You may have noticed in many cases of GST search seizure and inspection that many time offices pressurize the taxable person to pay tax immediately or they may seize assets or cash, bank account etc. In this article we will discuss whether GST officer have power to seize cash during search operation or not?
Provision of Law - Section 67(2) & 2(52)
Section 67(2) of the CGST Act
"Power of inspection, search and seizure:
(2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things:
Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer:
Provided further that the documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act."
Section 2(52) of the CGST Act
"(52) "goods" means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; "
Delhi High Court
Arvind Goyal CA v. Union of India & Ors.
Facts
Arvind Goyal is a Chartered Accountant and a search proceeding was carried out at his residence by GST officers and during this search, the Respondent found cash amounting to INR 1,22,87,000/- which was taken in possession
Issue
Whether cash can be seized by the Respondent during search proceeding under Section 67(2) of the CGST Act?
Held
The Hon’ble Delhi High Court held as under:
- Observed that, a plain reading of Section 67(2) of the CGST Act indicates that the seizure is limited to goods liable for confiscation or any documents, books or things, which may be "useful for or relevant to any proceedings under this Act".
- Further observed that, cash does not fall within the definition of goods and, prima facie, it is difficult to accept that cash could be termed as a ‘thing’ useful or relevant for proceedings under the CGST Act.
- Held that, the action of taking away currency was illegal and without any authority of law.
MP High court
Kanishka Matta v. UOI
The word "things" appearing in Section 67(2) of the CGST Act is to be given wide meaning and any subject matter of ownership within the spear of proprietary or valuable right, would come under the definition of "thing". Thus, it would cover cash also.
Held that, a conjoint reading of Section 2(17)-Business, 2(31)-Consideration, 2(75)-Money and 67(2) of the CGST Act, makes it clear that money can also be seized by an authorized officer, therefore, the authorities had rightly seized the cash amount.
Conclusion Remarks
- Unless money is included in the definition of "Goods", it cannot becomes the subject matter of proceedings under the GST Law.
- For the seizure of any documents, books or things, it is important to prove that the proper officer has reasons to believe that any goods liable to confiscation or any documents or books or things, shall be useful for or relevant to any proceedings under the CGST Act.
Hence, it may be concluded that GST authorities does not have unconditional powers to seize cash during search operations.
CBIC - Instruction No. 1/2022-23 [GST- Investigation]
No recovery of tax is to be made by the GST Authorities during search, inspection or investigation under any circumstances, unless it is voluntary.
In our case, GST officers have no power to seize cash during search operations.
This is our personal view and can not be treated as professional advice.
Video Link for full explanation
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