Court Declares Seizure Unlawful; Orders Immediate Return of Cash to Petitioner with Interest
In a significant judgment, the Bombay High Court has ruled against the Directorate General of GST Intelligence, declaring their seizure of INR 1 crore in cash from the premises of Smurti Waghdhare as illegal and without authority. The division bench of Justices G. S. Kulkarni and Aarti Sathe concluded that the cash seized did not fall within the ambit of "goods, documents, books, or things" as per Section 67(2) of the Central Goods and Services Tax Act, 2017 (CGST Act).
The case centered on the seizure of INR 60 lakhs from Waghdhare's office and INR 40 lakhs from her parents' residence during searches conducted in June 2023. The High Court pointed out that the authorities failed to fulfill the essential condition of "reason to believe" required under the CGST Act for such a seizure. The court emphasized that the statutory provisions do not authorize the seizure of cash, thus rendering the authorities' actions as perverse and arbitrary.
The judgment also noted that the respondents did not issue a notice within six months of the seizure, a requirement under Section 67(7) of the CGST Act, mandating the return of seized goods if such notice is not served. Furthermore, the court expressed surprise and dismay upon learning that the seized cash had been handed over to the Income Tax Department, highlighting a lack of legal basis for such a transfer.
The court ordered the immediate release and return of the seized cash to the petitioner, along with applicable interest, within two weeks. The ruling underscored the importance of adhering to the statutory framework, ensuring actions by authorities are backed by legal provisions.
Bottom Line:
Central Goods and Services Tax Act, 2017 - Seizure of cash by authorities under Section 67(2) of CGST Act - Held, cash does not fall within the ambit of goods, documents, books or things as mandated under Section 67(2) - Seizure of cash found at the premises of the petitioner declared arbitrary, perverse, and without authority of law.
Statutory provision(s): Section 67(2) of the Central Goods and Services Tax Act, 2017, Section 67(7) of the Central Goods and Services Tax Act, 2017, Section 131 of the Income Tax Act, 1961.
