In WP (C) No. 21772 of 2022 -KER HC- Kerala High Court directs release of seized cash in GST case; Finds seizure unjustified as cash was not part of petitioner's business stock-in-trade
Justice T.R. Ravi [27-06-2023]

Read Order: Dhanya Sreekumari and Ors V. The State Tax Officer (IB)-I and Ors

Chahat Varma

New Delhi, August 2, 2023: A Single Bench of the Kerala High Court, following the decision of a Division Bench, has directed the authorities to release the cash that was seized from the petitioner in a tax-related case. The court found that the seizure of cash was not warranted, as it was admitted that the cash was not part of the petitioner's business stock-in-trade.

Brief issue involved in the present case was that the petitioner, an industrial unit engaged in the manufacturing and sale of food items like Idly/Dosa batter, Parotta (half-cooked), Chappathi, etc., had their manufacturing unit and residence inspected by an Investigating Team, during which cash was seized. The petitioner contested that the authorities were not entitled to seize the cash under Section 67 of the Central Goods and Services Tax Act (CGST Act).

The Single-Judge Bench of Justice T.R. Ravi relied on a judgment by a Division Bench in Shabu George and Ors v. State Tax Officer (IB) and Ors [LQ/KerHC/2023/1334], wherein it was held that the power to seize ‘things’ under Section 67 of the CGST Act may include cash in certain cases, but it was deemed unwarranted in that particular case. The Division Bench had emphasized that in an investigation aimed at detecting tax evasion under the CGST Act, it was unclear how cash could be seized, especially when it was an admitted fact that the cash did not form part of the petitioner's business stock-in-trade. The Division Bench had directed the authorities to release the cash.

The bench observed that in the current case, the seizure of pay-in-slips, indicated that the cash was intended to be deposited in the bank. As the cash was not part of the petitioner’s stock-in-trade, the bench found that the seizure was not justified. The bench further noted that the seizure had occurred one year ago, and there was no reason to retain the cash any further.

Based on these facts, the bench ordered the release of the seized cash to the petitioner.