Background:
The case originated from a search conducted by the Directorate General of Goods and Service Tax Intelligence (DGGI) at the business premises of M/s. K.M. Food Infrastructure Pvt. Ltd. and M/s. Apparent Marketing Pvt. Ltd. During this search, various documents and records were seized, alongside a substantial amount of cash.
Legal Issue:
At the heart of the legal dispute was the question of whether the DGGI had the lawful authority under Section 67 of the Central Goods and Services Tax (CGST) Act to seize cash during its investigation.
Court’s Analysis and Verdict:
Upon careful examination of the relevant provisions of the CGST Act, the court concluded that while the legislation empowered the proper officer to inspect premises and seize goods, it did not explicitly authorize the seizure of cash.
Precedent and References:
In reaching its decision, the court referenced prior judgments, notably the case of Kanishka Matta v. Union of India, which clarified the interpretation of the term “things” in Section 67 of the CGST Act.
Conclusion:
In a significant ruling favoring the petitioners, the Hon’ble Delhi High Court deemed the seizure of cash by the DGGI as illegal and arbitrary. Consequently, the court directed the DGGI to remit the proceeds of the fixed deposit to the respective bank accounts of the petitioners. However, it emphasized that this decision did not hinder the DGGI from taking lawful actions under the CGST Act in accordance with the law.
