The Rajasthan High Court has held that Section 67(2) of the Central Goods and Services Tax Act, 2017 does not authorise GST authorities to seize cash during search proceedings, directing the release of ₹4.77 lakh seized from a taxpayer’s premises along with applicable interest in accordance with law.

The bench of Justice Arun Monga and Justice Ashutosh Kumar observed that money is expressly excluded from the statutory definition of “goods” and that the expression “documents or books or things” cannot be interpreted as a general power to seize every movable asset discovered during a search.

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The bench directed the authorities to release the amount within six weeks from the date the order was uploaded on its website, subject to any specific lawful restraint imposed in other proceedings by a competent court or authority.

The GST department conducted a search at the petitioner’s premises on February 14, 2024 and seized ₹4.77 lakh in cash through Form GST INS-02.

The assessee approached the High Court questioning the authorities’ jurisdiction to seize cash under Section 67 of the CGST Act. Its petition initially sought several reliefs, including removal of the provisional attachment of bank accounts, unfreezing of its electronic credit ledger, release of the seized cash and protection against further coercive action.

The bank accounts had been provisionally attached through Form GST DRC-22 dated September 14, 2023.

The petitioner gave up the prayers concerning the bank account attachment and the electronic credit ledger. The petition was therefore confined primarily to the release of the seized cash. Consequently, the court’s decision did not grant relief on the abandoned prayers.

The bench relied on its decision delivered the same day in Bhagwan Tirthani and Others v. Principal Commissioner, GST and Others, D.B. Civil Writ Petition No. 2128/2025, which addressed the same controversy.

Reproducing the reasoning from that decision, the court explained that Section 67(2) uses the defined expression “goods”, rather than broader expressions such as movable property, property or assets.

Since Section 2(52) of the CGST Act expressly excludes money from the definition of goods, the court held that this exclusion could not be disregarded without a contextual justification. No such justification had been shown.

The bench reasoned that where legislation specifically defines a term used in its substantive provisions, that definition ordinarily governs its interpretation.

The department sought to justify the seizure by treating cash as falling within the expression “documents or books or things” in Section 67(2).

The court rejected this interpretation. It explained that “documents” and “books” are inherently evidentiary in character. The associated expression “things” must therefore be understood in the same statutory setting, covering articles that may serve as material or evidence in an inquiry under the Act.

Applying the principle of ejusdem generis, under which a general expression takes its meaning from the class indicated by the accompanying specific words, the bench held that “things” could not become an unrestricted residual category permitting seizure of any movable article.

The court also relied on the second proviso to Section 67(2), which allows documents, books or things to be retained only for as long as necessary for their examination and for an inquiry or proceeding under the Act.

This limitation, the bench observed, confirms the evidentiary and investigative purpose of that part of the provision. The mere fact that currency may indicate possession does not bring it within the seizure power when the legislation expressly excludes money from goods.

The court contrasted the CGST Act with other enactments in which Parliament has expressly authorised the seizure of money.

It noted that Section 132(1)(iii) of the Income-tax Act, 1961 specifically includes money, bullion, jewellery and other valuable articles or things among the items that may be seized. Similarly, currency is expressly included within the definition of goods under Section 2(22) of the Customs Act, 1962.

These provisions demonstrated that Parliament knows how to confer a power to seize cash when it intends to do so.

The absence of corresponding language in Section 67 of the CGST Act could not be supplied through judicial interpretation. The court also noted that the CGST Act separately defines money, consideration, goods and securities, reflecting the legislature’s awareness of their distinct legal character.

The reasoning adopted by the bench also addressed the possible connection between seized cash and unaccounted supplies.

The court held that such a connection may be relevant when determining tax liability, penalty or recovery. It does not, by itself, authorise seizure of cash under Section 67(2).

The ruling thus distinguishes the relevance of cash to a tax investigation from the existence of a statutory power to seize and retain it.

The High Court held that the seizure and retention of ₹4.77 lakh from the petitioner’s residential premises could not be sustained. It directed the respondents to return the amount to the persons from whose possession it had been seized.

The court further held that the petitioner was entitled to applicable interest in accordance with law because the department had retained the amount pursuant to an action found to be without authority under Section 67(2).

Interest was directed to run from the expiry of a reasonable period after seizure until actual payment. The order did not prescribe a fixed rate of interest or define that reasonable period. Instead, it required the authorities to determine and disburse interest under the governing statutory provisions and applicable legal principles.

The seized amount must be released within six weeks of the order’s upload on the court website, unless a specific order passed by a competent court or authority in other proceedings lawfully prevents its release.

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