Kerala HC: GST Dept Cannot Illegally Seize and Transfer Cash to IT Dept U/S 132A

It was mentioned by the Kerala High Court that the illegal cash seizure via the GST department and handing over to the income tax department is not regulatory u/s 132A of the Income Tax Act.

The Division Bench of Justices A.K. Jyasankaran Nambiar and Easwaran S. ruled that “Cash amount seized from the premises of the assessee cannot be retained either by the GST Department of the State or the Income Tax Department prior to a finalization of respective proceedings initiated by them,”

The taxpayer/applicant in the same case is not satisfied with the seizure of the cash from their premises via the officers attached to the GST department of the state in the course of proceedings initiated u/s 74 of the CGST/SGST Act.

The seized car was subsequently handed over to the Income tax department post intimating the said department of the seizure of cash.

The writ petition has been furnished by the taxpayer asking for a direction to return the seized cash to them as the GST department did not have the authority to seize the cash from the premises of any dealer/ service provider until the cash itself formed part of the stock in trade of the dealer/service provider.

The taxpayer has been sought by the Single Judge to approach the Income tax department for a release of the cash. The taxpayer has contested the order passed via the Single Judge.

Read Also: All About Income Tax Rule 132 Related to Cess or Surcharge

It was furnished by the taxpayer that as the initial seizure of the cash via the GST department of the state was not legal and without jurisdiction, the following handing over of the seized cash to the Income Tax Department, even if according to a notice u/s 132A of the Income Tax Act, would not detract from the fact that the continued withholding of the money, by the respondent authorities, was prohibited.

From the taxpayer’s fact, the bench has agreed that the initial seizure of cash from the premises of the taxpayer is unlawful, the continued retention of it by the GST Department of the State, and the handing over of the cash to the Income Tax Department, cannot be witnessed as legal acts just because the money was now handed over to the Income Tax Department under a requisition sent by them u/s 132A of the IT Act.

The bench in the aforementioned view has permitted the plea.