Cash, Bullion, Jewellery Are Not Goods So Not Liable for Confiscation/Seizure Under GST
The fiscal statutes are meant to be interpreted strictly. There cannot be a read between the lines phenomena in interpreting such statutes. The things required to be done and the manner by which it is done are prescribed in the concerned statute and the rule books. Any action contrary to the procedure prescribed is void ab initio and cannot be upheld. In this paper, we will examine the power, extent, and limitation of GST officials in seizing cash, jewellery, bullions at the time of search/investigation.
Power of Inspection, Search, and Seizure (Section 67): Under Section 67 of the GST Act, the proper officer, not below the rank of Joint Commissioner, is granted the power of inspection, search, and seizure. This section outlines the authority and procedures for such actions. The proper officer in terms of Section 67 of the GST Act has power of inspection search and seizure. For the purpose of this Article the relevant portion of Section 67 is as follows:
“67. Power of inspection, search and seizure- (1) Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that……….
(2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section(1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things:……….”
A bare provision of the aforesaid provision makes it abundantly clear that the proper officer not below the rank of joint commissioner has power to seize the goods also but that seizure is subject to following conditions, which are as follows:
a) The subject of seizure must confirm the definition of goods in terms of Section 2(52) of the GST Act.
b) He must have reasons to believe that goods are liable for confiscation.
Definition of Goods: Here goods as defined in Section 2(52) means every kind of movable property other than money and securities. Meaning thereby, money which includes currency and securities are not a part of the goods in terms of the Section 2(52) of GST Act and hence, cannot be confiscated/seized.
Reason to Believe: Secondly, even for the goods or paper the officer must possess “reason to believe” that goods are liable to confiscation or documents are useful in investigation. It is settled that reason to believe is not an empty formality. The concerned officer must posses something in hand which suggest that seized goods are liable for confiscation and not otherwise.
Court Rulings – Cash Exclusion: The Hon’ble High Court of Delhi in Deepak Khandelwal v. Commissioner of CGST, Delhi (W.P.(C) No. 6739 of 2021, dated 17-08-2023) has settled this issue in after elaborately examining the contentions raised by both sides and held as follows:
“Cash (Indian currency) is clearly excluded from the definition of the term ‘goods’ as the same falls squarely within the definition of the word ‘money’ as defined in sub-section (75) of Section 2 of the Act.
Having stated the above, we are of the view that it would not be apposite to construe the word ‘things’ under sub-section (2) of Section 67 of the Act to be mutually exclusive to the term ‘goods.” The term ‘goods’ as used in sub-section (2) of Section 67, essentially, relates to goods, which are subject matter of supplies that are taxable under the Act. Admittedly, the goods that can be seized under sub-section (2) of the Act are goods, which the proper officer believes are liable for confiscation.”
The Broad Interpretation of “Goods”: The Hon’ble High Court in no uncertain terms has held that the word “goods” as defined in the GST Act is a wide term and for a seizure of the same it must be liable for confiscation. The relevant para of the judgment are as follows:
“The word ‘goods’ as defined under sub-section (52) of Section 2 of the Act is in wide terms, but the said term as used in Section 67 of the Act, is qualified with the condition of being liable for confiscation. Thus, only those goods, which are subject matter of or are suspected to be subject matter of evasion of tax. During the course of search under sub-section (2) of Section 67 of the Act, the officer conducting the search may find various types of movable assets. Illustratively, in any office premises, one may find furniture, computer, communication instruments, air conditioners etc. Those assets although falling under the definition of ‘goods’ cannot be seized, if the proper officer has no reason to believe that those goods are liable to be confiscated.”
Personal Assets Protection: Again, the Hon’ble Delhi High Court in Baleshwari Devi v. Additional Commissioner (Anti-Evasion), Central Goods and Service Tax (W.P.(C) 5056 of 2023 dated July 21, 2023) held that “Revenue Department has no power to take possession of the personal assets without official seizure under the Central Goods and Services Tax Act, 2017.”
Distinction Between Seizure and Tax Recovery: The legislature while enacting section 67 of the GST Act has made abundantly clear that the seizure/confiscation of “goods” is to be done only and only if it helps the revenue in quantifying and demanding the tax and in no case, it is a machinery provision for recovery of tax. There is a separate provision for recovery of tax and we should not try to mingle the two important aspects of GST i.e., seizure/confiscation for the said of investigation and recovery of tax as prescribed.
Conclusion: It has been noticed in many cases that during the investigation even cash, jewellery, bullions are seized in blatant violation of GST provision and it is sincerely hope that now onwards Deepak Khandelwal (supra) will be followed in its true spirit. Understanding the legal intricacies surrounding the seizure of assets under GST is essential for both taxpayers and GST officials. Recent court rulings, particularly the landmark Deepak Khandelwal case, have clarified the exclusion of cash from the definition of “goods.” This ensures that the power of seizure is exercised judiciously and in alignment with the principles of GST law. Clear legal distinctions between seizure and tax recovery should be maintained to prevent the undue confiscation of assets during investigations.
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