2023 (11) TMI 401 - HC - GST

Release of cash seized from the Petitioner - More than 6 months have passed from the date of seizure - consideration received on sale proceeds of silver bars - unexplained transaction under the Goods and Services Act or not - HELD THAT - Reading the CGST Act and particularly the preamble thereto, would indicate that it is an act to make a provision for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto - When this is read in context of provisions of sub-section (2) of section 67, obviously, when the proper officer confiscates any goods, documents, books or things, he must have reason to believe that they shall be useful for or relevant to any proceedings under this Act. Reading of affidavit primarily explains that even as per the case of respondent it was not the opinion of the proper officer that it was a seizure in relation to unexplained transaction under the Goods and Services Act, but it was an amount of consideration received on sale proceeds of silver bars. This therefore has to be read in light of observations of Division Bench of Kerala High Court in the decision of Shabu George 2023 (4) TMI 252 - KERALA HIGH COURT . Para-3 of the aforesaid decision of Kerala High Court held that 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. We therefore, allow this appeal 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. Once it is found that the cash did not form a part of stock in trade, it could not have been seized. Admittedly, there is no requisition under section 132(A) of the Income Tax Act, though, it was the case of the State that intimation was sent to the Income Tax Department. Even otherwise, the petitioner has not shown the cash as stock in trade - Even otherwise on the facts of this case, what is evident is that the Seizure memo was dated 13.11.2020 and in accordance with sub-section (7) of section 67 thereof when no Notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose possession, they were seized. On this ground thereto, the petitioner is entitled to the prayer that the amount of cash seized i.e. Rs.69,98,400/- to be returned forthwith to the petitioner. Petition allowed.

Summary

Issues Involved:
1. Legality of the seizure of cash under the GST Act.
2. Applicability of Section 67 of the GST Act to the seizure of cash.
3. Compliance with procedural requirements for seizure and retention of cash.
4. Entitlement of the petitioner to the return of seized cash.

Summary:

1. Legality of the Seizure of Cash under the GST Act:
The petitioner challenged the action of the respondents in not releasing the cash seized from them, arguing that the seizure was contrary to law. The petitioners sought the return of Rs. 69,98,400/- seized, along with appropriate interest/compensation for illegal retention.

2. Applicability of Section 67 of the GST Act to the Seizure of Cash:
The petitioners argued that under Section 67 of the GST Act, cash does not qualify as "goods, documents, or things" that can be seized. They cited the Kerala High Court's decision in Shabu George Vs. State Tax Officer (IB), which held that cash could not be seized under the GST Act if it is not part of the stock in trade. The respondents, however, relied on the Madhya Pradesh High Court's decision in Smt. Kanishka Matta Vs. Union of India, which included cash under the term "things" in Section 67(2).

3. Compliance with Procedural Requirements for Seizure and Retention of Cash:
The Court noted that the proper officer must have reasons to believe that the seized items are useful for or relevant to any proceedings under the Act. The petitioners contended that the cash was not shown as stock in trade and that the seizure memo was issued under Section 67(2) without proper justification. The Court observed that the seizure memo dated 13.11.2020, and no notice was given within six months as required by Section 67(7), necessitating the return of the seized goods.

4. Entitlement of the Petitioner to the Return of Seized Cash:
The Court found that the cash did not form part of the stock in trade and could not have been seized under the GST Act. The Kerala High Court's interpretation, supported by the Supreme Court's dismissal of the SLP, was persuasive. The Court directed the respondents to return the amount of Rs. 69,98,400/- to the petitioner, allowing the petition and permitting the respondents to transmit the amount through digital mode.

Conclusion:
The petition was allowed, and the respondents were directed to return the seized cash to the petitioner, emphasizing that the seizure was not justified under the GST Act and procedural requirements were not met.