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TMI Blog2023 (8) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Securities Contract (Regulation) Act, 1956 or the scope of that enactment. Plainly, as silver bars do not fall within the definition of securities under Subsection (101) of Section 2 of the Act read with Clause (h) of Section 2 of the Securities Contract (Regulation) Act, 1956. Thus, silver bars are included in the term goods as defined under Sub-section (52) of Section 2 of the Act. It would not be apposite to construe the word things under Sub-section (2) of Section 67 of the Act to be mutually exclusive to the term goods . The term goods as used in Sub-section (2) of Section 67, essentially, relates to goods, which are subject matter of supplies that are taxable under the Act. Admittedly, the goods that can be seized under Sub-section (2) of the Act are goods, which the proper officer believes are liable for confiscation. The power of search and seizure are drastic powers and are not required to be construed liberally. Further, it is found that the legislative intent of permitting seizure of books or documents or things in terms of Subsection (2) of Section 67 of the Act is crystal clear and it does not permit seizure of currency or valuable assets, simply, on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncern, Shri Shyam Metal. He is registered under the Central Goods and Services Tax Act, 2017 (hereafter the Act ) under the registration: GSTIN07AGCPK1126B2Z5. 3. On 28.01.2020, a search was conducted at the petitioner s residence, House No. 3-4, Pocket 6, Sector-24, Rohini, Delhi, under Sub-section (2) of Section 67 of the Act. During the aforementioned operations, certain items and currency were seized from the ground floor of the petitioner s residence. The relevant extract of the order of seizure (Form GST INS-02) listing out the goods and items seized by the respondent authorities, is reproduced hereinbelow: A) Details of goods seized: Sr No. Description of Goods Quantity/ Units Make /Mark or Model Remark 01 Silver Bar Silver Bar 29872 (29.5 kgs) 2017 02 Silver Bar Silver Bar 14948(14.5 kgs) 2018 B) Details of Books/Documents/ things seized: Sr.No. Description of books/ documents/ Equipments things seized Page No. 1. Sale Bill Book 251-300 2. Axis Bank Cheque Book 917020084690138 125593-125605 3. PNB Cheque Book 0155002106140506 260829-260920 4. PNB Cheque Book 0155002106140506 610455-610460 5. PNB Cheque Book 0617000100149333 705753-705770 6. PNB Cheque Book 0617000100292510 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is not goods as defined under the Act. The petitioner contends that the proper officer has the power to seize the goods under Sub-section (2) of Section 67 of the Act only if he has reasons to believe that the same are liable for confiscation. The petitioner also claims that the goods seized are liable to be returned if no notice in respect of the said goods is served within a period of six months from the date of seizure of the said goods. 9. It is contended that since no notice under Sub-section (2) of Section 67 of the Act was issued in respect of the seized silver bars, which fall within the definition of goods, within the stipulated period of six months, the said goods are liable to be released. 10. Mr. Rajesh Jain, learned counsel appearing for the petitioner contended that the Sub-section (2) of Section 67 of the Act is pari materia Section 105 and Sub-sections (1), (2) and (3) of Section 110 of the Customs Act, 1962, and referred to the decision of the Supreme Court in I.J. Rao, Asstt. Collector of Customs Ors. v. Bibhuti Bhushan Bagh Another: (1989) 3 SCC 202. On the strength of the said decision, he contended that if a notice is not given within a period of six months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of this Act or the rules made thereunder to evade tax under this Act; or (b) any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act, he may authorise in writing any other officer of central tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place. (2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things: Provided that where it is not practicable to seize any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (2), be disposed of by the proper officer in such manner as may be prescribed. (9) Where any goods, being goods specified under sub-section (8), have been seized by a proper officer, or any officer authorised by him under sub-section (2), he shall prepare an inventory of such goods in such manner as may be prescribed. (10) The provisions of the Code of Criminal Procedure, 1973, relating to search and seizure, shall, so far as may be, apply to search and seizure under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word ―Magistrate, wherever it occurs, the word ―Commissioner were substituted. (11) Where the proper officer has reasons to believe that any person has evaded or is attempting to evade the payment of any tax, he may, for reasons to be recorded in writing, seize the accounts, registers or documents of such person produced before him and shall grant a receipt for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any place; he may either search and seize the said goods, documents or books or things, or authorize any officer of the Central Tax to do so. 18. It is clear from the plain language of Sub-section (2) of Section 67 of the Act that only those goods can be seized, which the proper officer has reasons to believe are liable for confiscation. Insofar as seizure of documents or books or things is concerned, the same is permissible provided the proper officer is of the opinion that the said documents or books or things shall be useful or relevant to any proceedings under the Act. 19. The first proviso to Sub-section (2) of Section 67 of the Act provides that if it is not practical to seize such goods that is, goods that are liable for confiscation the proper officer or any officer authorized by him may direct the owner or custodian of the goods, not to remove or part with the same. 20. The second proviso to Sub-section (2) of Section 67 of the Act clarifies that insofar as seized documents or books or things are concerned, the same shall be retained only so long as it is necessary for their examination and for any inquiry or proceedings under the Act. It is, thus, clear that seizure of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as long as it is necessary in connection with any proceedings under the Act or the rules made thereunder for prosecution. 26. The question whether the proper officer has any power to seize cash or other asset is required to be addressed bearing in mind the aforesaid scheme of Section 67 of the Act. 27. The expression goods is defined in Sub-section (52) of Section 2 of the Act as under: (52) goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; 28. The expression goods covers all movable property other than money and securities . The expression securities as defined in Sub-section (101) of Section 2 of the Act has the same meaning as assigned to it in Clause (h) of Section 2 of the Securities Contract (Regulation) Act, 1956. 29. Clause (h) of Section 2 of the Securities Contract (Regulation) Act, 1956 reads as under: 2(h) securities include (i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and is set out below: 130. Confiscation of goods or conveyances and levy of penalty. (1) Notwithstanding anything contained in this Act, if any person (i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (ii) does not account for any goods on which he is liable to pay tax under this Act; or (iii) supplies any goods liable to tax under this Act without having applied for registration; or (iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122. 33. A plain reading of Clauses (i) to (iv) of Sub-Section (1) of Section 130 of the Act indicates that the goods, which ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lieves are liable for confiscation which can be seized are documents or books or things . Sub-section (2) of Section 67 of the Act makes it amply clear that such items that is, documents or books or things may be seized if the proper officer is of the opinion that it shall be useful or relevant to any proceedings under the Act. The words useful for or relevant to any proceedings under the Act control the proper officer s power to seize such items. 39. Documents and books are also covered under the wide definition of goods under Sub-section (52) of Section 2 of the Act but the same are not goods that are liable for confiscation. Seizure of such documents or books is not contemplated for the reason that they are subject matter of supplies in respect of which tax has been evaded; seizure of books and documents is contemplated only for the purpose that they may contain information, which may be useful or relevant for any proceeding under the Act. Hence, the purpose of providing for seizure of such items is to secure material information, which may be useful or relevant for the proceedings under the Act. 40. It is clear from the schematic reading of Section 67 as well as other provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same are considered useful for or relevant to the proceedings under the Act; Sub-section (3) of Section 67 makes it amply clear that the purpose of seizure of books or documents or things is only for the purpose of reliance in the proceedings under the Act. It, thus, posits that if the documents or books or things are not relied upon in any notice that is issued, the same are liable to be returned. 44. It follows from the contextual interpretation of Sub-section (2) and Sub-section (3) of Section 67 that seizure of books or documents or things are only for the purpose of relying on such material in proceedings under the Act. 45. It is also relevant to refer to Sub-section (11) of Section 67 of the Act. The said Sub-section empowers the proper officer to seize, for reasons to be recorded in writing, the accounts, registers or documents, which are produced before him and to retain the same so long as it is necessary in connection with any proceedings under this Act or the rules made thereunder for prosecution . 46. It is clear from the Scheme of Section 67 of the Act that the word things is required to be read, ejusdem generis, with the preceding words documents and books . It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in proceedings under the Act. 48. It is relevant to refer the decision of the Bombay High Court in Emperor v. Hasan Mama: AIR 1940 Bom 378. In the said case, the accused was convicted under Section 152 of the Bombay Municipal Boroughs Act, 1925. The allegation against the accused was that he had allowed the hand driven lorries containing fruits to remain on a public street at Ahmedabad for more than half an hour. Section 152 of the Bombay Municipal Boroughs Act, 1925 reads as under: (1) Whoever in any area after it has become a municipal district, or borough (a) shall have built or set up, or shall build or set up, any wall or any fence, rail, post, stall, verandah, platform, plinth, step or any projecting structure or thing or other encroachment or obstruction, or (b) shall deposit or cause to be placed or deposited any box, bale, package or merchandise or any other thing, in any public place or street shall be punished 49. The Division Bench of the Bombay High Court rejected the contention that the hand driven lorry containing fruits could be considered as thing either under Clause (a) or Clause (b) of Subsection (1) of Section 152 of the Bombay Municipal Boroughs Act, 1925. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd.: (1987) 1 SCC 424 , the Supreme Court held as under: Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when the object and purpose of its enactment is known. With this knowledge, the statute must be read first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute maker, provided by such context its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses the court must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under any other statute. Concededly, there is no material to indicate that the particular silver bars or cash were received by the petitioner in specie against any particular fake invoice. 56. There may be cases where the Revenue finds that a particular currency note or any particular asset has evidentiary value to establish the Revenue s case. Illustratively, a delinquent dealer supplies goods without invoices only on presentation of a currency note that bears a particular number. The presentation of the currency note is used as a means of authenticating the identity of the purchaser. The number of the particular currency note is recorded in diary maintained by the purchaser. The Revenue Officer ascertains this modus operandi of evasion of taxes. The currency note, corelated with the diary, would be relevant in establishing evasion of tax in respect of certain goods. Undoubtedly, in such cases, the currency note is material that yields information as to the modus adopted for evading tax; the proper officer may seize the currency note for its evidentiary value and relevance in establishing evasion of tax in proceedings under the Act. The same may be relied upon in the proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The purpose of the Act is not to proceed against unaccounted wealth. The provision of Section 67 of the Act is also not to seize assets for recovering tax. Thus, applying the principle of purposive interpretation, the power under Section 67 of the Act cannot be read to extend to enable seizure of assets on the ground that the same are not accounted for. 58. It is also material to note that the show cause notice dated 10.11.2020 does not refer to any documents or material relied upon by the Revenue for proposing any such demand. According to Mr. Harpreet Singh, the said notice is not relevant as it is issued by State Authorities. He states that Central Tax Authorities have not issued any notice. 59. The aforesaid contention is unpersuasive as the demand under the said notice issued under Section 74 of the Act includes a demand of ₹6,05,225/- on account of Central Goods and Service Tax. 60. In terms of Sub-section (3) of Section 67 of the Act, the documents, books and things seized under Sub-section (2) which have not been relied upon for issuance of a notice, under the Act or Rules made thereunder, are required to be returned to the person from whom the such items were seize ..... X X X X Extracts X X X X X X X X Extracts X X X X
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