2025 (4) TMI 681 - HC - GST

Availment of fraudulent Input Tax Credit (ITC) and passing of ITC through various other entities/ firms - seizure of cash from the petitioner s premises - all the Relied Upon Documents (RUDs) necessary for a fair adjudication process not provided to petitioner - opportunity of hearing - violation of principles of natural justice - HELD THAT - Clearly the intention of the Petitioner was not to participate in the show cause proceedings with diligence. The grounds etc. which have been stated in the reply have been considered in the impugned Order-in-Original which captures the reply of the Petitioner at paragraph 51.1 of the impugned Order-in-Original - this Court is of the opinion that the Petitioner having been supplied with all the RUDs and having had an opportunity to file a reply chose not to appear in the personal hearing before the adjudicating authority when the final hearing took place. Therefore these actions of the Petitioner cannot result in raising a grievance today in respect of the RUDs. In view of the fact that all the RUDs have been supplied and adequate notice for hearing has been given to the Petitioner there is no violation of principles of natural justice. There is also no jurisdictional error. This Court is of the opinion that the Petitioner ought to avail of its remedies in accordance with law under Section 107 of the CGST Act. Conclusion - i) Cash cannot be seized under the CGST Act as it is not categorized as goods. ii) In view of the fact that all the RUDs have been supplied and adequate notice for hearing has been given to the Petitioner there is no violation of principles of natural justice. iii) This Court is of the opinion that the Petitioner ought to avail of its remedies in accordance with law under Section 107 of the CGST Act. Petition disposed off.

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

Whether the seizure of cash from the petitioner's premises was justified under the Central Goods and Services Tax Act, 2017 (CGST Act).
Whether the petitioner was provided with all the Relied Upon Documents (RUDs) necessary for a fair adjudication process.
Whether the petitioner was afforded a fair opportunity to be heard, thus ensuring compliance with principles of natural justice.
Whether the petitioner should be directed to avail the appellate remedy under Section 107 of the CGST Act instead of filing a writ petition.

ISSUE-WISE DETAILED ANALYSIS

1. Justification of Cash Seizure

Relevant Legal Framework and Precedents: The Court referred to Section 67 of the CGST Act, which outlines the provisions for search and seizure. The Court also cited its previous judgment in K.M. Food Infrastructure Pvt. Ltd. vs. Director General (DGGI), which interprets that cash is excluded from the definition of "goods" and falls under "money" as defined in Section 2(75) of the Act.
Court's Interpretation and Reasoning: The Court held that cash could not be seized under the CGST Act as it is not categorized as "goods" liable for confiscation.
Key Evidence and Findings: Cash amounting to Rs. 72,00,000/- was seized during the search, which was later deemed unjustified by the Court based on the legal interpretation.
Conclusion: The Court directed the respondents to remit the seized cash to the petitioner along with interest, clarifying that the respondents could still pursue other legal actions under the Act.

2. Provision of Relied Upon Documents (RUDs)

Relevant Legal Framework: The provision of RUDs is essential for ensuring a fair hearing and compliance with principles of natural justice.
Court's Interpretation and Reasoning: The Court found that the RUDs were provided to the petitioner via a CD, as evidenced by the records. The petitioner's emails lacked specificity regarding which RUDs were allegedly missing.
Key Evidence and Findings: The Court noted that the petitioner had received a list of RUDs, and the GST Department had provided a virtual link for the proceedings.
Conclusion: The Court concluded that the petitioner was supplied with all necessary RUDs and had no valid grievance regarding their availability.

3. Opportunity to be Heard and Compliance with Natural Justice

Relevant Legal Framework: Principles of natural justice require that parties be given a fair opportunity to present their case.
Court's Interpretation and Reasoning: The Court observed that the petitioner had the opportunity to file a reply and was notified of the hearing dates. The petitioner chose not to participate diligently in the proceedings.
Key Evidence and Findings: The petitioner's preliminary reply was considered in the Order-in-Original, and the petitioner was aware of the hearing schedule.
Conclusion: The Court found no violation of natural justice principles and determined that the petitioner had adequate opportunity to be heard.

4. Availing Appellate Remedy Under Section 107 of the CGST Act

Relevant Legal Framework: Section 107 of the CGST Act provides for an appellate remedy against orders passed by the adjudicating authority.
Court's Interpretation and Reasoning: The Court emphasized the importance of exhausting statutory remedies before approaching the High Court under Article 226 of the Constitution.
Conclusion: The Court directed the petitioner to avail the appellate remedy, noting that the writ petition was not justified given the available statutory appeal process.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "Cash is clearly excluded from the definition of the term 'goods' and would fall within the definition of 'money' as defined in Section 2(75) of the Act."
Core Principles Established: The judgment reinforces that cash cannot be seized under the CGST Act as it is not categorized as "goods." It also underscores the necessity of exhausting statutory remedies before resorting to constitutional writ jurisdiction.
Final Determinations on Each Issue: The Court ordered the remission of seized cash to the petitioner, confirmed the provision of RUDs, upheld the compliance with natural justice, and directed the petitioner to pursue the appellate remedy under Section 107 of the CGST Act.

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