105 Kg Silver Seized by GST Dept. Stolen in Part from Police Station: Andhra Pradesh HC Directs Return of Silver as Tax & Penalty Paid [Read Order]
The High Court directed the return of 23.44 kg of missing silver or its market value after the petitioner raised issues on the purity of the silver that had been returned by the authorities.
The Andhra Pradesh High Court recently directed the state authorities to return silver that was seized from a bullion trader after noting that the trader had duly paid the relevant tax, penalty and fine in lieu of confiscation; the court also noted that the a portion of the seized silver had been lost while it was under police custody.
The decision was given by the Andhra Pradesh High Court against a writ petition filed by G R M Jewellers, a Salem-based entity doing business in the Gold and Silver Bullion Metals industry with requisite registration under the Central and State Goodsand Services Tax (GST) Acts.
The petitioner was transporting goods from Hyderabad to Salem on January 27, 2021 when they were apprehended by the local police from Kurnool District who seized 105 Kgs of pure silver lumps and ₹2,05,000 in cash.
Confiscation proceedings were ordered to be initiated and the petitioner was provided an option to pay a fine of ₹35 lakh in lieu of confiscation, which was calculated at a rate of ₹66,667 per kg of silver confiscated.
The petitioner unsuccessfully challenged the confiscation before the High Court in 2021.
The petitioner subsequently paid the entire tax, penalty and fine amounting to ₹39.2 lakh on March 21, 2023 and secured a release order from the state tax authorities for the return of the seized silver and cash.
The petitioner was then informed by the police that the seized silver and cash had been stolen from the police station by staff members.
However, some quantities of the seized silver and cash were recovered from the miscreants and the matter was registered before the First Class Magistrate, Kurnool who directed the release of 81.567 kgs of silver and cash of ₹10 lakhs, against the quantity of 105 kgs of silver and cash of ₹2,05,000 which had been seized.
The petitioner contended that the silver seized from his son was 100% pure silver while 54.567 kgs of the silver returned to the petitioner contained only 60% silver and 27 kgs was 100% silver.
The petitioner initiated legal notices against the official respondents for being compensated for the loss of silver, on account of the theft carried out in the police station. Since he was not compensated, the present petition was lodged.
G. Narendra Chetty, for the petitioner, relied on a catena of decisions to argue that the petitioner was eligible for being compensated by the loss caused by the state authorities.
However, Government Pleader Jayanthi referenced the Supreme Court decision in Kasturi lal Ralia Ram Jain vs. State of Uttar Pradesh (1965) opposed the claim, arguing that seizure was an exercise of sovereign power and no compensation was payable leading to this writ petition.
The Division Bench of Justice R. Raghunandan Rao and Justice T.C.D. Sekhar rejected the State’s defence, holding that the loss of seized property due to theft from the police station could only be attributed to negligence. The Court noted that loss of such a large amount of silver and cash would absolutely impinge on the right of the petitioner, under Article 19(1)(g) to carry on his trade or business.
Accordingly, the High Court directed that the shortfall of 23.44 kg of pure silver be returned to the petitioner, either in kind or by payment of its market value as on the date of the judgment.
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