Deepak Khandelwal Proprietor M/S Shri Shyam Metal vs. Commissioner Of CGST, Delhi West

Held

The Court held that the proper officer does not have the power under Section 67(2) of the CGST Act to seize currency and other valuable assets simply on the ground that they represent unaccounted wealth, unless there is a reason to believe they are liable for confiscation. The Court disagreed with the expansive interpretation of 'things' in Section 67(2), stating that seizure powers are drastic and not to be construed liberally. Applying purposive interpretation, the Court found that the Act's purpose is not to proceed against unaccounted wealth or seize assets for tax recovery. Furthermore, even if seizure of currency were permissible, the Court held that the seized silver bars and currency were liable to be returned under Section 67(3) as they were not relied upon in the subsequent notice dated November 10, 2020, issued under Section 74. The Court directed the immediate release of the seized currency and other valuable assets.

Facts

The petitioner, Deepak Khandelwal, proprietor of M/s Shri Shyam Metal, filed a writ petition seeking the release of silver bars (29.5 Kgs and 14.5 Kgs), ₹7,00,000 in Indian currency, and mobile phones seized from his residence on January 28, 2020, under Section 67(2) of the CGST Act. The petitioner was subsequently arrested on January 29, 2020, for offences under Section 132(1)(i) of the Act and released on bail on March 21, 2020. A Sales Tax Officer issued a notice under Section 74 on November 10, 2020, proposing a demand of ₹24,20,900, including penalty. The petitioner argued that the seized items, particularly currency, were not 'goods' and that the seized items should be released due to the lack of a timely notice under Section 67(2).

Key Issues

1. Whether the proper officer has the power under Section 67(2) of the CGST Act to seize currency and other valuable assets when there is no reason to believe they are liable for confiscation? 2. Whether currency falls within the definition of 'goods' or 'things' under Section 67(2) of the CGST Act? 3. Whether the seized items, not relied upon in a subsequent notice, are liable to be returned under Section 67(3) of the CGST Act? The petitioner argued that currency is not 'goods' as defined in the Act and that 'things' should be interpreted narrowly under the doctrine of ejusdem generis, excluding currency. He also contended that seized goods must be returned if no notice is issued within six months, citing I.J. Rao. The Revenue contended that silver bars and cash were seized as 'things' and not 'goods' liable for confiscation, arguing for an expansive interpretation of 'things' and relying on Kanishka Matta. The Revenue also argued that no show cause notice for confiscation was required for items not defined as 'goods'.