2023 (1) TMI 1028 - HC - GST

Seeking return of money recovered / taken away during search - It is contended by the petitioner that the concerned officers could have no reason to believe that any goods liable for confiscation were lying in the premises of the petitioners - whether cash can be seized by the officers under Section 67(2) of the GST Act? - HELD THAT - Prima facie, a plain reading of Section 67(2) of the GST Act indicates that the seizure is limited to goods liable for confiscation or any documents, books or things, which may be useful for or relevant to any proceedings under this Act . Clearly, cash does not fall within the definition of goods. And, prima facie, it is difficult to accept that cash could be termed as a thing useful or relevant for proceedings under the GST Act. The second proviso to Section 67(2) of the GST Act also provides that the books or things so seized would be retained by the officer only so long as may be necessary for their examination and for any inquiry or proceedings under the Act. Clearly, the petitioners had not handed over the cash to the concerned officers voluntarily. Undisputedly, the action taken by the officers was a coercive action. There are no provision in the GST Act that could support an action of forcibly taking over possession of currency from the premises of any person, without effecting the same. The powers of search and seizure are draconian powers and must be exercised strictly in terms of the statute and only if the necessary conditions are satisfied - In the present case, the GST officers have dispossessed the petitioners of the currency found in their premises during search operations conducted under Section 67(2) of the GST Act but have not seized the currency under the said provision. Plainly, their action in doing so is without authority of law. Insofar as the action of the officers of dispossessing the petitioners of their currency is concerned; it is clear that the said action of taking away currency was illegal and without any authority of law. The amount of ₹18,87,000/- has already been returned to petitioner no.1. The respondents are directed to forthwith return the balance amount along with the interest accrued thereon to the petitioners. The bank guarantee furnished by petitioner no.1 for release of currency is directed to be released forthwith. List on 20.02.2023.

Summary

Issues:
Challenge to search operation legality
Challenging authority to seize cash
Interpretation of Section 67(2) of the GST Act

Analysis:

Challenge to Search Operation Legality:
The petitioners filed a petition challenging a search operation conducted at their residence by GST officers under Section 67(2) of the GST Act. The officers found and took possession of cash without drawing a seizure memo. The petitioners argued that the officers had no valid reason to believe that goods liable for confiscation or relevant records were present at their premises, questioning the lawfulness of the search operation.

Challenging Authority to Seize Cash:
The petitioners contested the action of the officers in seizing cash, claiming it was without legal authority. They argued that the power to seize goods under Section 67(2) of the GST Act is limited to items liable for confiscation or relevant to proceedings under the Act. Cash, being excluded from the definition of goods, cannot be seized. The petitioners emphasized that currency is not useful or relevant for conducting proceedings under the Act, thus challenging the officers' authority to seize cash.

Interpretation of Section 67(2) of the GST Act:
A crucial issue raised was the interpretation of Section 67(2) of the GST Act regarding the power to seize goods. The court noted that cash does not fall under the definition of goods and questioned whether cash could be considered a 'thing' useful or relevant for proceedings under the Act. The court highlighted that the power to seize items is subject to strict conditions and must be exercised within the statutory framework. The court examined whether the officers' action of taking possession of cash without a seizure memo constituted a lawful seizure.

The court found that the officers' action of dispossessing the petitioners of cash during the search operation was illegal and without legal authority. The court directed the respondents to return the remaining amount seized along with accrued interest to the petitioners. Additionally, the court ordered the release of the bank guarantee furnished by one of the petitioners. The court also directed specific officers to be present in court for further proceedings, emphasizing the need for adherence to legal procedures and statutory provisions in search and seizure operations.