2023 (4) TMI 252 - HC - GST

Release of seized cash - alleged evasion of tax due - HELD THAT - The power of any authority to seize any 'thing' while functioning under the provisions of a taxing statute must be guided and informed in its exercise by the object of the statute concerned. In an investigation aimed at detecting tax evasion under the GST Act, we fail to see how cash can be seized especially when it is the admitted case that the cash did not form part of the stock in trade of the appellant's business. It is evident from the order of the Intelligence Officer that the cash that was seized from the premises of the appellants was not the stock in trade of the quarry business that was conducted by the appellant. The seizure of cash from the premises of the appellants was wholly uncalled for and unwarranted. Moreover, as the respondent has retained the seized cash for more than six months and is yet to issue a show cause notice to the appellants in connection with the investigation, there can be no justification for a continued retention of the said amount with the respondent. This appeal is allowed by directing the first respondent to forthwith release to the appellant the cash seized from the premises, against a receipt to be obtained from him.

Summary

Issues involved: Seizure of cash under the GST Act, authority of the Intelligence Officer, interpretation of Section 67(2) of the CGST Act, justification for retention of seized cash, failure to issue a show cause notice.

Summary:

Seizure of Cash under GST Act:
The appellant challenged the seizure of cash from his premises during an investigation under the GST Act, arguing that the cash was not part of any business stock. The court found the seizure unwarranted as the cash did not relate to the appellant's business activities.

Authority of the Intelligence Officer:
The Intelligence Officer justified the seizure of cash based on Section 67(2) of the CGST Act, which allows the seizure of 'things', including cash. However, the court disagreed with this justification, stating that the seizure of cash in this case was not justified under the GST Act.

Interpretation of Section 67(2) of CGST Act:
While Section 67(2) permits the seizure of 'things', including cash, the court emphasized that such power should be exercised in line with the objectives of the taxing statute. In this case, the seizure of cash was deemed unjustified as it did not pertain to the appellant's business operations.

Justification for Retention of Seized Cash:
The court criticized the Intelligence Officer's reasoning for retaining the seized cash, highlighting that the cash was not part of the appellant's business and that no show cause notice had been issued even after six months of retention. The court ordered the immediate release of the seized cash to the appellant.

Failure to Issue Show Cause Notice:
The court noted the failure of the authorities to issue a show cause notice to the appellant despite retaining the seized cash for an extended period. This lack of communication further supported the court's decision to order the release of the cash without delay.

Conclusion:
The court allowed the appeal, directing the first respondent to release the seized cash to the appellant promptly, emphasizing the unjustified nature of the seizure and the need for adherence to procedural requirements in such cases.

This summary provides a detailed breakdown of the judgment, addressing each issue involved in the case while preserving the legal terminology and significant points from the original text.