Cash Seized by GST Department to Be Released Due to Lack of Authority to Seize It From the Dealer Premises | HC

Case Details: Centre C Edtech (P.) Ltd. vs. Intelligence Officer, Offiintelligence Unit, State Goods And Service Tax Department, Kerala - [2025] 171 taxmann.com 659 (Kerala)

Judiciary and Counsel Details

• Dr A.K. Jayasankaran Nambiar & Easwaran S., JJ.
• Aditya Unnikrishnan, Anil D. Nair (SR.) & Smt Telma Raju, Advs. for the Petitioner.
• Smt Resmitha Ramachandran, Government Pleader, Shajahan V.K., Senior Government Pleader & Jose Joseph, SC for the Respondent.

Facts of the Case

The assessee was subjected to proceedings under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act). In the course of the investigation, officers of the State GST Department seized cash from the premises of the assessee. Subsequently, the seized cash was transferred to the Income Tax Department pursuant to a requisition made under Section 132A of the Income Tax Act, 1961. Aggrieved by the seizure and subsequent transfer of cash, the assessee filed a writ petition before the High Court of Kerala, contending that the GST authorities lacked the power to seize cash unless it constituted stock-in-trade. The assessee sought a direction for the return of the seized cash, asserting that the initial seizure was unlawful and that its continued retention was without jurisdiction.

High Court Held

The Hon’ble High Court of Kerala held that the GST Department does not possess the authority to seize cash from the premises of a dealer unless it forms part of the stock-in-trade. The Court emphasized that the initial seizure was illegal and, consequently, the subsequent transfer to the Income Tax Department did not validate its retention. The principle enshrined in Articles 265 and 300A of the Constitution, which prevents the deprivation of property without the authority of law, was reaffirmed. Accordingly, the Court directed the Income Tax Department to release the seized cash within 10 days while permitting both the GST and Income Tax Departments to continue their respective proceedings independently.

List of Cases Reviewed

• Sabu George & Ors. v. Sales Tax Officer (IB) & Ors.[(2023) 153 Taxman.com 46] – (para 7) followed
• Sales Tax Officer (IB) & Ors. v. Sabu George & Ors. [(2023) 153 Taxman.com 138] – (para 7) followed