GST Officers ‘Sat Idle’ Despite Knowing Law, Aided Taxpayer Through Lapses In Gold, Cash Seizure Case: Gujarat HC Orders Inquiry

The Gujarat High Court has directed the Chief Commissioner of State Tax to hold appropriate inquiry against the officers involved in leaving the loopholes in the gold, cash seizure case and stated that the officer, though being aware of the statutory provisions and the limitation period sat idle and did not issue any notices, and paved the way for the petitioner to take shelter of omissions. The bench of Justice A.S. Supehia and Justice Pranav Trivedi has ordered the immediate release of gold, bullion and cash seized from a jewellery trader and directed the lifting of provisional attachment of its bank accounts, while also mandating a departmental inquiry against GST officers for serious procedural lapses. The dispute arose from search proceedings conducted by the State Tax Department under Section 67(2) of the GST Actat the petitioner’s premises in March 2022. During the search, officials seized approximately 1175.82 grams of gold mixed with other metals and cash amounting to ₹5.54 lakh, and provisionally attached the firm’s bank accounts with HDFC Bank and State Bank of India through an order dated 10 March 2022 Despite the passage of more than 20 months, the seized goods were neither released nor were any statutory notices issued within the prescribed time limits. Repeated representations made by the petitioner seeking release of goods and de-freezing of bank accounts elicited no response, compelling the firm to approach the High Court in September 2023. Dr. Avinash Poddar on behalf of the petitioner contended that as per the provisions of Section 83(2) of the GST Act, after a period of one year has elapsed, the provisional attachment of the bank accounts has to be lifted and the account has to be defreezed. However, the same has not been done. So far as the issue with regard to the seizure of gold articles is concerned, he has referred to the provisions of Section 67 of the GST Act, more particularly, sub-section (7) of the GST Act and has submitted that under sub-section (2) where any goods are seized, and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized. Assistant Government Pleader, Harshvardhan Sharma submitted that the petitioner has committed huge tax evasion through the firms operated by him and in fact charge sheet was also filed against him which mentioned about tax evasion amounting to Rs.26.75 crores and accordingly provisional attachment order was passed on 10.03.2022, wherein the bank accounts of the petitioner were attached. As per the provisions of Section 67(2) of the GST Act, gold and other bullion of approximately 1175.82 grams and cash of Rs.5,54,130 was seized. It is submitted that notice under Section 130 of the GST was issued on 21.06.2024 i.e. two years after the seizure of the bank accounts and the articles. The department assigned the reason for delay in the affidavit-in-reply was that due to lack of clarity and ongoing investigation, no action could be undertaken by the respondents since various firms were being operated by the petitioner and in order to streamline the investigation, a single conducting officer being Assistant Commissioner of State Tax, Unit-10 was appointed by the Joint Commissioner (Division-1) vide letter dated 27.04.2022 and thereafter the case files were transferred. Thus, it is submitted that looking to the huge tax evasion and also the seizure of gold and metals along with cash of the petitioner, the writ petition may be rejected. The Court noted that even the State admitted that provisional attachment under Section 83 had lapsed after one year and no fresh order was passed. No notice was issued under Section 67(7) within the prescribed six months, nor was the period extended by invoking the proviso. The confiscation notice under Section 130 was issued more than two years after seizure, and that too during the pendency of the writ petition. Calling these lapses “serious dereliction in carrying out official duty,” the Bench observed that the officers’ inaction effectively allowed the assessee to claim statutory protection, despite allegations of substantial tax evasion. he High Court directed immediate release of seized gold, bullion and cash; lifting of provisional attachment on the petitioner’s bank accounts; and the ompliance with these directions within 10 days of receipt of the order. The Court also directed the Chief Commissioner of State Tax to conduct an appropriate inquiry against the officers concerned for leaving “loopholes” that ultimately aided the petitioner. The matter has been listed on 11 February 2026 for reporting the status of the departmental inquiry Case Details Case Title: M/S Reevan Creation Versus State Of Gujarat & Ors. Case No.: R/Special Civil Application No.21039 Of 2023 Date: 09/01/2026 Counsel For Petitioner: Ashva Legal Advisors Llp, Avinash Poddar, Anchal A Poddar Counsel For Respondent: Harshvardhan Sharma AGP Click Here To Read Order Read More: GST Dept. Can’t Jump Straight From Detention To Confiscation During Transit Checks: Gujarat HC

GST Officers ‘Sat Idle’ Despite Knowing Law, Aided Taxpayer Through Lapses In Gold, Cash Seizure Case: Gujarat HC Orders Inquiry

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