M/S. Kota Metals vs. Union Of INDIA

Facts

The petitioner, M/s. Kota Metals, filed a writ petition seeking directions to open the provisional attachment of its bank accounts and credit ledger, and to release cash seized by GST authorities. During a search on February 14, 2024, cash amounting to Rs. 4.77 lakh was seized from the petitioner's premises under Form GST INS-02. The petitioner challenged the jurisdiction of the respondents to seize cash under Section 67 of the CGST Act and argued that the continued attachment and retention of seized cash were contrary to statutory provisions and natural justice. During arguments, the petitioner withdrew prayers related to bank accounts and credit ledger, confining the petition to the release of seized cash.

Held

The Court held that the seizure and retention of Rs. 4.77 lakh in cash from the petitioner's premises under Section 67(2) of the CGST Act, 2017, cannot be sustained. The Court reasoned that Section 67(2) authorizes the seizure of goods liable to confiscation and documents, books, or things useful or relevant to proceedings, but it does not explicitly mention money, cash, or currency. The Court emphasized that money is expressly excluded from the definition of 'goods' under Section 2(52) of the CGST Act. Furthermore, the expression 'things' in Section 67(2) must be interpreted in light of associated words 'documents' and 'books', indicating an evidentiary character, and cannot be construed as a general power to seize any movable asset. The Court noted that other statutes, such as the Income-tax Act and Customs Act, specifically provide for the seizure of money or currency, highlighting the omission of such a power in the CGST Act. Consequently, the respondents were directed to release the seized amount to the petitioner. The petitioner was also held entitled to applicable interest from the date of expiry of a reasonable period after seizure until actual payment, to be determined and disbursed by the respondents. The amount was to be released within six weeks unless lawfully prevented by a specific order from a competent court or authority.

Key Issues

1. Whether the seizure of cash under Section 67(2) of the CGST Act, 2017, is permissible when money is expressly excluded from the definition of 'goods' and the provision does not explicitly authorize the seizure of cash. - Petitioner's argument: The petitioner contended that Section 67(2) of the CGST Act does not grant the authorities the power to seize cash. They argued that 'money' is not included in the definition of 'goods' under Section 2(52) and that the term 'things' in Section 67(2) should be interpreted ejusdem generis with 'documents' and 'books', implying an evidentiary purpose, which cash does not serve in the same manner. They relied on the omission of express power to seize cash, contrasting it with other statutes like the Income-tax Act, 1961, and the Customs Act, 1962, which specifically permit seizure of money or currency. - Revenue's argument: The respondents sought to justify the seizure by placing cash within the expression "documents or books or things".