The Delhi High Court has held that Cash possessed by an individual cannot be forcibly taken over during a search under the Central Goods and Service Tax ( CGST ) Act, 2017. The petitioners had not handed over the cash to the concerned Officers voluntarily. The CGST Act does not support such action of forcibly taking over the possession of the currency from the premises of any person.
Ms. Pankhuri Shrivastava appeared for the petitioner and Mr. Harpreet Singh, Senior Standing Counsel with Ms. Suhani Mathur appeared for the respondent.
M/S K M Food Infrastructure Pvt Ltd, Mukesh Kapoor, and Others, the petitioners prayed for issuance of directions declaring the resumption of currency as recorded vide as illegal, arbitrary, and contrary to the provisions of law and for further directions to the respondents to return the resumed currency to the petitioners.
The undisputed facts are that a search was carried out by the Officers of the respondents on 04.10.2021 at the business premises belonging to Mr. Mukesh Kapoor, who is the Director of M/s. K.M. Food Infrastructure Pvt. Ltd. and M/s. Apparent Marketing Pvt. Ltd., in terms of “Authorization for Search” dated 03.10.2021. During the search, various documents/records viz. balance sheets, bilty books, purchase invoices, e-way bills, GST sales ledger etc., belonging to said companies were resumed vide Panchnama dated 04.10.2021.
The officers of the respondents searched other premises from where, they resumed various records/documents, such as purchase/invoices, bank account details, sale invoices, directorship details, etc. as also electronic devices viz. mobile phones of the Director of the aforesaid companies. They also resumed Indian Currency totaling Rs. 1,90,66,000/- from the said premises vide Panchnama.
The Officers of the respondents on 01.12.2023, returned the documents and mobile phones seized during the search conducted on 04.10.2021. However, the currency seized was not returned to the petitioners.
During the investigation, no evidence could be unearthed that the cash so seized was representing the sale proceeds of unaccounted goods. However, a letter dated 23.10.2023 has been written to the Income Tax Authorities to take over the custody of a fixed deposit of Rs. 1,90,66,000/- with the request to take requisite action as deemed fit under the Income Tax provisions.
Counsel for the petitioners contended that the CGST Officers had no power to seize the cash in the exercise of its powers under Section 67 (2) of the “Central Goods & Services Tax Act, 2017” (CGST Act). It was argued that powers under Section 67 (2) of the CGST Act to seize the goods can be exercised only if the goods are liable for confiscation. It was also argued that the currency is excluded from the definition of goods and thus cannot be seized as goods. It is further submitted that currency is not useful or relevant for conducting any proceedings and therefore the same cannot be seized in the exercise of powers under Section 67 (2) of the CGST Act.
The investigation has revealed that there is no evidence that the cash so seized was representing the sale proceeds of unaccounted goods, therefore, it could not have been seized under the provisions of the CGST Act as the seizure is limited to the goods liable for confiscation. Therefore, there is no reason for the retention of the cash amount by the respondents.
The petitioners had not handed over the cash to the concerned Officers voluntarily. The action taken by the Officers was therefore coercive. CGST Act does not support such an action of forcibly taking over the possession of the currency from the premises of any person.
Even though, as per respondents, a letter was written to the Income Tax Authorities on 23.10.2023 to take custody of the fixed deposit of Rs. 1,90,66,000/- with the request to take action under the Income Tax provisions, it is conceded by the learned counsel for the respondent that till date, there is no requisition under Section 132 (A) of the Income Tax Act.
A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja did not find any justification for the resumption of the cash and its continued retention by the respondents. The court allowed the petition with directions to the respondents to forthwith remit the proceeds of the fixed deposit (along with interest) to the bank account of the entities/persons from whose possession the same was resumed during the search conducted on 04.10.2021.
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