seizure, the pre-condition/condition precedent for conducting the said search and seizure were conspicuously absent and missing in the facts and circumstance of the instant case, as a result of which the entire proceedings including the impugned seizure order deserves to be quashed. A perusal of the second proviso to Section 67 (2) of the CGST Act, as well as Section 67(3) clearly indicate that it was incumbent upon the respondents to conduct an enquiry and complete the proceedings under the Act as expeditiously as possible subsequent to search and seizure and after recording the statement of petitioner No. 1 on 21.09.2022 - it is significant to note that the respondents have not even issued show cause notice to the aforesaid company M/s. Vihaan Direct Selling (India) Pvt. Ltd., even after more than 1 years till today. The said inaction on the part of the respondents revenue to complete the investigation subsequent to the date of search and seizure dated 20.09.2022, for more than a period of 1 years from that day is sufficient to come to the conclusion that the respondents are not entitled to retain the subject cash illegally confiscated from the petitioners despite repeated representations submitted by them and consequently, necessary directions are to be issued to the respondents to return / refund the entire subject sum / cash of Rs. 1,71,07,500/- together with accrued interest back to the petitioners within a stipulated timeframe. This issue answered in favour of the petitioners by holding that the impugned seizure order at Annexure-A2 dated 21.09.2022 is illegal, arbitrary and without jurisdiction or authority of law and the same deserves to be quashed and by consequently directing the respondents revenue to refund / repay / return the entire subject sum / cash of Rs. 1,71,07,500/- together with accrued interest back to the petitioners within a stipulated timeframe. The impugned order set aside - Petition allowed.
Issues Involved:
1. 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? 2. Whether the impugned seizure order is valid, legal, and proper? Summary of Judgment: Re-Point No. 1: The primary question is whether the expression "things" in Section 67(2) of the CGST Act includes cash/currency seized during search and seizure. The court examined Section 67(2) which allows the seizure of goods, documents, books, and "things" useful or relevant to proceedings under the Act. The term "things" is not defined in the CGST Act. The court referred to the Madhya Pradesh High Court's judgment in Kanishka Matta's case, which included cash in "things," but disagreed with it, favoring the Delhi High Court's interpretation in Deepak Khandelwal's case. The Delhi High Court held that "things" should be read ejusdem generis with documents and books, meaning items that contain information useful for proceedings under the Act. The court concluded that cash/currency/money is excluded from "things" in Section 67(2) and cannot be seized under this provision. The court also noted that the object of Section 67(2) is not to unearth unaccounted wealth or recover tax, which is covered by other sections like 73, 74, 78, and 79 of the CGST Act. Re-Point No. 2:The impugned seizure order dated 21.09.2022 was found to be contrary to Section 67(2) of the CGST Act. The order did not provide valid reasons for the seizure of cash, only mentioning electronic devices. The court emphasized that the "reasons to believe" requirement was not met, as there was no material indicating that the cash was relevant or useful for proceedings under the CGST Act. Additionally, the respondents failed to conduct an inquiry or issue a show cause notice to the company involved even after 1.5 years, violating the provisions of Section 67(2) and (3). The court directed the respondents to refund the seized cash of Rs. 1,71,07,500/- with accrued interest to the petitioners within three weeks. Order:(i) The petition is allowed. (ii) The impugned order dated 21.09.2022 is set aside. (iii) The respondents are directed to refund the seized cash of Rs. 1,71,07,500/- with accrued interest to the petitioners within three weeks. (iv) The respondents are not precluded from instituting or continuing any other proceedings in accordance with law.
|
