GST Seized Silver Stolen from Police Custody: AP High Court Orders Compensation to Trader

The Andhra Pradesh High Court has held the State liable to compensate a bullion trader after silver seized during transit was stolen from police custody, invoking the doctrine of constitutional tort and limiting the shield of sovereign immunity. The bench of Justice R. Raghunandan Rao and Justice T.C.D. Sekhar allowed the writ petition filed by a Salem-based bullion trader, and directed the authorities to return 23.44 kg of pure silver or pay its market value, after adjusting excess cash already released. The petitioner, G R M Jewellers, is engaged in the business of gold and silver bullion and is registered under the CGST and SGST Acts, 2017 in Tamil Nadu. On 27 January 2021, while 105 kg of pure silver lumps were being transported from Hyderabad to Salem, the consignment was seized by police officials at Kurnool, along with ₹2.05 lakh in cash. Subsequently, the silver and cash were confiscated under GST proceedings, with the authorities offering the petitioner an option to pay a fine in lieu of confiscation, calculated at silver’s rate of ₹66,667 per kg. After exhausting appellate remedies—rendered ineffective due to the non-constitution of the GST Appellate Tribunal—the petitioner paid ₹39.20 lakh towards tax, penalty, and fine in March 2023. Following payment, a release order was issued for the entire seized silver and cash. When the petitioner approached the police for release, he was informed that the silver and cash had been stolen from the police station itself by police personnel. While some quantities were later recovered from the accused officers and placed before the Judicial Magistrate, only 81.567 kg of silver and ₹10 lakh in cash were returned to the petitioner. The trader contended that there was a shortfall in quantity, and s substantial portion of the silver returned was impure, containing only about 60% silver. After repeated legal notices seeking compensation for the loss yielded no response, the petitioner approached the High Court under Article 226 of the Constitution. The issue raised was whether the State could escape liability for loss of seized goods by invoking the doctrine of sovereign immunity, or whether such loss—caused due to negligence and criminal acts of State officials—would entitle the petitioner to compensation under public law remedies. Rejecting the State’s reliance on the landmark ruling in Kasturi Lal v. State of Uttar Pradesh, the Bench held that sovereign immunity cannot be used as a defence where State negligence results in deprivation of constitutional rights. Relying on a long line of Supreme Court precedents, including N. Nagendra Rao, Nilabati Behera, and the recent Constitution Bench decision in Kaushal Kishor v. State of Uttar Pradesh, the Court reiterated that the loss of property due to State negligence can amount to a constitutional tort. Such loss directly affects the fundamental right to carry on trade and business under Article 19(1)(g). Courts are empowered to grant monetary compensation in writ jurisdiction when fundamental rights are infringed by State action or inaction. The Bench observed that the theft of silver from within a police station demonstrated sheer failure of the State machinery to safeguard seized property entrusted to it under law. While declining to adjudicate on the question of purity of the silver returned, due to lack of conclusive material, the Court accepted the quantitative shortfall. The High Court directed that the petitioner is entitled to 23.44 kg of pure silver, being the shortfall between seized and returned quantities. The current market value of silver shall be taken for valuation. The excess cash of ₹7.95 lakh (₹10 lakh returned against ₹2.05 lakh seized) shall be adjusted against the value of silver payable. The remaining balance shall be paid either in pure silver or cash equivalent. If the silver or payment is not made within three weeks, valuation shall be based on the market price prevailing on the date of actual return. Case Details Case Title: G R M Jewellers Versus The Assistant Commissioner Of State Tax Case No.: Writ Petition No: 9513/2024 Date: 31-12-2025 Counsel For Petitioner: G Narendra Chetty Counsel For Respondent: GP Click Here To Read Order Read More: GST Collections Rise 6.1% in December 2025; Import IGST and State Settlements Drive Growth

GST Seized Silver Stolen from Police Custody: AP High Court Orders Compensation to Trader

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