2023 (7) TMI 623 - HC - GST

Validity of Seizure of cash by invoking the power available u/s 67 of the CGST Act - tax evasion - Cash seized from the house and not forming part of stock-in-trade - It is contended that the word 'things' in Section 67(2) will include cash also, and hence the seizure of cash was very much in accordance with the law - HELD THAT - The Division Bench in W.A.No.514 of 2023 2023 (4) TMI 252 - KERALA HIGH COURT , after considering Section 67 of the CGST Act, held that the authority to seize things may include cash in appropriate cases, but it was unwarranted in the case before the Division Bench. The Court specifically held that in an investigation aimed and detecting tax evasion under the CGST Act, the Court fails to see how cash can be seized, especially when it is an admitted case that the cash did not form part of the stock-in-trade of the appellant's business. In the said case, the appellant was involved in the business of quarry. The Court also considered the findings of the Intelligence Officer in the said case that it was suspicious as to why large amounts had been kept idle without being deposited in the Bank. The Court held that such findings only reveal the extent to which the authorities under the Act are misinformed of their powers and the limits of their jurisdiction. It was observed that the said findings might be justified if the Officer was an Officer attached to the Income Tax Department and that in the context of the GST Act, the findings are wholly irrelevant - On the above said findings, the Division Bench directed the respondents therein to forthwith release the cash against a receipt to be obtained from the appellant. In the case on hand also, it is admitted that the petitioners are engaged in the manufacture and sale of dosa/idly batter, etc., and that cash has been seized from the house. An additional fact is that the authorities had also seized pay-in-slips which would show that the cash was intended to be deposited in the Bank. As observed by the Division Bench, the cash being not a stock-in-trade of the petitioners, was not a thing that ought to have been seized. The seizure was one year back, and there is no reason to retain it any further. The writ petition is disposed of directing the respondents to release the cash seized from the petitioners forthwith, at any rate, within a week from the date of receipt of a copy of this judgment.

Summary

Issues Involved:
1. Seizure of cash by the investigating team under Section 67 of the CGST Act.
2. Legality of the seizure of cash and pay-in slips during inspection.

Summary:

Issue 1: Seizure of cash under Section 67 of the CGST Act
The petitioner, running an industrial unit, had cash amounting to Rs. 32,73,900 seized by the investigating team, along with pay-in slips totaling Rs. 21,02,000. The petitioner argued that the respondents lacked the authority to seize cash under Section 67 of the CGST Act. Despite a representation for the return of the seized cash, no action was taken, leading to the filing of a writ petition seeking the return of the cash and quashing of the seizure order.

Issue 2: Legality of the seizure of cash and pay-in slips
The 4th respondent contended that the seizure of cash was justified due to suspected tax evasion, citing precedents and claiming that releasing the cash would disrupt the ongoing verification process. However, the counsel for the petitioners referenced a Division Bench judgment that cash seizure may be warranted in appropriate cases under Section 67 of the CGST Act. The Division Bench held that seizing cash unrelated to the business's stock-in-trade was unwarranted, especially in cases of alleged tax evasion. The court directed the immediate release of the seized cash to the petitioners within a week, emphasizing that the cash was not part of their business inventory and should not have been seized.

In conclusion, the court ordered the respondents to release the seized cash promptly, highlighting that retaining the cash further was unjustified given the circumstances of the case.