Centre C Edtech Private Limited Vs Intelligence Officer (Kerala High Court)
Kerala High Court, in a recent judgment concerning Centre C Edtech Private Limited, has ruled that the seizure of cash by the state’s GST Department and its subsequent transfer to the Income Tax Department was illegal. The court’s decision stemmed from writ appeals challenging the initial seizure, conducted under Section 74 of the CGST/SGST Act, which the appellants argued was beyond the department’s legal authority. The crux of the matter revolved around the GST Department’s seizure of cash, which was not part of the company’s stock-in-trade, and the subsequent handover to the Income Tax Department under Section 132A of the Income Tax Act.
The court highlighted the fundamental principle that government authorities cannot expropriate property without legal sanction, citing Articles 265 and 300A of the Indian Constitution. The judges emphasized that the initial seizure by the GST Department was “blatantly illegal” due to a lack of legal authority. This stance was reinforced by referencing prior judicial precedents, specifically the Division Bench ruling in Sabu George & Ors. v. Sales Tax Officer (IB) & Ors., which established that GST authorities cannot seize cash from a dealer’s premises unless it constitutes stock-in-trade. This ruling was further upheld by the Supreme Court in Sales Tax Officer (IB) & Ors. V Sabu George & Ors..
The court rejected the argument that the transfer of the seized cash to the Income Tax Department under Section 132A of the Income Tax Act validated the initial illegal seizure. The judges asserted that the continued retention of the cash, regardless of which department held it, remained unlawful. Consequently, the High Court ordered the Income Tax Department to release the seized cash to the appellants within ten days. The court also directed the continuation of both the GST and Income Tax proceedings, but stipulated that the Income Tax proceedings must proceed without considering the previously illegally seized cash as legally seized under section 132A of the IT act.
The judgement stipulated the continuation of the Section 74(1) CGST/SGST Act proceedings, ensuring the appellants would receive a hearing. The court’s decision underscores the importance of adherence to legal procedures by government authorities and reinforces the protection of citizens’ property rights against unauthorized seizures.
Read SC Judgment: SC upholds Kerala HC ruling: GST Dept lacked authority to seize cash
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
