GST UPDATE ON SEIZURE OF MONEY BY THE INVESTIGATING OFFICER 138/2020-21

vAmidst the pandemic times, we have a decision of Madhya Pradesh High Court stating that cash can be seized by the officers conducting search. This decision has been pronounced in the case of M/S KANISHKA MATTA VS UNION OF INDIA & OTHERS wherein cash amounting to Rs. 66,43,130/- was seized from the residential premises. The petitioner raised thisquestion before the high court stating that money cannot be treated as “Document, Book or Things” (as per the provision of Section 67 of the CGST Act) and so cannot be seized during the course of search of their premises. The outcome of this decision is the subject matter of discussion of our present update.

The petitioner is in the business of Confectionery and Pan Masala Items. Search operation was carried out at the business as well as residential premises of the petitioner and a Panchnama was also drawn. Apart from seizing the goods and documents, the officer had also seized cash upto Rs. 66 lakhs. The petitioner states that the officer is not vested with the power to seize cash as per the provisions of 67(2) of CGST Act 2017. Cash cannot be treated as “Document, Book or Things”. It was also further stated that the delay in filing of returns under section 37 of the Act was due to the lockdown keeping in view of COVID -19 pandemic. Furthermore, it was also pointed that the statements recorded of the husband of the petitioner were retracted.

Relying on the definitions of ‘Business’, ‘Consideration’ and ‘money’ as per the provisions of Section 2(17), 2(31) and 2(75) of the Act and further referring to the provisions of Sections 37 ‘Furnishing details of Outward Supply’ and section 67(2) ‘power of inspection, search and seizure’ along with dictionary meaning of the term ‘things’, it has been concluded by the High court that money can be seized by authorised officer. Reference was made to the meaning of ‘thing’ which as per Black's Law Dictionary, 10th Edition means any subject matter of ownership within the spear of proprietary or valuable right. Further in Wharton's Law Lexicon the word “thing” has been defined and it includes “money”. Moreover, reliance has also been placed on the case of D. Vinod Shivappa Vs. Nanda Belliappa pronounced by Hon’ble Supreme court. It was even concluded by the high court that unless and until the matter pertaining to investigation is finally adjudicated, the question of releasing the amount does not arise.

This judgement has widened the scope of seizure made by the officers to even seize cash found at the time of conducting search and have opened new avenues for the officers. Until now, it was presumed that money cannot be considered as ‘thing’for the purpose of seizure under section 67 of the CGST Act, 2017 but this decision negates such interpretation.
This is solely for educational purpose.

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GST UPDATE ON SEIZURE OF MONEY BY THE INVESTIGATING OFFICER 138/2020-21

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