Facts: The Petitioner, a proprietor of M/s. Platinum International registered under the GST Act, challenged two seizure orders issued in June 2023. The Respondents (DGGI officers) conducted searches at the Petitioner's office, her residence, and her parents' residence. During these searches, they seized cash totaling INR 1 Crore (INR 60 Lakhs from one premises and INR 40 Lakhs from another). The seizure was purportedly linked to an investigation into a fake Input Tax Credit (ITC) racket involving a friend of the Petitioner, Mr. Hitesh Chheda. The Petitioner contended that the cash was for her mother's medical treatment and that the GST authorities had no power to seize "money" as it is excluded from the definition of "goods". During the proceedings, it was revealed that the Respondents had handed over the seized cash to the Income Tax Department.
Procedural Posture: The Petitioner approached the High Court of Judicature at Bombay by filing a Writ Petition under Article 226 of the Constitution of India, seeking the quashing of the seizure orders and the release of the seized cash with interest.
Issue: Whether the seizure of cash by the GST authorities under Section 67(2) of the CGST Act, 2017, was legally sustainable, and whether the authorities had the power to seize "cash" as "goods, documents, books or things" without recording "reasons to believe" that such cash was useful or relevant to any proceedings.
Holding: No, the seizure was illegal. The Court quashed the seizure orders and directed the Respondents to release the cash with interest to the Petitioner.
Reasoning: The Court reasoned that the power of seizure under Section 67(2) of the CGST Act is not plenary and requires the fulfillment of specific jurisdictional facts, primarily the existence of "reason to believe" that the items are useful for or relevant to proceedings. The Court observed that "reason to believe" cannot be a subjective satisfaction or a mere pretence; it must have a rational connection with the material on record. In this case, the Respondents failed to record any reasons why the cash was liable for seizure or how it was relevant to GST proceedings. Furthermore, the Court noted a violation of Section 67(7), as no notice was issued within six months of the seizure. The Court also expressed shock that the GST authorities handed over the cash to the Income Tax Department without any legal authority under the CGST Act to do so.