Case Law Details
Rajeev Chhatwal Vs Commissioner of Goods And Services Tax (East) (Delhi High Court)
Introduction: In the recent case of Rajeev Chhatwal vs Commissioner of Goods And Services Tax (East), the Delhi High Court addressed the contentious issue of whether officers have the authority under Section 67(2) of the CGST Act to seize cash. The case throws light on the limits and scope of this section.
Background of the Case: A search was conducted under Section 67 of the CGST Act at the residence of the petitioner, Mr. Rajeev Chhatwal, where Indian currency amounting to ₹15,92,000/- was seized. Interestingly, Mr. Chhatwal claimed he was not a ‘taxpayer’ under the Act, hence questioning the necessity of the search at his premises.
Events During the Search: During the search, various documents and the mentioned currency kept in a locker were confiscated. The family argued against this seizure, asserting the cash was stored for safety reasons due to ongoing house renovations. The petitioner, along with Asif Khan and Arjun Sharma, was arrested but later released on bail.
Allegations Against the Petitioner: The respondents alleged that Mr. Chhatwal had confessed involvement in a fake invoice scheme. This scheme resulted in an Income Tax Credit (ITC) fraud of approximately ₹11 crores. Despite multiple summonses, Chhatwal allegedly evaded the investigation initially but later cooperated.
Petitioner’s Claims: Mr. Chhatwal refuted the allegations, stating he signed documents under duress. Emphasizing his non-involvement in the fraudulent activities, he challenged the cash seizure on the grounds that Section 67(2) of the CGST Act doesn’t empower such actions.
Court’s Verdict: The Delhi High Court, referencing the recent judgment in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, confirmed that Section 67(2) does not grant officers the power to seize cash. Consequently, the court ordered the return of the seized amount to Mr. Chhatwal, along with the applicable interest.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition, inter alia, praying that directions be issued to the respondent to release Indian currency amounting to ₹15,92,000/-, which was seized by the respondent during the search conducted on 23.01.2020.
2. The respondent conducted a search under Section 67 of the Central Goods and Services Tax Act (hereafter ‘the CGST Act’), at the residential premises of the petitioner being H. No. B-9/6, Lal Quarter, Krishna Nagar, Delhi-110051. The petitioner claims that prior to the same, the petitioner had joined the investigation being conducted by the respondent and the respondent had no reason to conduct any search at the petitioner’s premises more particularly as he is not a ‘taxpayer’ under the CGST Act.
3. During the course of the search, the concerned officers seized various documents as well as currency amounting to ₹15,92,000/- lying in a locker at the petitioner’s premises. The petitioner claims that he was not present at the time of the search but the family members who were present at the material time requested the officials not to seize the said amount as the same belonged to the family. It is averred that they had explained that the currency was kept in the locker as a precautionary measure because the house was under renovation/ construction and a number of labourers were working at the premises.
4. The petitioner along with one Asif Khan and Arjun Sharma were arrested on 01.03.2020 but were later on released on bail.
5. The respondent claim that the petitioner had made a voluntary statement on 29.02.2020 and admitted that he was involved in a racket of issuance of fake invoices along with other accused namely, Asif Khan and Arjun Sharma. The respondent claims that the said persons have issued invoices from various firms without the supply of goods resulting in Income Tax Credit (ITC) of approximately ₹11 crores being availed. The petitioner was summoned on various dates – 23.01.2020, 27.01.2020, 31.01.2020 and 29.02.2020. However, it is alleged that the petitioner attempted to evade the investigation but finally appeared before the concerned officers on 29.02.2020.
6. The respondent states that the investigation is not complete yet and therefore, no show-cause notice has been issued.
7. The petitioner also claims that he had also signed various documents and statements under threat and coercion by the concerned officers. He claims that he is not involved in making any supplies and is not a taxpayer and is not concerned with the alleged fake ITC availed by any other entity as alleged.
8. The petitioner has assailed the seizure of Indian currency amounting to ₹15,92,000/- from its premises inter alia on the ground that Section 67(2) of the CGST Act does not empower any such seizure. The learned counsel for the petitioner has confined the present petition to the aforesaid issue.
9. The aforesaid question is covered in favour of the petitioner by the recent decision in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr.: 2023:DHC:5823-DB.
10. In view of the above, the present petition is disposed of by directing the respondent to remit the amount seized to the petitioner’s bank account within a period of two weeks from today along with accrued interest.
11. It is clarified that the respondent is not precluded from taking any such steps or measures as available in accordance with law.
12. All rights and contentions of the parties are reserved.
13. The petition is disposed of in the aforesaid terms.
