Whether cash can be seized during search in CGST Act, 2017?

Seizure of cash is often the matter of litigation not only in Income Tax Search but also during GST search.

Though the power of seizure of cash during income tax search is upheld on various occasion, the matter is still subject to litigation under GST. It may be noted that the provision of seizure is different in Income Tax Act vis a vis GST Act.

Section 67(2) of the CGST Act, 2017 states that where the proper officer 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 any proceedings, he may authorize in writing to any officer of central tax to search and seize such goods or documents or books or things.

Recently, in the case of M/s K.M Food Infrastructure Pvt. Ltd. [TS-56-HCDEL-2024], cash was seized during search proceedings.

The Delhi High Court held that the word “thing” does not include “money”.

For drawing the conclusion, the court made reference to the fact that the word “thing” is required to be read, ejusdem generis, with the preceding words documents and books.

 The legislative intent to use word “things” is to include all material that may contain information relevant for proceedings under the Act.

Hence, the word “thing” cannot not be used expansively to include anything notwithstanding the same may not be relevant to the proceedings as stated above

 Therefore, the seizure of cash during search was held to be illegal and arbitrary.