No Seizure Extension Notice Provided before Conclusion of Six-Month Period: Delhi HC Orders Release of Spectacles and Frames [Read Order]

The Delhi High Court has ruled that the GST Department’s failure to issue a notice before extending the seizure period beyond six months invalidates the continued retention of goods, while ordering the immediate release of spectacles and frames seized from the Petitioner.

The decision was rendered by the Delhi High Court in response to a petition filed by Kashish Optics Ltd. The GST Department conducted a search and seizure operation at the premises of Kashish Optics Ltd. during October, 2020 which led to the seizure of goods including spectacles and optical frames under Section 67(2) of the CGST Act, 2017.

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While Section 67(2) permits the gods to be retained in seizure beyond the period of six months, provided that “sufficient cause” is adduced, no extension notice was issued to the petitioner before the expiry of this period.

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Puneet Agrawal, Ketan Jain, Sakshi Bisht, Shruti Garg and Chetan Kumar Shukla, appearing for the Petitioner argued that the seizure of the goods became invalid once six months elapsed without an extension notice being issued relying on the Supreme Court decision in I.J. Rao, Asstt. Collector of Customs & Ors. v. Bibhuti Bhushan Bagh & Another (1989).

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Meanwhile, Senior Standing Counsel Anushree Narain, along with Ankit Kumar representing the Revenue Department argued that the decision in I.J. Rao would not be applicable in the present matter as the Supreme Court decision was in terms of Section 110 of the Customs Act, 1961 whereas the present case dealt with Section 67 of the CGST Act, 2017.

The Respondent Counsel further claimed that the petitioner could have applied for provisional release under Rule 140 of the CGST Rules, which they failed to do so and neither did the petitioner demonstrate any financial harm resulting from the continued seizure of goods.

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The Division Bench of Justice Yashwant Varma and Justice Harish Vaidyanathan Shankar ruled that Section 67(7) of the CGST Act requires “sufficient cause” to be shown for an extension, and such cause must be communicated to the affected party through prior notice.

The Bench further dismissed the argument that the petitioner should have sought provisional release under Rule 140, stating that the availability of such an option does not override the obligation on the Department to justify the extension through formal notice with “sufficient cause”. The Delhi High Court also acknowledged that the petitioner had repeatedly argued that their goods, being spectacles and frame, were subject to market trends and could lose commercial value if retained for too long.

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In light of all the observations made, the Delhi High Court ordered the immediate release of the seized spectacles and frames upon the petitioner making a deposit as per the valuation.

To Read the full text of the Order CLICK HERE

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