Bombay High Court Orders Immediate Return of Rs 1 Crore Seized Cash by DGGI
In a significant legal ruling, the Bombay High Court has mandated the Directorate General of Goods and Services Tax Intelligence (DGGI), Mumbai zone, to return Rs 1 crore in cash that was seized from a trader's office and her parents' residence in Charni Road. The court found the seizure orders to be unlawful and without proper authority under the Central Goods and Services Tax (CGST) Act.
Court Quashes Seizure Orders and Directs Swift Action
Justices Girish Kulkarni and Aarti Sathe quashed and set aside two seizure orders issued by the DGGI. They ordered the "forthwith" release and payment of the amount directly to Smruti Waghdhare's bank account, along with applicable interest, within two weeks. The judges emphasized that the seizure was conducted without the necessary legal foundation, stating, "We are of the considered view that the impugned seizure orders and consequent seizure of the cash... is without any authority of law and could not have been made under any of the provisions of the CGST Act."
Background of the Case and Seizure Details
Smruti Waghdhare is the proprietor of Platinum International, a company involved in trading metals and scrap. The DGGI conducted searches on June 27 and 28, 2023, resulting in the recovery of Rs 60 lakh from her office at Laxmi Niwas and Rs 40 lakh from her parents' residence at Jitekarwadi. According to her advocate, Abhishek Rastogi, the cash was set aside for the medical treatment of her elderly parents.
DGGI's Allegations and Court's Rebuttal
DGGI's advocate, Jitendra Mishra, argued that the seizure was part of an effort to uncover a large-scale racket operated by Waghdhare and her associate Hitesh Chheda, allegedly involving fake input tax credit claims without actual movement of goods. However, the judges dismissed this, stating that the seizure of cash was "perverse, arbitrary and without the authority of law." They highlighted that seizure under GST laws should be limited to goods, documents, or items liable to confiscation, requiring a "reason to believe" recorded by an officer of at least joint commissioner rank—a condition not met in this case.
Legal Grounds for the Ruling
The court cited a March 1976 Supreme Court judgment to underscore the importance of the "reason to believe" condition, which forms the "bedrock" for initiating seizure proceedings. Since two intelligence officers failed to record this, the judges deemed the seizure "completely illegal and not justified." Additionally, as no notice was issued to Waghdhare within six months of the seizure, the DGGI was obligated to release the cash. The judges also noted Waghdhare's role as a caregiver for her parents, with her mother requiring urgent medical treatment for a heart condition, supported by hospital documents.
Surprise Over Cash Handover to Income-Tax Department
Expressing surprise, the judges noted that the seized cash had been handed over to the income-tax department for further proceedings, adding another layer of irregularity to the case. This move was seen as inconsistent with proper legal procedures, further justifying the court's decision to order the return of the funds.
This ruling reinforces the necessity for tax authorities to adhere strictly to legal protocols when conducting seizures, ensuring that citizens' rights are protected under the law.
