Cash Seized From Assessee Cannot Be Retained By GST Dept Or IT Dept Prior To Finalisation Of Proceedings: Kerala High Court

The Division Bench of Justices A.K. Jyasankaran Nambiar and Easwaran S. held that “Cash amount seized from the premises of the assessee cannot be retained either by the GST Department of the State or the Income Tax Department prior to a finalisation of respective proceedings initiated by them,”

In this case, the assessee/appellant is aggrieved by the seizure of cash from their premises by the officers attached to the GST Department of the State in the course of proceedings initiated under Section 74 of the CGST/SGST Act.

The cash so seized was later handed over to the Income Tax Department after intimating the said Department of the seizure of cash.

The assessee had filed writ petition seeking a direction to return the seized cash to them since the GST Department did not have the power to seize cash from the premises of any dealer/service provider unless the cash itself formed part of the stock in trade of the dealer/service provider.

The Single Judge directed the assessee to approach the Income Tax Department for a release of the cash. The assessee has challenged the order passed by the Single Judge.

The assessee submitted that as the initial seizure of the cash by the GST Department of the State was illegal and without jurisdiction, the subsequent handing over of the seized cash to the Income Tax Department, even if pursuant to a notice under Section 132A of the Income Tax Act, would not detract from the fact that the continued withholding of the money, by the respondent authorities, was illegal.

The bench agreed with the assessee that the initial seizure of cash from the premises of the assessee being illegal, the continued retention of it by the GST Department of the State, and the handing over of the cash to the Income Tax Department, cannot be seen as legal acts merely because the money was now handed over to the Income Tax Department pursuant to a requisition sent by them under Section 132A of the IT Act.

In view of the above, the bench allowed the appeal.

Case Title: Centre C Edtech Private Limited v. The Intelligence Officer

Case Number: WA NO. 1934 OF 2024

Counsel for Respondent/ Department: Resmitha Ramachandran, Shajahan V.K and Jose Joseph

Click Here To Read/Download The Order