Rahul Tayal & Ors. vs. Additional Director Directorate General Of GST Intelligence Dggi Jaipur Zonal Unit & Ors.

Facts

The petitioners filed a writ petition seeking the release of INR 2,41,86,000/- seized from petitioner no. 2 by the Directorate General of GST Intelligence (DGGI), Jaipur Zonal Unit. The seizure occurred on January 28, 2020. The petitioners argued that the currency seized could not be retained under Section 67 of the Central Goods and Services Tax Act, 2017, as it was not relied upon in any subsequent notice issued by the revenue. The revenue's contention, though not explicitly detailed in the provided excerpt, was implicitly that the currency constituted "things" that could be seized under Section 67(2) of the Act. The court referred to a previous judgment in Deepak Khandelwal Prop. M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West and Anr.

Held

The Court held that the seizure of currency under Section 67(2) of the CGST Act, 2017, is not sustainable if the currency has not been relied upon in any subsequent notice issued under the Act. The Court reiterated the principle from Deepak Khandelwal that the purpose of Section 67 is to unearth tax evasion and secure material relevant to proceedings, not to recover tax or seize assets merely because they represent unaccounted wealth. The Court found that the currency seized from the petitioner was not relied upon in the subsequent notice. Therefore, by virtue of Section 67(3), it was liable to be returned. The Court explicitly disagreed with the view taken in Kanishka Matta v. Union of India, which held a wider interpretation of "things" to include money, stating that powers of search and seizure are drastic and must be circumscribed by their intended purpose. The Court directed the immediate release of the seized sum of INR 2,41,86,000/- along with applicable interest to petitioner no. 2. The Court clarified that this order does not preclude the respondents from instituting or continuing other proceedings under the Act.

Key Issues

1. Whether currency seized under Section 67(2) of the Central Goods and Services Tax Act, 2017, can be retained by the revenue when it has not been relied upon in any subsequent notice issued under the Act? 2. Whether the word "things" in Section 67(2) of the CGST Act, 2017, can be interpreted to include currency seized solely on the ground that it represents unaccounted wealth, without it being material useful or relevant to any proceedings under the Act? Petitioner's Arguments: The petitioners contended that Section 67 of the CGST Act is not a machinery provision for tax recovery but for unearthing evasion. They argued, relying on the Deepak Khandelwal judgment, that seized "things" must be useful or relevant to proceedings and are to be returned if not relied upon in a notice, as per Section 67(3). They emphasized that currency seized as "unaccounted wealth" without evidentiary value for specific proceedings is not permissible. Revenue's Arguments: The revenue, implicitly, argued that currency falls within the ambit of "things" that can be seized under Section 67(2) of the CGST Act, potentially relying on a broader interpretation of the term, as suggested by the reference to the Kanishka Matta case.