04.08.2023: Revenue Cannot Withhold The Cash Recovered During Search Under Section 67 Without Seizing The Same – Delhi High Court

The Hon’ble High Court of Delhi vide its order dated 21.07.2023 in the matter of Baleshwari Devi Vs. Additional Commissioner (Anti-Evasion), Central Goods and Service Tax, Delhi North, New Delhi & Ors. in W.P. (C) – 5056/2023, held that the revenue cannot continue the possession of the currency (cash) recovered from the residence of the assessee’s, without seizing the same.  It was directed to refund the said amount to the assessee.

The Petitioner filed the writ petition before the Hon’ble High Court challenging the action of the respondents in removing a sum of Rs. 19,50,000/- from her premises during a search conducted under Section 67 of the CGST Act, 2017.  Further, directions were also sought to the respondents to refund the said amount to the petitioner.

Facts of the Case: –

  • That the petitioner is a senior citizen and is a proprietor of a concern named M/s Bishan Saroop Ram Kishan. On 09.11.2021, a search was conducted in the residential premises bearing the address, 25/75, Shakti Nagar, New Delhi-110007, where the petitioner and her family reside.
  • Further, at the time of search, the petitioner was not present at her residence and the room occupied by her was locked. The respondents during the search, seized some files, loose papers and cheque leaves.  The respondents also found a sum of Rs. 19,50,000/- in cash and the same was taken in the possession by them.
  • The Panchnama was drawn up, which records that one room was found locked and the petitioner’s daughter-in-law informed the respondents that she does not have keys to that room. During the search proceedings, the duplicate keys were made and the door of the room was opened in the presence of daughter-in-law.
  • The Panchnama further records that Smt. Seema Gupta (daughter-in-law) could not provide any justification or document for legal possession of the said cash.

It was submitted on the behalf of the Petitioner that the sum of Rs. 19.5 lakh was found from the said room, which was locked.  Further, the said cash was handed over by Respondent No. 2 to Respondent No. 3 and thereafter, was placed in a fixed deposit.

On the other hand, it was submitted on the behalf of the respondents that no proceedings for returning the amount were undertaken as none had approached the concerned respondents for seeking return of the said amount.  It was also submitted that that Smt. Seema Gupta (Daughter-in-law) had made a statement during the search proceedings that she did not have any documents to justify the legal possession of the cash amount. And since she was present at the premises during the search proceedings, the respondent had assumed that the cash was in her possession.

Held: –

  • The Hon’ble Court after considering the submissions made and facts of the case, found that there is a serious controversy whether the respondents have any authority to seize currency during search proceedings under Section 67 of the CGST Act. However, it is not necessary to examine the controversy in the present case because it is admitted that the respondents have not seized the cash. The seizure memo also does not record seizure of the cash.
  • It was found by the Hon’ble Court that the respondents have innovatively coined another term ‘resume’ – to denote taking forcible possession of the assets without recording seizure of the said assets. There is no provision under the CGST Act, which empowers the respondents to “resume” or dispossess any person of his assets, without seizing the same.
  • It was found that there is no dispute that the respondents are required to act strictly in accordance with provisions of the statute and rules. Though, in the present case, clearly the action of the respondents in dispossessing the petitioner or any of the family members of any of their assets in the proceedings under Section 67 of the CGST Act, without seizing the same, is illegal.  The respondents cannot continue with the possession of the currency collected from the petitioner’s residence.
  • Further, it was observed by the Hon’ble Court that the assumption that the cash recovered from the locked room was in the possession of Seema Gupta (the petitioner’s daughter-in-law) is ex facie erroneous. It was recovered from a room that was locked and the record shows that Ms Seema Gupta did not have the keys to that room.

The Hon’ble Court with the above findings, disposed of the writ petition with directions to the respondents to refund the amount to the petitioner.  Further, to avoid any further controversy, the petitioner as well as Smt. Seema Gupta shall appear before Respondent No. 3 at the office of Respondent No. 3, on 26.07.2023 at 12:00 noon.  And in the event Ms Seema Gupta does not dispute that the money in question belongs to the petitioner, respondent No. 3 shall take immediate steps for pre-mature encashment of the fixed deposit and transfer of the proceeds to the account of the petitioner.

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