Supreme Court reaffirms Illegality of Cash Seizures in GST Search Operations [Read Order]
Under Section 67, goods can only be seized if liable to confiscation for suspected tax evasion.
![Supreme Court reaffirms Illegality of Cash Seizures in GST Search Operations [Read Order]](https://images.taxscan.in/h-upload/2025/08/22/2079759-supreme-court-taxscan.webp "Supreme Court reaffirms Illegality of Cash Seizures in GST Search Operations [Read Order]")
The Supreme Court of India has rejected the Revenue Department’s review petition against a Delhi High Court order that termed the seizure of cash from a trader’s residence as unlawful.
A bench comprising Chief Justice B.R. Gavai and Justice Augustine George Masih upheld the High Court’s view that Section 67 of the Central Goods and Services Tax (CGST) Act does not authorize officials to confiscate valuable assets merely because they are “unaccounted.”
The case stems from a January 2020 search by Central Tax officers at the home of a Delhi trader dealing in non-ferrous metals. Authorities seized two silver bars of 29.5 kg and 14.5 kg, ₹7 lakh in cash, several mobile phones, cheque books, and documents. The trader was arrested but later released on bail.
Complete Blueprint for Preparing Project Reports, click here
The Revenue contended that the seized items were linked to bogus or “goodless” invoices and represented unaccounted proceeds. However, no show cause notice referencing the seized property was issued within the six-month statutory limit prescribed by the CGST Act.
On August 17, 2023, a division bench of Justice Vibhu Bakhru and Justice Purushaindra Kumar Kaurav of the Delhi High Court had ruled for the trader.
The court held that silver bars fall within the meaning of “goods” under Section 2(52) of the CGST Act, while currency constitutes “money,” excluded from the definition of goods. Under Section 67, goods can only be seized if liable to confiscation for suspected tax evasion.
The expression “things” in Section 67(2), the court clarified, must be read ejusdem generis with “documents” and “books,” extending only to items containing information relevant to proceedings, such as electronic devices, and not valuable assets themselves.
Understand the complete process and tax nuances of GST refunds, Click here
The court further observed that the CGST framework does not permit seizure of unaccounted wealth unless directly connected with GST proceedings. Issues of unaccounted income fall under the Income Tax law, not GST.
Accordingly, the High Court had ordered the return of the seized cash, silver, and other belongings, while clarifying that authorities remained free to raise lawful tax demands through proper procedure.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
