The Supreme Court while dismissing the Special Leave Petition (SLP) filed by the department on the issue of whether the proper officer is empowered to seize currency under section 67(2) of CGST Act, 2017.
The bench of Justice Abhay S. Oka and Justice Augustine George Masih has dismissed the SLP filed against the order of the Delhi High Court in the case of Bhagwan Gupta and ors. Versus Commissioner of CGST.
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Bhagwan Gupta and ors. Versus Commissioner of CGST: Delhi High Court
Seize Currency Under Section 67(2) of CGST Act, 2017: Interpretation Of Delhi High Court
The legislative intent of permitting seizure of books or documents or things in terms of Section 67 (2) of the gst Act is crystal clear and it does not permit seizure of currency or valuable assets, simply, on the ground that the same represent unaccounted wealth.
The mischief rule or the Heydon’s rule (propounded in the year 1584 in Heydon’s case: 76 ER 637) requires a statute to be interpreted in the light of its purpose. The purpose of the Act is not to proceed against unaccounted wealth.
The provision of Section 67 of the GST Act is also not to seize assets for recovering tax. Thus, applying the principle of purposive interpretation, the power under Section 67 of the GST Act cannot be read to extend to enable seizure of assets on the ground that the same are not accounted for.
The Delhi High Court has held that the word ‘things’ as appearing in Sub-section (2) of Section 67 of the Act is required to be given wide meaning as per Black’s Law Dictionary.
The Court also referred to Wharton’s Law and had noted that the word ‘thing’ is defined to include ‘money’. In addition, the Court had also referred to a decision of the Supreme Court referring to the Heydon’s Rule, and concluded that money was included in the word ‘things’.
The power of search and seizure are drastic powers and are not required to be construed liberally.
Delhi High Court’s Observations – Proper Officer Can’t Seize Currency Under Section 67(2) of CGST Act, 2017
The Delhi High Court observed that the power of the proper officer to seize books or documents or things does not extend to seizing valuable assets for the reasons that they are unaccounted for or may be liable to confiscation under any other statute. Concededly, there is no material to indicate that the particular silver bars or cash were received by the petitioner in specie against any particular fake invoice.
The department averred that cash and silver bars were seized because “the petitioner could not produce any lawful evidence of its purchase/possession and they appeared to be sale proceeds from the goodless/fake invoices being transacted by the petitioner”. The search and seizure operations under Section 67 of the GST Act are not for the purpose of seizing unaccounted income or assets or ensuring that the same are taxed.
The field is covered by the Income Tax Act, 1961. Thus, even if it is assumed that the petitioner could not produce any evidence of purchase of the silver bars or account for the cash found in his possession, the same were not liable to be seized under Sub-section (2) of Section 67 of the GST Act. The power of the proper officer to seize books or documents or things does not extend to seizing valuable assets for the reasons that they are unaccounted for or may be liable to confiscation under any other statute.
Concededly, there is no material to indicate that the particular silver bars or cash were received by the petitioner in specie against any particular fake invoice.
The Delhi High Court has allowed the petition in the favour of the assessee and against the department holding that the Proper Officer is not empowered to seize currency under Section 67(2) Of CGST Act
Conclusion
The department being aggrieved by the decision of the Delhi High Court filed the special leave petition before the Supreme Court.
“No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India,” the court while dismissing the SLP said.
Case Details
Supreme Court
Case Title: Commissioner Of CGST Versus Deepak Khandelwal
Case No.: Special Leave Petition (Civil) Diary No(S). 31886/2024
Date: 14-08-2024
Counsel For Petitioner: N.Venkatraman, A.S.G; Gurmeet Singh Makker, V C Bharathi, H R Rao, Udai Khanna, Santosh Kumar
Counsel For Respondent: Rajesh Jain, Virag Tiwari, Rishabh Jain, Ramashish, Tanya Sarswat, Avadh Bihari Kaushik
Delhi High Court
Case Title: Deepak Khandelwal Proprietor M/S Shri Shyam Metal Versus Commissioner Of CGST
Case No.: W.P.(C) 6739/2021
Date: 17.08.2023
Counsel For Petitioner: Rajesh Jain, Virag Tiwari, Ramashish
Counsel For Respondent: Harpreet Singh, Suhani Mathur, Jatin Kumar Gaur
