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"CASH SEIZURE"
During searches, sometimes the GST Department tries to seize cash.
Do they have power to seize cash?
What is the view of the various High Courts in this matter?
1. Kerala High Court
1.1 T.H. Fazil (18-Sep-2023)
GST authorities have no power to seize cash that is not considered as 'stock-in-trade'.
1.2 Dhanya Sreekumari
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
1.3 Shabu George (24-Mar-2023)
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.
Note: This judgment was affirmed by Supreme Court (31-Jul-2023)
2. Delhi High Court
2.1 Goel Metal Udyog
During search, department does not possess authority to seize currency; hence, currency seized by department during search was required to be released to assessee.
2.2 K.M. Food Infrastructure Pvt. Ltd.
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.
2.3 Jagdish Bansal
‘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.
2.4 Deepak Khandelwal
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.
3. Gujarat High Court
3.1 Bharat Kumar Pravin Kumar & Co. (26-Oct-2023)
If cash found in search does not form a part of stock-in-trade, it cannot be seized.
Hope you will find this useful.
Thanks and Regards,
Abhishek Raja Ram