Cash Seizure Challenge Rejected Due to Ongoing GST & Income Tax Proceedings

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.