Cash Seized During GST Search Or Resume Cash Without Seizure:Delhi
High Court Orders Refund of Rs 1.04 Crore Taken During GST Search
Summary of
the Case
The Delhi High Court
ordered the immediate return of ₹1.04 crore to the petitioners, holding
that GST officers had no legal authority to take possession of currency
during a search under Section 67(2) of the CGST Act without formally seizing it.
The Court was particularly critical of the officers’ use of the term “resume”
to describe taking cash without recording seizure — a practice the Court said
has no statutory backing.
The case also raises
important questions about the scope of GST’s search and seizure powers,
particularly whether cash can be seized at all under Section 67.
Case Overview
- Case Title:
Arvind Goyal CA vs. Union of India & Others
- Case Number:
W.P.(C) 12499/2021
- Court:
High Court of Delhi at New Delhi
- Bench:
Hon’ble Mr. Justice Vibhu Bakhru & Hon’ble Mr. Justice Amit Mahajan
- Date of Judgment:
19 January 2023
Factual
Background
1. Search
at Residence
On 4 December 2020, GST Anti-Evasion officers conducted a search at the
petitioners’ residence in Delhi under Section 67(2) of the CGST Act, 2017.
2. Cash
Found and Taken
During the search:
o ₹18,87,000/-
was found in the room of petitioner no.1 (Arvind Goyal).
o ₹1,04,00,000/-
was found in the room of petitioner no.2 (Deepak Goel).
o Mobile
phones and a laptop belonging to petitioner no.1 were also taken.
o The
total cash taken amounted to ₹1,22,87,000/-.
3. No
Seizure Memo for Cash
While a panchnama was prepared, no seizure memo was drawn for the cash.
Instead, the panchnama recorded that the officers had “resumed” the cash.
4. Fixed
Deposit Made
The cash was later deposited into a fixed deposit receipt (FDR) in the
name of the President of India.
5. Background
from CGST Bhopal
o The
search was triggered by a letter from CGST Bhopal to CGST Delhi East regarding M/s
Samriddhi Enterprises, GSTIN 23BSOPP9752K1ZY, owned by one Rakesh Pal.
o Enquiries
revealed that Samriddhi Enterprises was allegedly involved in trading betel
nuts without actual movement of goods, and the declared address was actually a
saree shop.
o Rakesh
Pal allegedly stated that petitioner no.1 (Arvind Goyal) had opened the firm
and named others.
o Petitioners,
however, were not GST assessees and no tax recovery was pending against
them.
6. Return
of Some Items
o The
laptop and mobile phones were later returned to petitioner no.1.
o ₹18,87,000/-
was also returned.
o ₹1.04
crore remained withheld.
Petitioners’
Submissions
The petitioners, through Mr.
J.K. Mittal, argued:
1. Lack
of Authority to Take Cash
o Section
67(2) permits seizure of:
§ Goods
liable for confiscation.
§ Documents,
books, or things useful or relevant to proceedings.
o Currency
is excluded from the definition of goods under GST law and is neither a
document, book, nor a relevant “thing” for GST proceedings.
2. No
Power to “Resume” Assets
o “Resume”
is not a statutory term under the GST Act.
o Without
seizure, there is no lawful authority to take possession.
3. Illegal
and Coercive Action
o The
petitioners never voluntarily handed over the cash.
o Taking
possession without statutory authority amounts to illegal dispossession.
4. Relief
Sought
o Refund
of ₹1.04 crore with interest.
o Any
such amount to be placed in FD in the court’s name during proceedings.
Respondents’
Submissions
Representing GST, Mr.
Harpreet Singh argued:
1. Not
a Seizure
o Officers
did not “seize” the cash, hence no seizure memo was drawn.
o The
panchnama records that the cash was merely “resumed” and thus formal seizure
provisions were not triggered.
2. Basis
for Action
o The
action was pursuant to CGST Bhopal’s request in connection with Samriddhi
Enterprises’ suspected GST fraud.
3. No
Provision for Refund Initiated Earlier
o The
respondents did not initiate refund because no request was made earlier.
Court’s
Observations
The Bench made several
critical findings:
1. Cash Not “Goods” Under
GST
- Prima facie,
cash does not fall within “goods” for GST purposes.
- Cash also cannot be considered a
“thing” useful or relevant for GST proceedings.
- Section 67(2) limits seizure to goods
liable for confiscation and relevant documents/things.
2. No Statutory Power to
“Resume”
- The term “resume” is absent
from GST law.
- No GST provision allows officers to
take possession of assets without seizing them.
- The action was coercive and beyond
statutory powers.
3. Powers of Search and
Seizure Are Draconian
- Such powers must be exercised strictly
in accordance with law and only when statutory preconditions are met.
- Officers cannot invent procedures to
bypass safeguards.
4. Dispossession Was
Illegal
- Petitioners were unlawfully
dispossessed of currency without following seizure provisions.
- The action was therefore without
authority of law.
5. Whatsapp Chats and
Officer Conduct
- Petitioners produced WhatsApp chats
suggesting informal meetings between officers and petitioners.
- The Court directed notices to the
officers concerned — Mr. Vinod Prakash Sharma (Superintendent) and Mr.
Sandeep Dhama — to appear in person before further comments.
Operative
Directions
The Court ordered:
1. Immediate
Refund
o Respondents
to forthwith return ₹1.04 crore with accrued interest.
2. Release
of Bank Guarantee
o Any
bank guarantee furnished by petitioner no.1 for release of currency to be released
immediately.
3. Officer
Summons
o Officers
involved to appear in Court on 20 February 2023 for further proceedings.
Legal
Significance
1. Clarifies Seizure
Powers Under GST
- Cash is not “goods” and is unlikely
to be a “thing” relevant to GST proceedings.
- Officers cannot bypass seizure
provisions by inventing terms like “resume”.
2. Strengthens Procedural
Safeguards
- Search and seizure under GST are
intrusive and draconian; strict adherence to statutory safeguards is
essential.
- Any deviation can result in judicial
intervention and refund orders.
3. Accountability for
Officer Misconduct
- The Court’s decision to summon
officers shows judicial willingness to hold individuals personally
accountable.
4. Potential Precedent
for Similar Cases
- This ruling could be cited in other
cases where cash or assets are taken without proper seizure documentation.
Conclusion
The Delhi High Court’s
decision in Arvind Goyal CA vs. Union of India is a strong precedent
against unauthorized asset appropriation during GST searches. It
emphasizes that:
- Procedure matters
— statutory safeguards cannot be bypassed.
- Terminology tricks
(like “resume”) will not survive judicial scrutiny.
- Cash
has a limited role in GST proceedings and cannot be seized unless
explicitly authorized.
This case will likely be
relied upon in future litigation challenging GST officers’ actions involving
cash found during searches.
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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