Krishija Optics Limited & Anr. Vs Commissioner, CGST (Delhi West) & Ors. (Delhi High Court)
Summary: The Delhi High Court considered Review Petition No. 98/2024 filed by the GST Department seeking reconsideration of its earlier order dated 22 August 2023 in proceedings involving Krishija Optics Limited. The review petition was accompanied by applications for condonation of 97 days’ delay in filing and 38 days’ delay in re-filing. The principal issue in the underlying proceedings concerned the power of GST authorities to seize cash during search proceedings, particularly where the currency was not part of the taxpayer’s stock-in-trade. The earlier order had proceeded on the basis that the dispute was covered by the Delhi High Court’s decision in Deepak Khandelwal, Proprietor of M/s Shri Shyam Metal Vs Commissioner of CGST. In the review proceedings, the Department sought to revisit that conclusion.
The Department explained the 97-day filing delay on the ground that it was a government department and that preparation, finalisation and signing of petitions involved several procedural formalities. The High Court found this explanation plainly insufficient. The application concerning the 38-day re-filing delay repeated the same departmental-procedure explanation but additionally stated that counsel had been indisposed. The Court criticised the casual and repetitive approach to seeking condonation, observing that departmental procedures could not adequately explain prolonged delays. Nevertheless, it accepted counsel’s ill health as a persuasive reason for condoning the re-filing delay. Accordingly, it allowed the application concerning the 38-day re-filing delay but declined to condone the original 97-day filing delay.
Although the review petition was liable to be rejected on limitation grounds, the High Court also examined its substantive basis. The Department attempted to distinguish the original decision by referring to the Kerala High Court’s ruling in Shabu George & Anr. Vs State Tax Officer & Ors.. That decision had criticised the seizure of cash discovered during a GST investigation where the money did not form part of the taxpayer’s business stock-in-trade. The Kerala High Court had emphasised that the powers of GST authorities must be exercised for purposes relevant to the GST legislation and should not be used merely to investigate unexplained wealth or matters within the jurisdiction of income-tax authorities. The Delhi High Court found that this reasoning did not justify reconsidering its earlier decision; rather, the relevant factual distinction reinforced the principle governing seizure of cash unrelated to goods liable for confiscation.
The Court recorded that Krishija Optics Limited was engaged in the business of optical lenses and that the review petitioner did not claim the seized cash constituted stock-in-trade. It also noted that the Kerala High Court had referred to the Madhya Pradesh High Court’s decision in Kanishka Matta Vs Union of India, which had already been considered in the Delhi High Court’s earlier decision in Deepak Khandelwal. Consequently, the Department had not identified any ground warranting review. The Court dismissed the application seeking condonation of the original 97-day delay and the review petition, allowed condonation of the 38-day re-filing delay, and disposed of the remaining stay application. The order underscores the need for a sufficient explanation for procedural delay and the limited scope of review when the relevant legal and factual issues have already been addressed.
Cases Discussed
- Deepak Khandelwal, Proprietor M/s Shri Shyam Metal Vs Commissioner of CGST, Delhi West & Anr. (Delhi High Court) – Neutral Citation: 2023:DHC:5823-DB; Judgment dated 17/08/2023. Followed as the controlling Delhi High Court decision governing the underlying dispute. The Court found no reason to reconsider its earlier order based on this authority.
- Shabu George & Anr. Vs State Tax Officer & Ors. (Kerala High Court) – W.A. No. 514/2023; Judgment dated 24/03/2023. Invoked by the Department to distinguish the earlier judgment. The Court considered the ruling and found no basis for review. The Kerala High Court had regarded seizure of cash unrelated to the business stock-in-trade as unwarranted in the circumstances examined.
- Kanishka Matta Vs Union of India & Ors. (Madhya Pradesh High Court) – W.P. No. 8204/2020; Judgment dated 26/08/2020. Referred to in the quoted judicial discussion and noted as having already been considered in the Deepak Khandelwal decision.
FULL TEXT OF THE ORDER OF DELHI HIGH COURT
CM APPL. 15939/2024(Exemption)
1. Exemption is allowed, subject to just exceptions.
2. The application stands disposed of.
CM APPL. 15938/2024(condonation of delay of 97 days in filing);
CM APPL. 15941/2024 (condonation of delay of 38 days in re-filing);
REVIEW PET. 98/2024 and CM APPL. 15940/2024 (Stay).
3. The only ground explaining the delay in filing the review petition as set out in the application seeking condonation of delay in filing (CM No.15938/2024), is that “the Petitioner is a Government Department and a number of procedural formalities are involved in drafting, finalization and signatures of Petitions, including the present case”.
4. We find the said ground plainly insufficient to explain the inordinate delay of 97 days in filing the present review petition.
5. In addition, we find that there is further delay of 38 days in re-filing. The review petitioner has also filed an application (CM No.15941/2024) seeking condonation of delay in refiling.
6. Two reasons have been provided for the delay in re-filing. The first that the counsel was indisposed and the second is that “the Petitioner is a Government Department and a number of procedural formalities are involved in drafting, finalization and signatures of Petitions, including the present case”.
7. As is apparent from the above, one of the reasons stated in the application for condonation of delay in re-filing the review petition is the verbatim copy of the ground as stated in the application seeking condonation of delay in filing (CM No.15938/2024). We are unable to countenance seeking condonation of delay in such casual manner apart from finding the said reason inadequate for explaining protracted delays. However, the ill health of the counsel is a persuasive ground to condone the delay in re-filing. Thus, the application (CM No.15941/2024) is allowed and the delay in re-filing stands condoned.
8. Notwithstanding that the present review petition is not liable to be entertained on the ground of delay, we have examined the grounds for review of the order dated 22.08.2023. The said order was passed as it was conceded that the issue involved in the petition is covered by an earlier decision of this Court in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr.:
9. The learned counsel for the review petitioner now seeks to distinguish the case on the ground that the judgment rendered by the High Court of Kerala in Shabu George & Anr v. State Tax Officer & Ors. being WA No.514/2023 decided on 24.03.2023 has taken a separate view. This is not a ground to review the order dated 22.08.2023 as the decision in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr. (supra) is squarely applicable in the facts of this case.
10. The High Court of Kerala in the decision of Shabu George & Anr v. State Tax Officer & Ors. (supra) observed as under:-
“In an investigation aimed at detecting tax evasion under the GST Act, we fail to see how cash can be seized especially when it is the admitted case that the cash did not form part of the stock in trade of the appellant’s business. It is evident from the order of the Intelligence Officer that the cash that was seized from the premises of the appellants was not the stock in trade of the quarry business that was conducted by the appellant. The findings of the Intelligence Officer that ‘it is suspicious that this much amount of money kept in the house of M/s.Shabu as idle and not deposited at bank’ and further ‘the amount received as gift on the day of marriage has not been recorded in his income tax return and from this it is evident that the money is from illicit sources’ reveal the extent to which authorities under the Act are misinformed of their powers and the limits of their jurisdiction. The aforesaid findings of the Intelligence Officer could perhaps have been justified had he been an officer attached to the Income Tax department. In the context of the GST Act, the findings are wholly irrelevant. We find that the seizure of cash from the premises of the appellants was wholly uncalled for and unwarranted.”
[underlining added]
11. In the present case as well, it is not the case of the respondents that cash seized was stock in trade. The tax payee is in the business of optical lenses and it is not the review petitioner’s case that the cash seized was stock in trade.
12. It is also noted that the High Court of Kerala has followed the earlier decision of the High Court of Madhya Pradesh in Kanishka Matta v. Union of India and Ors. being W.P. (C) No.8204/2020 decided on 26.08.2020. The said decision was also noted in the case of Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr. (supra).
13. Thus, in view of the above, we find no ground to review the order dated 22.08.2023. The application for condonation of delay (CM No.15938/2024) and the review petition are dismissed. The application for condonation of delay in re-filing (CM No.15941/2024) is allowed. The remaining application (CM No.15940/2024) is also disposed of.
