Rajeev Chhatwal vs. Commissioner Of Goods And Services Tax East

Held

The Court held that the seizure of Indian currency amounting to ₹15,92,000/- was not empowered by Section 67(2) of the CGST Act. The Court relied on its recent decision in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr.: 2023:DHC:5823-DB, which established that the said section does not permit the seizure of cash. The reasoning was that the provision for seizure under Section 67(2) is limited to goods or documents, and cash is neither. The ratio decidendi is that cash cannot be seized under Section 67(2) of the CGST Act. Consequently, the Court directed the respondent to remit the seized amount to the petitioner's bank account within two weeks, along with accrued interest. The Court clarified that this order did not preclude the respondent from taking other lawful steps. All rights and contentions of the parties were reserved.

Facts

The petitioner, Rajeev Chhatwal, filed a writ petition seeking the release of Indian currency amounting to ₹15,92,000/- seized by the respondent, the Commissioner of Goods and Services Tax (East), during a search conducted on 23.01.2020 at his residential premises. The petitioner claimed he was not a taxpayer under the CGST Act and had joined the investigation prior to the search. The currency was found in a locker and seized despite family members explaining it belonged to them and was kept there due to ongoing house renovation. The petitioner, along with two others, was arrested on 01.03.2020 and later released on bail. The respondent alleged the petitioner was involved in a fake invoice racket leading to fraudulent ITC claims of approximately ₹11 crores. The investigation was stated to be ongoing, and no show-cause notice had been issued. The petitioner contended that the seizure was illegal as Section 67(2) of the CGST Act did not permit such seizure.

Key Issues

1. Whether Section 67(2) of the Central Goods and Services Tax Act, 2017, empowers the seizure of Indian currency found during a search conducted under the said section, when the currency is not directly linked to any alleged tax evasion or fraudulent ITC claims. Petitioner's arguments: The petitioner argued that Section 67(2) of the CGST Act does not authorize the seizure of cash. He relied on the decision in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr.: 2023:DHC:5823-DB, which he contended covered this issue in his favour. He also claimed he was not a taxpayer and not involved in the alleged fake invoice racket. Respondent's arguments: The respondent did not record any specific arguments against the petitioner's contention regarding the legality of the seizure of cash under Section 67(2) of the CGST Act. They stated that the investigation was not complete and no show-cause notice had been issued.