Case Law Details
N.P. Industries Vs Union of India & Ors. (Delhi High Court)
The petitions were filed seeking release of cash amounting to ₹25,30,000 allegedly seized during a search conducted by the GST Department under Section 67 of the Central Goods and Services Tax Act, 2017. The petitioners contended that the Department was not empowered to seize cash under Section 67(2). The search was conducted on 27 February 2024 at the residential premises of the proprietors, during which unaccounted cash was found. The cash was subsequently handed over to the Income Tax Department, and notices were issued by both the GST authorities and the Income Tax Department, including a show cause notice dated 29 July 2024 and a reassessment notice dated 26 March 2025.
The respondents submitted that the search was based on allegations of availing fake input tax credit through non-existent firms. The Court noted that the seizure had occurred about one year prior and that proceedings had already been initiated by both authorities. It observed that the petitioners had the opportunity to respond to the notices and defend their case before the respective departments.
The Court held that no grounds were made out for interference in the ongoing proceedings. It declined to grant relief for release of cash at this stage and left all legal contentions open. The petitions were disposed of accordingly.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This hearing has been done through hybrid mode.
2. These petitions have been filed by the Petitioner Firms under Article 226 of the Constitution of India seeking release of the cash amounting to Rs. 25,30,000/-, allegedly seized by the GST Department in contravention of the Section 67 of the Central Goods and Services Tax Act, 2017 (hereinafter “the Act”).
3. According to the Petitioner Firms, the GST Department is not empowered to seize cash under Section 67(2) of the Act.
4. The Petitioner Firms – M/s N.P. Industries And M/s Arav Enterprises, are run by the sole proprietors e., Mr. Pradip Jain and Mr. Nitesh Jain, who are father and son. It is the case of the Petitioner Firms that the resumption of the cash took place during a search operation conducted by the Directorate General of Goods & Services Tax Intelligence (hereinafter “the DGGI”) on 27 February, 2024, at the residential premises of the sole proprietors of the Petitioner Firms. The said discovery was allegedly communicated by the DGGI to the Income Tax Department on 29th February, 2024, on the ground that the same was unaccounted cash. Accordingly, the said cash was stated to have been resumed by the DGGI and handed over to the Income Tax Department one week later i.e., on 4th March, 2024.
5. Thereafter, the Show Cause Notice dated 29th July, 2024 has been issued by the DGGI and a notice under Section 148 of the Income Tax Act, 1961 dated 26th March, 2025 for re-assessment has also been issued.
6. At this stage, almost one year and three months later, the resumption of cash by the DGGI has been challenged, after the two notices have been issued.
7. Mr. Harpreet Singh, ld. SSC appearing for the DGGI submits that the allegation against the Petitioners was that fake Input Tax Credits under the Act was being availed of by the Petitioner Firms through 13 non-existent firms. When the search was conducted at the residence of the proprietors of the Petitioner Firms on the basis of the said allegations, unaccounted cash was found and was handed over to the Income Tax Department.
8. In view of the fact that both the Departments e., DGGI and Income Tax Department, have issued their respective notices, and the resumption of cash was allegedly done almost about a year ago, the Petitioner Firms are free to defend their position with the said Departments by replying to the concerned show cause notices.
9. In the opinion of the Court no ground for interference with the ongoing proceedings is made out in the present petitions. All legal contentions are left open for the Petitioner Firms.
10. The petitions are disposed of in these terms. Pending application(s), if any, also stand disposed of.
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