“Court Directs Release of ₹15,92,000 Seized in CGST Act Search, Citing Lack of Empowerment Under Section 67”

In a significant ruling, the Delhi High Court has directed the Commissioner of Goods and Services Tax (East) to release ₹15,92,000 that was seized during a search operation. The court observed that the seizure was not empowered under Section 67 of the Central Goods and Services Tax Act (CGST Act).

The bench, consisting of Hon’ble Mr. Justice Vibhu Bakhru and Hon’ble Mr. Justice Purushaindra Kumar Kaurav, delivered the judgement on August 24, 2023. The petitioner, Rajeev Chhatwal, had filed the case seeking the release of the seized amount.

“The petitioner contends that the seizure was not empowered by the said section,” the court noted in its judgement. This observation was pivotal in the court’s decision to direct the respondent to “remit the amount seized to the petitioner’s bank account within a period of two weeks from today along with accrued interest.”

The petitioner was arrested along with two others, Asif Khan and Arjun Sharma, but was later released on bail. The respondent had alleged that the petitioner was involved in a racket of issuing fake invoices. However, the petitioner denied these allegations and claimed that he had signed various documents under coercion.

The court also referred to a recent decision in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr.: 2023:DHC:5823-DB, which favored the petitioner’s claim regarding the seizure.

While the court has directed the release of the seized amount, it clarified that “the respondent is not precluded from taking any such steps or measures as available in accordance with law.”

This ruling sets an important precedent for cases involving seizures under the CGST Act and emphasizes the need for authorities to strictly adhere to the provisions of the law.

Date of Decision:  August 24, 2023

RAJEEV CHHATWAL vs COMMISSIONER OF GOODS AND  SERVICES TAX (EAST)