Cash Seized During Search and Resume of Assets Without Legal
Authority - Delhi High Court Orders Refund of Rs. 19.5 Lakh Illegally Taken
During GST Search
Summary of
the Case
The Delhi High Court
directed the Goods and Services Tax (GST) authorities to refund ₹19.5 lakh
taken from the petitioner’s locked room during a search under Section 67 of
the CGST Act, 2017. The Court held that the GST officers acted without
legal authority when they forcibly took possession of the currency without
formally seizing it in accordance with law. The Court criticized the
introduction of an invented term “resume” to justify the action, holding
that the CGST Act contains no provision empowering such action.
Case Overview
- Case Title:
Baleshwari Devi vs. Additional Commissioner (Anti-Evasion), CGST Delhi
North & Others
- Case Number:
W.P.(C) 5056/2023
- Court:
High Court of Delhi at New Delhi
- Date of Judgment:
21 July 2023
Factual
Background
1. The
Petitioner and Her Business: Baleshwari Devi, a senior citizen,
is the proprietor of M/s Bishan Saroop Ram Kishan.
2. Search
Conducted at Residence: On 9 November 2021, GST
officers conducted a search under Section 67 of the CGST Act at the
petitioner’s residence in Shakti Nagar, New Delhi. The petitioner was not
present at the time.
3. Locked
Room Opened: One room in the house was locked. The
petitioner’s daughter-in-law, Seema Gupta, informed officers she did not
have the keys. The officers made duplicate keys and opened the room in her
presence.
4. Recovery
of Cash: Inside the locked room, officers found ₹19,50,000/-
in cash along with certain documents and cheque leaves.
5. No
Seizure, But Possession Taken: The cash was taken
away, but no seizure memo recorded the currency as “seized property”.
Instead, the officers claimed they had “resumed” the cash and later placed it
in a fixed deposit at Canara Bank for twelve months.
6. No
Justification from Daughter-in-Law: Seema Gupta allegedly
stated she had no documents to justify possession of the cash. The authorities
assumed the cash was in her possession.
7. Petitioner’s
Claim: The petitioner contended that the cash was hers,
taken from her room, and the entire action was illegal and beyond statutory
authority. She sought a writ directing the refund of the amount.
Petitioner’s
Submissions
Through her counsel, Mr.
Akhil Krishan Maggu, the petitioner argued:
1. No
Power to “Resume” Assets
o The
CGST Act allows seizure under specific conditions, but has no provision
allowing officers to “resume” assets without recording them as seized.
o The
officers’ action amounted to forcible dispossession without legal basis.
2. Cash
Taken From Locked Room Belonging to Petitioner
o The
locked room was exclusively used by the petitioner; thus, the presumption that
the cash belonged to Seema Gupta was unfounded.
3. Violation
of Statutory Procedure
o If
officers intended to seize the cash under Section 67(2), they were
required to record reasons and issue a seizure memo, which was not done.
o Non-compliance
with statutory safeguards makes the possession unlawful.
4. Relief
Sought
o Immediate
refund of ₹19.5 lakh along with any accrued interest.
o Declaration
that the officers’ action was without jurisdiction.
Respondents’
Submissions
Represented by Mr.
Atul Tripathi, the GST department argued:
1. No
Request for Refund Made Earlier
o The
authorities did not initiate refund proceedings because no one approached them
earlier for return of the money.
2. Statement
by Seema Gupta
o Seema
Gupta, present during the search, admitted she had no documents to justify
possession of the cash.
o The
authorities assumed the money belonged to her.
3. Fixed
Deposit Made
o The
cash was deposited into a fixed deposit for safekeeping pending further
proceedings.
Court’s
Findings
The Bench of Justice
Vibhu Bakhru and Justice Amit Mahajan made several key observations:
1. No Power to “Resume”
- The term “resume” is foreign
to the CGST Act.
- Officers cannot forcibly take
possession of assets without seizing them in accordance with Section 67
and the prescribed rules.
- There is no statutory provision
allowing the creation of a new category of action outside the framework of
“seizure”.
2. Illegal Dispossession
- Taking possession without formal
seizure violates the principle that authorities must act strictly under
statutory powers.
- The action amounted to illegal
dispossession of the petitioner’s property.
3. Erroneous Presumption
- The assumption that the money was in
Seema Gupta’s possession was factually and legally unsound:
- The cash was in a locked room.
- Seema Gupta did not have keys to
that room.
- Therefore, there was no basis to
attribute ownership or possession to her.
4. Mandatory Compliance
with Procedure
- Section 67(2)
of the CGST Act requires that seized goods or documents be properly
recorded, with seizure memos issued.
- Any deviation from statutory
requirements renders the action illegal.
Operative
Directions
The Court issued the
following directions:
1. Refund
of Money
o The
respondents must refund ₹19.5 lakh to the petitioner.
2. Appearance
to Avoid Controversy
o Both
the petitioner and Seema Gupta were directed to appear before Respondent No. 3
on 26 July 2023 at 12:00 noon.
3. If
No Dispute, Release Money
o If
Seema Gupta did not dispute that the money belonged to the petitioner, the
respondent was to:
§ Prematurely
encash the fixed deposit.
§ Transfer
the proceeds to the petitioner’s account immediately.
Legal
Significance of the Judgment
1. Reinforcement of Rule
of Law
The judgment underscores
that tax authorities cannot operate outside the four corners of the law.
They must adhere to:
- Explicit statutory powers.
- Procedural safeguards for seizure.
2. Protection Against
Arbitrary Action
By rejecting the concept
of “resume”, the Court has:
- Closed the door on creative but
unlawful justifications for seizing assets.
- Reinforced that taxpayers are
protected from unauthorized asset confiscation.
3. Clarity on Section 67
Powers
Section 67 of the CGST
Act:
- Empowers inspection, search, and
seizure.
- Does not authorize retention
of property without formal seizure.
- Requires recording of reasons and
issuance of seizure memos.
4. Importance of
Documentation in Searches
The case illustrates
that:
- Officers must maintain proper panchanamas
and seizure records.
- Any departure from documentation
requirements invites judicial intervention.
Conclusion
The Delhi High Court’s
ruling in Baleshwari Devi vs. Additional Commissioner (Anti-Evasion), CGST
Delhi North is a clear warning to GST enforcement officers against
bypassing statutory procedures under the guise of new terminology. The
decision:
- Protects citizens from illegal
confiscation of assets.
- Emphasizes that even in
anti-evasion actions, procedural discipline is mandatory.
- Affirms that property rights
cannot be curtailed without clear statutory authority.
For taxpayers, this
judgment provides a strong precedent to challenge unlawful detentions of
cash or goods during GST searches where seizure procedures are not
followed.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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