Court Holds Central Goods and Services Tax Act, 2017, Section 67(2) Does Not Authorize Seizure of Money, Emphasizes Strict Construction of Search and Seizure Powers
In a landmark judgment delivered on September 14, 2026, the Rajasthan High Court (Division Bench, Jaipur Bench) unequivocally held that the seizure and retention of cash during GST search proceedings under Section 67(2) of the Central Goods and Services Tax Act, 2017 ("CGST Act") are not authorized by law. The bench, comprising Mr. Arun Monga and Ashutosh Kumar, JJ., ordered the release of Rs.47,45,000/- seized from the residential premises of petitioner Bhagwan Tirthani and others during a GST search operation conducted in November 2022.
The petitioners challenged an Order-in-Original dated June 11, 2024, passed by the Assistant Commissioner, Anti-Evasion, CGST, Jaipur, which upheld confiscation of the seized cash and imposed penalties, alleging it represented sale proceeds from unaccounted cigarette sales. The petitioners contended that the seizure of cash was beyond the statutory authority conferred under Section 67(2) of the CGST Act, which permits seizure only of "goods liable to confiscation" or "documents or books or things" relevant to GST proceedings. Crucially, the Act expressly excludes "money" from the definition of "goods" under Section 2(52).
The Court undertook a detailed analysis of the statutory provisions, emphasizing that "goods" excludes "money" and "securities," and that the phrase "documents or books or things" must be construed ejusdem generis (of the same kind) with the preceding words, thus limiting seizure to evidentiary material. The Court rejected the argument that currency can be seized as "things" merely because it is alleged to be proceeds of unaccounted sales.
The judgment highlighted that other statutes like the Income-tax Act, 1961, and the Customs Act, 1962, explicitly empower authorities to seize cash and currency, demonstrating Parliament's conscious exclusion of such power in the CGST Act. The Court underscored that powers of search and seizure are coercive and invasive, thus warranting strict construction in favor of the individual.
Addressing the factual matrix, the Court noted that although cigarettes were seized from the petitioner's business premises and allegations of unaccounted sales existed, no direct nexus was established between the seized cash and taxable supplies at the time of seizure. The Court emphasized that subsequent adjudicatory findings cannot retrospectively validate an unlawful seizure.
The Court also dismissed the preliminary objection regarding availability of alternate statutory remedies, holding that writ jurisdiction is maintainable when the challenge goes to the root of jurisdictional authority of officers to seize cash.
As a result, the Court directed the release of the entire seized amount to the persons from whom it was seized, subject to any lawful claims or attachments under other statutes. It further directed payment of applicable interest from the date of seizure until actual release. The respondents were granted six weeks from the date of the order's upload to effectuate the release.
This judgment aligns with recent precedents from the Delhi and Bombay High Courts, which have also held that Section 67(2) of the CGST Act does not authorize seizure of cash. The Court respectfully diverged from the contrary view taken by the Madhya Pradesh High Court in Kanishka Matta v. Union of India, reiterating that legislative intent and statutory language do not support inclusion of currency within the scope of seizure under the GST law.
The decision reaffirms the principle that tax authorities must operate strictly within the statutory framework, and cannot extend coercive powers beyond those expressly conferred by Parliament. It safeguards proprietory rights against unauthorized deprivation of money during GST investigations.
Bottom Line:
Central Goods and Services Tax Act, 2017, Section 67(2) does not authorize seizure and retention of cash during GST search proceedings - Money is expressly excluded from definition of "goods" under Section 2(52) - Word "things" in Section 67(2) cannot be interpreted to include currency merely because it is alleged to be sale proceeds of unaccounted goods - Cash seized without statutory authority is liable to be released with applicable interest.
Statutory provision(s):
Central Goods and Services Tax Act, 2017 Sections 2(31), 2(52), 2(75), 2(101), 67(1), 67(2), 67(3), 67(6), 67(7), 67(11), 107, 130(1); Income-tax Act, 1961 Section 132(1); Customs Act, 1962 Section 2(22)
