Bombay High Court Quashes GST Seizure Of Trader’s ₹1 crore

Mumbai: The Bombay High Court has quashed the seizure of Rs1 crore in cash by the Directorate General of GST Intelligence (DGGI) from a Mumbai trader, holding that the action was “perverse, arbitrary and without the authority of law” under the GST framework.

A bench of Justices Girish Kulkarni and Aarti Sathe, on Tuesday, allowed a petition filed by Smurti Waghdhare, a Charni Road resident and proprietor of M/s Platinum International, which trades in ferrous and non-ferrous metals and scrap.

The petition challenged two seizure orders issued in June 2023 by officers of the DGGI, Mumbai Zonal Unit, under the Central Goods and Services Tax Act, 2017. Acting on search authorisations, officers had conducted searches at four premises linked to Waghdhare on June 27 and 28, 2023. During the searches, officials seized Rs60 lakh from one of her premises and Rs40 lakh from her parents’ residence.

Waghdhare argued that the seizure was illegal as cash does not fall within the scope of items that can be seized under Section 67(2) of the CGST Act. Her counsel submitted that the provision only permits seizure of “goods, documents, books or things” that may be relevant to proceedings under the Act. It was also argued that the department failed to record the mandatory “reason to believe” required to justify the seizure.

The petitioner further contended that the money belonged to her and had been kept for the medical treatment of her parents, particularly her mother who was undergoing treatment for a heart ailment.

The DGGI opposed the plea, claiming the searches were part of an investigation into an alleged fake input tax credit (ITC) racket involving Waghdhare’s friend, Hitesh Chheda, proprietor of M/s Leo Ferromet. Chheda was arrested in July 2023 under Section 132(1) of the CGST Act and later granted bail.

Rejecting the department’s stand, the court held that the statutory requirements under Section 67(2) had not been satisfied. “The action of the Respondents of seizing the cash found at the premises of the Petitioner… is perverse, arbitrary and without the authority of law,” the bench observed.

Also Watch:

The court noted that the officers had neither recorded “reasons to believe” nor demonstrated how the cash was relevant to any proceedings under the Act.

Expressing “shock and dismay”, the bench also noted that the GST authorities had handed over the seized cash to the Income Tax Department without any legal authority under the CGST Act.

The court quashed both seizure orders and directed the authorities to release the Rs1 crore to Waghdhare with applicable interest within two weeks. However, it clarified that its findings would not affect any income tax proceedings initiated against the petitioner.

To get details on exclusive and budget-friendly property deals in Mumbai & surrounding regions, do visit: https://budgetproperties.in/