Section 67 CGST Act | Whether Cash Can Be Seized During GST Search ? Supreme Court To Consider

Taking into account conflicting views of the Delhi High Court and the Madhya Pradesh High Court, the Supreme Court is set to consider the issue as to whether authorities can seize "cash" under Section 67 of the Central Goods and Services Tax Act, 2017.

The development comes as a bench of Justices PS Narasimha and Sandeep Mehta recently issued notice on a petition filed by tax authorities assailing Delhi High Court's direction for refund of seized cash to the respondents.

To briefly state facts of the case, the petitioner-authorities conducted a search at the residential premises of the respondents under Section 67 of the CGST Act. In course of the same, they found cash amounting to Rs.1,15,00,000/- which could not be satisfactorily explained by the respondents, and seized it. The respondents requested that the same be released to them, but to no avail.

Ultimately, the respondents approached the High Court, contending that the petitioner-authorities had no power to seize cash under Section 67 of the CGST Act on the ground that the same was not satisfactorily explained.

In response, it was conceded that the issue stood covered by earlier decisions of the Court in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr. and Rajeev Chhatwal v. Commissioner of Goods and Services Tax (East). Accordingly, the petition was allowed and the petitioner-authorities directed to remit back the seized amount.

Assailing the decision of the High Court, the petitioner-authorities approached the Supreme Court. It is their claim that divergent views exist on the issue of seizure of cash under Section 67 of the CGST Act. While the Delhi High Court has held that authorities don't have the power to seize cash, the Madhya Pradesh High Court has opined that cash can be seized.

Considering the above, the top Court issued notice in the present case.

For context, Section 67 of the CGST Act reads thus:

"(2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things:

Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer:

Provided further that the documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act."

Case Title: COMMISSIONER OF CGST DELHI WEST & ORS. VERSUS GUNJAN BINDAL & ANR., Diary No(s). 44061/2024

Click here to read the order