In light of the differing views held by the Delhi and Madhya Pradesh High Courts, the Supreme Court is now set to examine whether authorities can lawfully seize “cash” under Section 67 of the Central Goods and Services Tax ( CGST ) Act, 2017.
This issue has been brought to the forefront as a bench comprising Justices PS Narasimha and Sandeep Mehta recently issued a notice in response to a petition by tax authorities challenging the Delhi High Court’s order, which directed the authorities to refund seized cash to the respondents.
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To summarise the case facts, tax authorities conducted a search at the respondents’ residence under Section 67 of the Central Goods and Services Tax Act, where they discovered cash totaling ₹1,15,00,000/-. The respondents failed to provide a satisfactory explanation for the source of these funds, prompting the authorities to seize the cash. When the respondents sought the return of the seized cash, they were denied.
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Consequently, the respondents approached the High Court, arguing that Section 67 does not grant tax authorities the power to seize cash solely because the origin was not satisfactorily explained. The High Court agreed, citing prior decisions in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr. and Rajeev Chhatwal v. Commissioner of Goods and Services Tax (East), ultimately ordering the return of the cash.
Challenging this decision, the tax authorities approached a petition before the Supreme Court, asserting that there is judicial inconsistency over the seizure of cash under Section 67 of the Central Goods and Services Tax Act. According to them, while the Delhi High Court opposes the seizure of cash under this provision, the Madhya Pradesh High Court upholds it.
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Section 67 of the Central Goods and Services Tax Act allows a proper officer to seize any goods, documents, or other items deemed relevant to proceedings under the Act if there is reason to believe they may be used or are hidden to avoid detection.
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