Return Rs 1 crore cash seized from trader’s premises, Bombay high court orders GST authority

MUMBAI: The Bombay high court has ordered the Directorate General of Goods and Services Tax Intelligence (DGGI), Mumbai zone, to return Rs 1 crore cash seized from a trader’s office and her parents’ residence in Charni Road.Justices Girish Kulkarni and Aarti Sathe quashed and set aside two seizure orders and directed “forthwith” release and payment of the amount directly to Smruti Waghdhare’s bank account with applicable interest within two weeks. “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,’’ they said on Tuesday.Waghdhare is the proprietor of Platinum International, which is engaged in trading of metals and scrap. Searches were conducted on June 27 and 28, 2023. From her office at Laxmi Niwas, Rs 60 lakh was recovered and Rs 40 lakh from her parents’ residence at Jitekarwadi. Her advocate Abhishek Rastogi said the money was kept for their medical treatment.DGGI’s advocate Jitendra Mishra said the seizure was to unearth a huge racket operated by Waghdhare and her friend Hitesh Chheda (whose office in Laxmi Niwas was also searched) to claim fake input tax credit without movement of goods. But the judges said seizing of cash “by way of seizure orders is perverse, arbitrary and without the authority of law.” They agreed with Rastogi that seizure has to be of goods, documents or things liable to confiscation, for which an officer not below joint commissioner rank should record “reason to believe” that cash was liable to be seized. Two intelligence officers did not record it. DGGI gave “a go-by” to the expression “reason to believe”—which forms the “bedrock” to initiate seizure proceedings.Citing a March 1976 Supreme Court judgment, the judges said “when this very important condition of ‘reason to believe’ has not been fulfilled by the respondents, we are of the firm view that the seizure of cash is completely illegal and not justified.” Also, as no notice was issued to Waghdhare within six months of seizure, “the respondents are liable to release the cash back to the petitioner.” They said “even otherwise Waghdhare is a care-giver of her elderly parents’’ and her mother is undergoing treatment for a heart ailment “for which she is in need of urgent cash.” Hospital documents show her medical condition. The judges were “surprised” that the seized cash was handed to the income-tax department for further proceedings.