Facts of the Case

  • The petitioner challenged:
    • Seizure of ₹65 lakhs cash from the director’s residence during GST search on 04.03.2021.
    • Recovery of ₹94,65,316/- allegedly without adjudication.
  • GST authorities conducted searches at:
    • Business premises
    • Registered office (sealed for non-disclosure)
    • Director’s residence (cash seized)
  • The petitioner claimed:
    • Illegal detention of director
    • Coercive recovery of tax
    • Non-supply of panchnama
  • The petitioner deposited amounts in parts, totaling ₹94,65,316/- during investigation.

Issues Involved

  1. Whether GST authorities have power to seize cash during search.
  2. Whether tax payments made during investigation were voluntary or coercive.
  3. Whether non-supply of panchnama invalidates proceedings.
  4. Whether the petitioner can seek refund after voluntary payment under Section 74(5).
  5. Whether concealment of material facts affects relief under Article 226.

Petitioner’s Arguments

  • Seizure of cash is not authorized under CGST Act.
  • Director was illegally detained without summons under Section 70.
  • Tax payments were made under coercion, not voluntarily.
  • No proper adjudication or notice was issued.
  • Panchnama was not provided, violating due process.
  • Excess tax collected should be refunded or adjusted.

Respondent’s Arguments

  • Panchnama was duly served and acknowledged by the director and his wife.
  • Petitioner concealed material facts, including:
    • Letter requesting release of ₹65 lakhs
    • Undertaking to pay tax voluntarily
  • Payments were made voluntarily under Section 74(5).
  • Proceedings were lawfully concluded; hence, no further challenge is maintainable.

Court’s Findings / Order

  • The Court found material concealment of facts by the petitioner.
  • The petitioner had:
    • Voluntarily requested release of seized cash
    • Undertaken to pay tax with interest and penalty
  • Payments were held to be voluntary, not coercive.
  • Once benefit under Section 74(5) is availed:
    • No show cause notice is required
    • Proceedings are deemed concluded
  • Issue of cash seizure power left open (academic in nature).
  • Writ petition dismissed with costs of ₹25,000.

Important Clarifications by Court

  • Voluntary payment under Section 74(5) bars later challenge.
  • Concealment of material facts disentitles relief under Article 226.
  • Claims of coercion must be substantiated contemporaneously, not raised later.
  • Issues becoming academic (like seizure legality here) need not be adjudicated.

Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:3739-DB/NAC18112021CW130342021_142210.pdf

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