Order Date – 17 August 2023

Parties: Mr. Deepak Khandelwal Proprietor M/s Shri Shyam Metal Vs Commissioner of GST, Delhi West & Anr.

Facts – 

• The Petitioner, Mr. Deepak Khandelwal Proprietor M/s Shri Shyam Metal carries on business of trading in non-ferrous metals. 
• During a search conducted on 28.01.2020 at the petitioner’s residence certain items like two silver bars, cheque books, mobile phones and currency were seized. The petitioner was arrested and subsequently released on bail on 21.03.2020. On 10.11.2020 a notice under Section 74 issued proposing demand of duty and penalty and petitioner filed a reply to the same. 
• On 23.03.2021 the petitioner requested to release the goods, documents and cash seized contenting that even if the proviso to Sub section (7) of Section 67 of the Act was applicable, no notice was issued with respect to the seizure of goods, within a period of six months from the date of seizure.

Issue – 

• Whether the seized goods were liable to be restored?

Order –

• The Divisional Bench of Hon’ble High Court observed that silver bars being movable assets are not securities within the meaning of Clause (h) of Section 2 of the Securities Contract (Regulation) Act, 1956. Thus, silver bars are included in the term ‘goods’ as defined under Sub-section (52) of Section 2 of the Act. 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
• 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 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.
• In terms of Sub-section (3) of Section 67 of the Act, the documents, books and things seized under Sub-section (2) which have not been relied upon for issuance of a notice, under the Act or Rules made thereunder, are required to be returned to the person from whom such items were seized within a period not exceeding thirty days from the issuance of notice.
• The demand of CGST/SGST raised in the notice dated 10.11.2020 issued under Section 74 of the Act would take into account the ineligible / bogus GST Input Tax Credit. The notice under Section 74 of the Act does not specify any particular reasons to show that “Input Tax Credit has been wrongly availed or utilized”. In the circumstances, the notice dated 10.11.2020 is not the “notice” as referred to under Sub-section (3) of Section 67 of the Act.
• Thus, even if, it is accepted, the proper officer could not seize the currency and other valuable assets in exercise of powers under Sub-section (2) of Section 67 of the Act, the same were required to be returned by virtue of Sub-section (3) of Section 67 of the Act because the silver bars and currency have not been relied upon in the notice issued subsequently.
• The respondents are directed to forthwith release the currency and other valuable assets seized from the petitioner during the search proceedings conducted on 28.01.2020. The appeal is allowed.