The Delhi high Court has held that the department must return seized goods on failure to issue notice within 6 months.
The bench of Justice Yashwant Varma and Justice Harish Vaidyanathan Shankar has held that upon the expiry of six months, the person whose goods are seized becomes entitled to their return and the said right cannot be sought to be defeated unilaterally and the affected person would be entitled to a notice of the proposal for extension prior to the expiry of six months.
The writ petitioner challenged the continued seizure of articles pursuant to a panchnama which had come to be drawn on 22/23 October 2020 in connection with search proceedings initiated under the Central Goods and Services Tax, 2017. Pursuant to the search, an order of seizure came to be made by the respondents on 23 October 2020.
The petitioner submitted that the goods which are seized under the GST Act are liable to be returned to the person from whose possession they were taken within six months of seizure. It becomes pertinent to note that in terms of Section 67(2), the seizure of goods is itself predicated upon the formation of an opinion that the goods are liable to be confiscated. In terms of the Proviso to sub-section (7), the period of six months may, on sufficient cause being shown, be extended by the proper officer by a further period not exceeding six months.
The petitioner argued that the extension of the period during which the goods may remain seized cannot in any eventuality exceed a total period of 12 months.
The petitioner contended that it has drawn our attention to the pari materia provisions which stand comprised in Sections 110 and 124 of the Customs Act, 1962.
The content of the note-sheet would show that Mr. Saket Aggarwal had co-operated and participated fully in the investigation. What it also shows is that the concerned officer has not recorded the description of the goods properly and that is not a fault that can be attributable to the Petitioner.
The officer however gives further reasoning related to COVID-19 which is not found in the note sheet that accompanies the Draft SCN.
The court held that the shoddy performance by the concerned officers in valuing the goods despite the complete cooperation of the Assessee cannot be “sufficient cause”. When the relevant documents themselves were not made available completely, it is difficult to accept the contention that the same could have formed “sufficient cause” for the purpose of extending the period of seizure.
The court allowed the Writ Petition and directed that the seized goods as per the stock summary be released upon the Petitioner making a deposit of the amount as per the valuation with the department.
Case Details
Case Title: M/S Kashish Optics Ltd Versus The Commissioner, Cgst Delhi West & Ors.
Case No.: W.P.(C) 7741/2022, CM APPL. 23664/2022 (Interim Relief) & CM APPL. 25690/2022 (Addl. Docs.)
Date: 03.03.2025
Counsel For Petitioner: Puneet Agrawal
Counsel For Respondent: Anushree Narain
