In a recent ruling, the Delhi High Court held that silver bars or cash are not liable to be seized under section 67(2) of the Central Goods and Service Tax Act, 2017 (CGST) and directed to release the seized cash and silver bars.
Deepak Khandelwal proprietor of Shri Shyam Metal, the petitioner engaged in the business of trading in non-ferrous metals and is registered under the Central Goods and Services Tax Act, 2017. During a search conducted at the petitioner’s residence under Sub-section (2) of Section 67 of the Act, certain items and currency were seized from the ground floor of the petitioner’s residence.
After that, the petitioner was arrested by the Central Tax Officers of GST Commissionerate, North Delhi, as it was alleged that he had committed offences, punishable under Clause (i) of Sub-section (1) of Section 132 of the Act. Later the petitioner was released on bail.
The Sales Tax Officer issued a notice under Section 74 of the Act demanding ₹24,20,900/- including a penalty of a sum of ₹12,10,450/-. The petitioner contended that no reliance was placed on any of the documents, Indian currency, or any other items which were seized on 28.01.2020, as detailed in the seizure report, in the said notice.
Further contended that even if the proviso to Subsection (7) of Section 67 of the Act was applicable, no notice was issued concerning the seizure of goods, within a period of six months from the date of seizure. Therefore, the seized goods were liable to be restored.
The petitioner was of the view that the proper officer does not have any powers under Section 67 of the Act to seize currency as the same is not ‘goods’ as defined under the Act. The petitioner contended 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.
Mr Rajesh Jain, counsel appeared for the petitioner contended that Sub-section (2) of Section 67 of the Act is part material Section 105 and Sub-sections (1), (2) and (3) of Section 110 of the Customs Act, 1962. Further submitted that currency neither fell within the definition of the terms ‘goods’ nor could be considered as ‘things’.
Mr. Harpreet Singh, counsel appeared for the Revenue and countered the contentions advanced on behalf of the petitioner. He contended that silver bars and cash seized by the proper officer were not covered under the definition of ‘goods’; therefore, there was no requirement for issuing any show cause notice for confiscation.
A division bench comprising Justice Vibhu Bakhru and Justice Purushaindra Kumar Kaurav observed that the power of inspection under Sub-section (1) of Section 67 of the Act is conferred to unearth any evasion of tax or any attempt to evade tax. Sub-section (1) of Section 67 of the Act is not a provision for recovery of tax or for securing the same. It was evident that as per Sub-section (2) of Section 67 of the Act, only those goods can be seized, that the proper officer has reasons to believe are liable for confiscation.
“Silver bars being movable assets are not securities within the meaning of Clause (h) of Section 2 of the Securities Contract (Regulation) Act, 1956. 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”, the court viewed
Cash (Indian currency) is 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.
The Court held that “the proper officer could seize the currency and other valuable assets in the exercise of powers under Sub-section (2) of Section 67 of the Act, the same was required to be returned by 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.”
Further, it was directed by the court to forthwith release the currency and other valuable assets seized from the petitioner during the search proceedings.
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