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TMI Blog2024 (6) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... on things included cash / currency confiscated during search and seizure under Section 67 (2) of the CGST Act. The Delhi High Court in DEEPAK KHANDELWAL PROPRIETOR M/S. SHRI SHYAM METAL VERSUS COMMISSIONER OF CGST, DELHI WEST ANR. [ 2023 (8) TMI 929 - DELHI HIGH COURT] has held that the judgment in Kanishka Matta s case, does not correctly interpret Section 67 (2) of the CGST Act and that cash / currency / money is excluded and not included in the expression things in the said provision. The Delhi High Court also came to the conclusion that cash / currency / money cannot be treated as things which were useful or relevant for proceedings under the CGST Act and consequently, the cash / currency / money seized from the petitioner therein was directed to be returned / refunded back to him. On careful perusal of the provisions contained in Section 67 (2) of the CGST Act and the statutory scheme envisaged therein and other relevant provisions, the views taken by the High Courts of Delhi, Gujarat and Kerala have laid down the correct law and the judgment of the Madhya Pradesh High Court in Kanishka Matta s case supra, is not based on the correct interpretation of the said provision - It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to retain the subject cash illegally confiscated from the petitioners despite repeated representations submitted by them and consequently, necessary directions are to be issued to the respondents to return / refund the entire subject sum / cash of Rs. 1,71,07,500/- together with accrued interest back to the petitioners within a stipulated timeframe. This issue answered in favour of the petitioners by holding that the impugned seizure order at Annexure-A2 dated 21.09.2022 is illegal, arbitrary and without jurisdiction or authority of law and the same deserves to be quashed and by consequently directing the respondents revenue to refund / repay / return the entire subject sum / cash of Rs. 1,71,07,500/- together with accrued interest back to the petitioners within a stipulated timeframe. The impugned order set aside - Petition allowed. - HON'BLE MR JUSTICE S.R. KRISHNA KUMAR For the Petitioners (By Sriv. Raghuraman, Senior Counsel for Sri. Shreehari Kutsa, Advocate) For the Respondents (By Sri. Vanita K R., Advocate for Respondents) ORDER PER In this petition, petitioners seeks quashing of the impugned seizure order at Annexure A2 dated 21.09.2022 issued by the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw and the same is contrary to the provisions contained in Section 67 (2) of the CGST Act, and deserves to be quashed and necessary directions are to be issued to the respondents to refund the cash amount seized from the premises of the petitioner. In this context, learned Senior counsel made the following submissions: 5.1 The impugned seizure order will indicate that in addition to seizing electronic devices comprising of hard disk, laptops, mobile phones etc., the respondent No. 1 also seized the subject cash from the residential premises of the petitioner. In this context, it was submitted that cash/money does not answer or fall within the definition of Things as contemplated under Section 67 (2) of the CGST Act, and consequently, the respondent No. 1 was neither empowered nor authorized or competent to seize the subject cash from the premises of the petitioner and consequently, the impugned seizure order deserves to be quashed on this ground alone. 5.2 Learned Senior counsel invited my attention to Section 67 (2) of the CGST Act, in order to point out that before a search and seizure was conducted by the respondent No. 1, it was incumbent upon him to come to the conclusion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Officer W.A. No. 514/2023 dated 24.03.2023 (Ker). 4. State Tax Officer Vs Shabu George SLP (Civil) Diary No. 27670/2023 dated 31.07.2023 (SC). 5. Arvind Goyal CA Vs Union of India W.P. (C) No. 12499/2021 dated 19.01.2023 (Del). 6. Gunjan Bindal Vs Commissioner of CGST W.P. (C) No. 8713/2023 dated 17.11.2023 (Del). 7. Baleshwari Devi Vs Additional Commissioner W.P. (C) No. 5056/2023 dated 21.07.2023 (Del). 8. Vimal Yashwant Giri Goswami Vs State of Gujarat R/Special Civil Application No. 5410/2020 dated 06.01.2022 (Guj). 6. Per Contra, learned counsel for the respondents would reiterate the various contentions urged in the statement of objections and submit that there is no merit in the petition and the same is liable to be dismissed on account of equally efficacious and alternative remedy available in favour of the petitioners to challenge the adjudication order after completion of investigation which is at an advanced stage. It was submitted that several irregularities were committed by the company i.e., M/s. Vihaan Direct Selling (India) Pvt. Ltd., as a result of which, search was conducted on 20.09.2022 not only at the co-working space of the company but also at the residenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eize such goods, documents or books or things 9.1 A plain reading of the aforesaid provision will indicate that the following movables can be confiscated by the proper officer, pursuant to search and seizure to be conducted in a premises viz., (a) goods (b) documents (c) books and (d) things. The expression things has not been defined under the CGST Act and interpretation of the said expression came up for consideration before the Madhya Pradesh High Court in Kanishka Matta s case supra, relied upon by the respondents, wherein it was held that the said expression things included cash / currency confiscated during search and seizure under Section 67 (2) of the CGST Act. However, the said view was not accepted and a completely contrary view was taken by the Hon ble Division Bench of Delhi High Court in its subsequent judgment in Deepak Khandelwal s case supra, wherein it was held as under:- 14. The principal controversy to be addressed in the present petition is whether the proper officer has the power to seize the currency and other valuable assets under Section 67 of the Act, even though he has no reason to believe that the same are liable for confiscation. The controversy, essenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereunder, shall be returned to such person within a period not exceeding thirty days of the issue of the said notice. (4) The officer authorised under sub-section (2) shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. (5) The person from whose custody any documents are seized under sub-section (2) shall be entitled to make copies thereof or take extracts therefrom in the presence of an authorised officer at such place and time as such officer may indicate in this behalf except where making such copies or taking such extracts may, in the opinion of the proper officer, prejudicially affect the investigation. (6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be. (7) Where any g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 67 of the Act, the proper officer, not below the rank of Joint Commissioner, is empowered to authorize any officer of the central tax to inspect any place of business of a taxable person or persons engaged in the business of transporting or storing of goods. However, such inspection can be authorized only if the proper officer has reasons to believe that the taxable person has (i) suppressed any transaction relating to supply of goods or services or both; or (ii) suppressed the stock of goods in hand; or (iii) has claimed input tax credit in excess of his entitlement; or (iv) has otherwise contravened any provision of the Act or the Rules made thereunder, to evade payment of tax. Such inspection can also be authorized if the proper officer believes that any person who is engaged in the business of transporting goods, or operating a warehouse or a godown or any other place, is keeping goods that have escaped payment of tax or has kept his accounts or goods in such a manner, which is likely to cause evasion of tax payable under the Act. 16. It is apparent from the above, the power of inspection under Sub-section (1) of Section 67 of the Act is conferred to unearth any evasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty days from the issue of such notice. 22. In terms of Sub-section (6) of Section 67 of the Act, the goods seized under Sub-section (2) of Section 67 of the Act are required to be released on provisional basis upon execution of a bond and furnishing of a security, in such manner and of such quantum, as may be prescribed or on payment of applicable tax, interest and penalty payable as the case may be. 23. In terms of Sub-section (7) of Section 67 of the Act where goods are seized under Sub-Section (2) of Section 67 of the Act and no notice, in respect thereof, is given within the period of six months of seizure of the goods, the goods are required to be returned to the person from whom the same were seized. This period of six months can be extended on sufficient cause being shown. 24. In terms of Sub-section (8) of Section 67 of the Act, the Government also has the power to specify goods, which are required to be disposed of by the proper officer, as soon as may be, after its seizure under Sub-section (2) of Section 67 of the Act. Such goods are required to be specified having regard to the perishable or hazardous nature of the goods, constraints of storage space, depreciation in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h) of Section 2 of the Securities Contract (Regulation) Act, 1956. The contention that silver bars are securities , as advanced on behalf of the Revenue, is insubstantial. Although the definition of the term securities is an inclusive definition, the same cannot be read in disregard of Sub-clauses (i) to (iii) of Clause (h) of Section 2 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 Sub-section (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. 31. Cash (Indian currency) is clearly excluded from the definition of the term goods as the same falls squarely within the definition of the word money as defined in Sub-section (75) of Section 2 of the Act 32. Having stated the above, we are of the view that 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, esse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. During the course of search under Sub-section (2) of Section 67 of the Act, the officer conducting the search may find various types of movable assets. Illustratively, in an office premises, one may find furniture, computer, communication instruments, air conditioners etc. Those assets although falling under the definition of goods cannot be seized, if the proper officer has no reasons to believe that those goods are liable to be confiscated. 35. Sub-section (6) of Section 67 of the Act provides for provisional release of the goods so seized on payment of applicable tax, interest and penalty. This also indicates that the goods, which may be seized under Sub-section (2) of Section 67 are goods that are subject matter of evasion of tax or are supplies in respect of which the proper officer has reason to believe, taxes would not be paid. 36. Sub-section (7) of Section 67 of the Act mandates that the goods seized under Sub-Section (2) would be returned to the person from whose possession the goods were seized, if no notice in respect of those goods is issued within a period of six months. It is apparent that a notice in respect of such goods can be issued only where taxes, intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67 (2) of the Act permits seizure of documents or books or things so as to aid in the proceedings that may be instituted under the Act. The documents or books or things cannot be confiscated and have to be returned. This is amply clear from the plain language of the second proviso to Sub-section (2) of Section 67 of the Act. In terms of the second proviso to Sub-section (2) of Section 67, the documents or books or things seized are required to be retained only for so long as it may be necessary for their examination and for any inquiry or proceedings under the Act . Once the said purpose is served, the books or documents or things seized under Sub-section (2) cannot be restrained and are required to be released. 42. The second proviso, although couched as a proviso, is an integral part of Sub-section (2) of Section 67 of the Act. The same clearly reflects that the legislative intent of empowering seizure of documents or books or things is for enabling their use in aid of the proceedings under the Act. Thus, seizure of such documents or books or things is conditional upon the proper officer s opinion. That the same are useful for or relevant to such proceedings. 43. Sub-section (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denotes items that contain information or records, which the proper officer has reason to believe is useful for or relevant to the proceedings under the Act. The context in which the word things is used makes it amply clear that, notwithstanding, the wide definition of the term things , the same is required to be read ejusdem generis with the preceding words. It is apparent that the legislative intent in using a word of wide import is to include all possible articles that would provide relevant information, records, and material which may be useful for or relevant to proceedings under the Act. 47. We are unable to accept that the word things must be read expansively to include any and every thing notwithstanding that the same may not yield and / or provide any material useful or relevant to any proceedings under the Act as contended on behalf of the Revenue. It is necessary to bear in mind that power of search and seizure is a drastic power; it is invasive of the rights of a taxpayer and his private space. Conferring of unguided or unbridled power of this nature would fall foul of the constitutional guarantees. It necessarily follows that such power must be read as circumscribed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay have a stall on wheels, but I am clearly of opinion that introducing into a street a lorry on wheels with goods for sale upon it does not amount to setting up a stall within s. 152 (1) (a). In my opinion that sub-section deals with making some form of addition or annexe, more or less permanent, to a building in the street. It is directed against the man who has a shop or house in the street, and who encroaches upon the street by making some sort of addition to his house or shop. I think the real question is whether the case can be brought within s. 152, sub-s. (1)(b). In my opinion the words or any other thing must be read ejusdem generis as the words box, bale, package or merchandise . Those words seem to cover merchandise, and things in which merchandise can be packed, and any other thing must be of the same kind or genus and does not include a vehicle. In my view a motor car or a motor lorry or a horse drawn or hand-propelled vehicle, though containing merchandise and left standing in a street, cannot be said to come within the section. The hand lorry of the accused clearly falls within the definition of vehicle contained in s. 3, sub-s. (21), of the Bombay Municipal Boroughs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as under: The court must ascertain the intention of the Legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with the other parts of the law, and the setting in which the clause to be interpreted occurs. 54. Section 67 of the Act is not a machinery provision for recovery of tax; it is for ensuring compliance and to aid proceedings against evasion of tax. Section 79 of the Act provides for the machinery for recovery of tax. Section 83 of the Act provides for provisional attachment of any property belonging to a taxable person to safeguard the interests of the Revenue. Section 67 of the Act must be reads chematically along with other provisions of the Act. 55. The Revenue has averred in its counter affidavit that cash and silver bars in question were seized because the petitioner could not produce any lawful evidence of its purchase / possession and they appeared to be sale proceeds from the good-less / fake invoices being transacted by the petitioner . The search and seizure operations under Section 67 of the Act are not for the purpose of seizing unaccounted income or assets or ensuring that the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablish in any proceedings. However, the answer to the same was in the negative. It is, thus, clear that the silver bars and the cash were seized only on the ground that it was unaccounted wealth and not as any material which was to be relied upon in any proceedings under the Act. 57. Mr. Harpreet Singh has placed reliance on the decision of the Madhya Pradesh High Court in Kanishka Matta v. Union of India Ors. (supra). In that case, the Division Bench at Indore had rejected the prayer for release of Rs. 66,43,130/- that were seized from the premises of the petitioner. The Court held that the word things as appearing in Sub-section (2) of Section 67 of the Act is required to be given wide meaning as per Black s Law Dictionary. The Court also referred to Wharton s Law and had noted that the word thing is defined to include money . In addition, the Court had also referred toa decision of the Supreme Court referring to the Heydon s Rule, and concluded that money was included in the word things . With much respect to the Hon ble Court and its opinion, we are unable to persuade ourselves to adopt the said view. As noted above, the power of search and seizure are drastic powers and are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the notice dated 10.11.2020 issued under Section 74 of the Act would take into account the said allegation. The notice under Section 74 of the Act does not specify any particular reasons to show that Input Tax Credit has been wrongly availed or utilized . In the circumstances, we are unable to accept that the notice dated 10.11.2020 is not the notice as referred to under Sub-section (3) of Section 67 of the Act. 62. Thus, even if, it is accepted, which we do not, that the proper officer could seize the currency and other valuable assets in exercise of powers under Sub-section (2) of Section 67 of the Act, the same were required to be returned by virtue of Sub-section (3) of Section 67 of the Act because the silver bars and currency have not been relied upon in the notice issued subsequently. 63. In view of the above, the petition is allowed. The respondents are directed to forthwith release the currency and other valuable assets seized from the petitioner during the search proceedings conducted on 28.01.2020. It is, however, clarified that the respondents are not precluded from instituting or continuing any other proceedings under the Act in accordance with law. Nothing stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of the CGST Act. It is also significant to note that the object of Section 67 (2) of the CGST Act is not unearth unaccounted wealth (as in income tax) nor can it be said to be a mechanism for recovering tax by seizing assets, especially when there are separate mechanisms in Sections 73, 74, 78 and 79 of the CGST Act for that purpose and on this score also, I am of the view that cash / currency / money are not things within the meaning of the said provision and cannot be confiscated during the course of search and seizure in terms of the said provision. Point No. 1 is accordingly answered by holding that the expression things contained in Section 67 (2) of the CGST Act does not include cash / currency / money found or recovered during the course of search and seizure under the said provision. Re-Point No. 2:- 10. A perusal of the impugned seizure order will indicate that the seizure order at Annexure-A2 dated 21.09.2022 will indicate that the same records that a search was conducted on 20.09.2022 and on examination of the Electronic devices viz., laptop, hard disks and mobile phones found during the search, the 1st respondent had reasons to believe that the said electronic devic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to conduct an enquiry and complete the proceedings under the Act as expeditiously as possible subsequent to search and seizure and after recording the statement of petitioner No. 1 on 21.09.2022. In this regard, it is significant to note that the respondents have not even issued show cause notice to the aforesaid company M/s. Vihaan Direct Selling (India) Pvt. Ltd., even after more than 1 years till today. The said inaction on the part of the respondents revenue to complete the investigation subsequent to the date of search and seizure dated 20.09.2022, for more than a period of 1 years from that day is sufficient to come to the conclusion that the respondents are not entitled to retain the subject cash illegally confiscated from the petitioners despite repeated representations submitted by them and consequently, necessary directions are to be issued to the respondents to return / refund the entire subject sum / cash of Rs. 1,71,07,500/- together with accrued interest back to the petitioners within a stipulated timeframe. Point No. 2 is also accordingly answered in favour of the petitioners by holding that the impugned seizure order at Annexure-A2 dated 21.09.2022 is illegal, arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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