Whether cash can be seized by the GST Department?
Income Tax authorities have power to seize the cash during income tax search operations. The question arises as to whether the GST department can also do the same?
- Gujarat High Courtin Bharat Kumar Pravin Kumar & Co. (26-Oct-2023) has held that if cash found in search does not form a part of stock-in-trade, it cannot be seized.
- Hon’ble Delhi High Court in the case of Goel Metal Udyogheld that during search, department does not possess authority to seize currency; hence, currency seized by department during search was required to be released to assessee.
- In K.M. Food Infrastructure Pvt. Ltd, it was held that cash is clearly excluded from the definition of the term ‘goods’ as the same falls squarely within the definition of the word ‘money’ as defined in Sec. 2(75).
In this case, Court issued directions to the respondents to forthwith remit the proceeds of the fixed deposit (along with interest) to the bank account of the entities/person from whose possession the same was resumed during search conducted.
- In Dhanya Sreekumari, it has been held that when inspection team found cash from residence of assessee engaged in manufacture and sale of dosa/idly batter, etc., since pay-in-slips were also seized which indicated that cash was intended to be deposited in bank, cash seized was to be released forthwith.
- Similarly in the order dated 24.03.2023 in the case of Shabu George, it has been hled that in an investigation aimed at detecting tax evasion under GST Act, cash cannot be seized, especially when cash does not form part of stock-in-trade of business.This judgment was later on affirmed by Supreme Court on 31-Jul-2023.
- In the case of Deepak Khandelwal, it was held that during search, “PO” cannot seize currency and other valuable assets in exercise of powers U/S67(2); even if so done, same are required to be returned by virtue of S.67(3) when assets and currency had not been relied upon in notice issued subsequently.
- Kerala High Courtin T.H. Fazil (18-Sep-2023) has held that GST authorities have no power to seize cash that is not considered as ‘stock-in-trade’.
- In a remarkable case of Jagdish Bansal, it was held that ‘Cash’ is clearly excluded from definition of term ‘goods’ and would fall with definition of ‘money’ as defined in Sec. 2(75); since cash is not goods, it could not have been seized under provision of Act, as seizure is limited to goods liable for confiscation.
