Gujarat High Court: Cash Not Treated as Goods for GST Seizure Proceedings


LI Network

Published on: November 11, 2023 at 12:11 IST

The Gujarat High Court has addressed the issue of seizing cash under the Goods and Services Tax (GST) Act, ruling that cash does not fall under the definition of “goods” for seizure proceedings.

The division bench, comprising Justices Biren Vaishnav and Mauna M. Bhatt, emphasized that retaining seized cash for more than six months without issuing a Show Cause Notice (SCN) is unjustified.


The case involved a partnership firm and one of its partners operating a courier services business, registered under the GST Acts. The firm had previously faced a situation where silver bars were seized by the Income Tax Department in 2004. Despite paying the necessary taxes, the silver bars were not returned. Seeking resolution, the petitioners filed a Special Civil Application in 2017.

In 2018, the Court ordered the release of the seized silver bars. The petitioners later sold the silver bars, and the sale proceeds were received through checks. However, when attempting to transfer the cash to their branch office in 2020, the cash was seized by authorities.


The main question addressed by the Court was whether cash can be considered as goods for seizure proceedings under GST.


The Court, after reviewing arguments and relevant sections of the CGST Act, clarified that the Act’s primary focus is on the imposition and collection of tax on the intra-State supply of goods or services. The Court highlighted the necessity of a reasonable belief by the proper officer that seized items are pertinent to proceedings under the Act.

Referring to a Kerala precedent, the Court emphasized that if cash is not part of the stock in trade, it should not be subject to seizure. Importantly, the Court noted that the seizure memo was dated 13.11.2020, and as per subsection (7) of section 67, if no notice is issued within six months of the goods’ seizure, they must be returned.

Consequently, the Court allowed the petition, directing the authorities to return the seized amount of cash to the petitioners, emphasizing the need to adhere to legal timelines for issuing notices in such cases.

The judgment provides clarity on the treatment of cash in GST seizure proceedings and underscores the importance of following legal procedures in such matters.

Case Title: Bharatkumar Pravinkumar And Co. Versus State Of Gujarat Case No.: R/Special Civil Application No. 26222 Of 2022

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