Dhanya Sreekumari vs The State Tax Officer (Ib)
2023 Latest Caselaw 7252 Ker

WPC 21772/2022                    1


                 IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                 PRESENT

                   THE HONOURABLE MR. JUSTICE T.R.RAVI

          TUESDAY, THE 27TH DAY OF JUNE 2023 / 6TH ASHADHA, 1945

                         WP(C) NO. 21772 OF 2022

PETITIONERS:

     1      DHANYA SREEKUMARI
            AGED 43 YEARS
            PROPRIETRIX, M/S. B.K. FOODS PRODUCTS,
            KURATTICKADU, MANNAR P.O.,
            ALAPPUZHA DISTRICT., PIN - 689622
     2      MAHESH.M.M.
            AGED 39 YEARS
            PROPRIETOR, M/S. M.R. TRADERS, VII/159,
            MANNAR CHENGANNUR ROAD, MANNAR,
            ALAPPUZHA, PIN : 689 622.,
            PIN - 689622
            BY ADVS.SRI HARISANKAR V. MENON
            SMT.MEERA V.MENON
            SRI R.SREEJITH
            SMT.K.KRISHNA


RESPONDENTS:
     1      THE STATE TAX OFFICER (IB),
            STATE GOODS AND SERVICES TAX DEPARTMENT,
            ALAPPUZHA - 688 013, PIN - 688013
     2      THE COMMISSIONER OF STATE GST
            SGST DEPARTMENT, TAX TOWERS,
            KILLIPPALAM, KARAMANA,
            THIRUVANATHAPURAM - 695 002., PIN - 695002
     3      THE JOINT COMMISSIONER (IB)
            SGST DEPARTMENT, ERNAKULAM,
            KOCHI - 682 011, PIN - 682011

     4
            ASSISTANT COMMISSIONER (IB)
            STATE GST DEPARTMENT,
            PATHANAMTHITTA, PIN - 689645
            BY DR. THUSHARA JAMES, SR. GOVT.PLEADER


         THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON

30.03.2023, THE COURT ON 27.06.2023 DELIVERED THE FOLLOWING:
 WPC 21772/2022                       2




                               T.R. RAVI, J.
                 --------------------------------------------
                        WP(C)No.21772 of 2022
                 --------------------------------------------
                  Dated this the 27th day of June, 2023


                               JUDGMENT

The petitioner is running an industrial unit that is involved in

the manufacture and sale of Idly/Dosa batter, Parotta (half-cooked),

Chappathi, etc. It is stated that the Unit has been functioning from

the year 2010 onwards, and the 1 st petitioner was awarded the Best

Woman Entrepreneur Award 2016 by the Government of Kerala. The

1st petitioner is marketing her products through the 2 nd petitioner. An

Investigating Team represented by the 1 st respondent conducted an

inspection of the Manufacturing Unit as well as the residence of the

1st petitioner. The team found Rs.32,73,900/- kept as cash and

seized the same as per the order of seizure dated 13.06.2022, a copy

of which has been produced as Ext.P1. It can be seen from Ext.P1

that along with cash, pay-in slips for depositing an amount totalling

Rs.21,02,000/- were also seized by the respondents. According to

the petitioner, pay-in-slip for depositing a further sum of

Rs.8,00,000/- was also present in the Safe from which a sum of

Rs.11,71,900/- was seized, but the same had not been noted in the

order of seizure. The case of the petitioner is that the respondents

are not entitled to seize cash by invoking the power available under

Section 67 of the CGST Act. The petitioner has also preferred Ext.P4

representation before the 4th respondent for the return of the seized

cash as early as on 22.06.2022. When no action was forthcoming,

the writ petition was filed seeking direction for the return of the cash

and for quashing Ext.P1 to the extent it seizes the cash. In the

alternate, there is also a prayer for a direction to consider and pass

orders on Ext.P4 application.

2. The 4th respondent has filed a counter affidavit. It is

stated in paragraph 4 that on preliminary verification, it is found that

there is tax evasion. It is contended that the word 'things' in Section

67(2) will include cash also, and hence the seizure of cash was very

much in accordance with the law. It is also submitted that if the cash

seized is released, it will disintegrate the entire proceedings of

verification of the seized article, which is in progress. Reliance is also

placed on the judgments in Smt. Kanishka Matta V. Union of

India & Ors. ([2021] 89 GSTR 56 (MP)), BA Continuum India

Pvt. Ltd V. Union of India and Others ([2021] 89 GSTR 73

(Bom)) and the decision of Delhi High Court in WP(C)

No.12499/2021 in support of the contention that cash can also be

seized under Section 67 of the CGST Act.

3. Heard the counsel for the petitioner and Smt.Thushara

James, learned Senior Government Pleader for the respondents.

4. The counsel for the petitioners placed before me the

judgment of a Division Bench of this Court in W.A.No.514 of 2023

filed against the judgment of a Learned Single Judge in W.P.

(C)No.39406 of 2022. The said writ petition was also concerning the

release of seized cash. The learned Single Judge had directed the

concerned Officer to consider and pass orders on the representation

preferred for the release of cash, rejecting the contention of the

assessee that the seizure of cash was unwarranted since the

investigation was on alleged evasion of tax. The Division Bench,

after considering Section 67 of the CGST Act, held that the authority

to seize" things" may include cash in appropriate cases, but it was

unwarranted in the case before the Division Bench. The Court

specifically held that in an investigation aimed and detecting tax

evasion under the CGST Act, the Court fails to see how cash can be

seized, especially when it is an admitted case that the cash did not

form part of the stock-in-trade of the appellant's business. In the

said case, the appellant was involved in the business of quarry. The

Court also considered the findings of the Intelligence Officer in the

said case that it was suspicious as to why large amounts had been

kept idle without being deposited in the Bank. The Court held that

such findings only reveal the extent to which the authorities under

the Act are misinformed of their powers and the limits of their

jurisdiction. It was observed that the said findings might be justified

if the Officer was an Officer attached to the Income Tax Department

and that in the context of the GST Act, the findings are wholly

irrelevant. On the above said findings, the Division Bench directed

the respondents therein to forthwith release the cash against a

receipt to be obtained from the appellant. In the case on hand also,

it is admitted that the petitioners are engaged in the manufacture

and sale of dosa/idly batter, etc., and that cash has been seized from

the house. An additional fact is that the authorities had also seized

pay-in-slips which would show that the cash was intended to be

deposited in the Bank. As observed by the Division Bench, the cash

being not a stock-in-trade of the petitioners, was not a thing that

ought to have been seized. The seizure was one year back, and

there is no reason to retain it any further.

5. In the above circumstances, the writ petition is disposed

of directing the respondents to release the cash seized from the

petitioners forthwith, at any rate, within a week from the date of

receipt of a copy of this judgment.

Sd/-

T.R. RAVI JUDGE

dsn

APPENDIX OF WP(C) 21772/2022

PETITIONER EXHIBITS Exhibit P1 ORDER OF SEIZURE ISSUED BY THE 1ST RESPONDENT DTD. 13-06-2022 Exhibit P2 COPY OF PAY-IN-SLIP FOR RS. 4.5 LAKHS IN SBI DTD. 14-06-2022 Exhibit P3 COPY OF PAY-IN-SLIP FOR RS. 3.5 LAKHS IN HDFC BANK DTD. 14-06-2022 Exhibit P4 COPY OF REPRESENTATION SUBMITTED BY THE 1ST PETITIONER BEFORE THE 4TH RESPONDENT DTD. 22-06-2022