Shabu George Vs State Tax Officer (Kerala High Court)
Kerala High Court has ruled in favor of petitioner Shabu George, directing the release of cash seized by tax authorities under the GST Act. The case originated from a search operation on June 9, 2022, where authorities confiscated cash from George’s premises as part of an investigation into alleged tax evasion. The petitioner contended that the seizure was unwarranted, as the cash did not constitute business stock-in-trade. Despite his representation for its return, the authorities took no action until November 2022. The learned single Judge initially directed the State Tax Officer to consider the request but did not find the seizure itself unlawful.
Upon appeal, the division bench examined whether cash could be legally seized under Section 67(2) of the CGST Act, which allows confiscation of “things.” While a Madhya Pradesh High Court judgment (WP(C) No. 8204 of 2020) previously upheld the inclusion of cash under this provision, the Kerala High Court questioned its applicability in this case. The court found no connection between the seized amount and any tax evasion, noting that it was neither stock-in-trade nor directly linked to business transactions. It criticized the Intelligence Officer’s reasoning, particularly the assumption that the cash was illicit merely because it was not deposited in a bank or recorded in income tax returns.
