"Delhi High Court's Landmark Decision: Cash Seizures under CGST Act – Unraveling the Rajeev Chhatwal Case"

 

Introduction:

 

In a recent legal development, the Delhi High Court addressed a crucial issue regarding the authority of officers under Section 67(2) of the CGST Act to seize cash. The case in question, Rajeev Chhatwal vs Commissioner of Goods And Services Tax (East), delves into the limits and scope of this section, providing insights that could reshape the landscape of tax-related investigations.

 

Background of the Case:

 

The case originated from a search conducted under Section 67 of the CGST Act at the residence of Mr. Rajeev Chhatwal. The search led to the seizure of Indian currency totaling Rs. 15,92,000/-. An intriguing twist in the narrative unfolded as Mr. Chhatwal contested his status as a 'taxpayer' under the Act, questioning the necessity of the search at his premises.

 

Events During the Search:

 

The search yielded various documents and a significant sum of cash found in a locker. Chhatwal's family contested the seizure, explaining that the cash was being stored for safety reasons during ongoing house renovations. The situation escalated as Mr. Chhatwal, along with Asif Khan and Arjun Sharma, faced arrest, only to be later released on bail.

 

Allegations Against the Petitioner:

 

The crux of the matter revolved around allegations that Mr. Chhatwal confessed to involvement in a fake invoice scheme, resulting in an Income Tax Credit (ITC) fraud amounting to approximately ?11 crores. Despite multiple summonses, Chhatwal was accused of initially evading the investigation but later cooperating.

 

Petitioner’s Claims:

 

In a staunch defense, Mr. Chhatwal refuted the allegations, claiming that he signed documents under duress. Emphasizing his non-involvement in fraudulent activities, he challenged the cash seizure, asserting that Section 67(2) of the CGST Act did not empower officers to take such actions.

 

Court’s Verdict:

 

Referencing a recent judgment in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, the Delhi High Court definitively ruled that Section 67(2) does not grant officers the power to seize cash. Consequently, the court ordered the return of the seized amount to Mr. Chhatwal, coupled with applicable interest.

 

Full Text of the Judgment/Order:

 

The court's decision, as articulated in the judgment/order, reaffirmed the petitioner's position, directing the respondent to release the seized amount of Rs. 15,92,000/- along with accrued interest. The ruling was based on the understanding that Section 67(2) did not authorize cash seizures.

 

Implications and Concluding Thoughts:

 

This landmark decision by the Delhi High Court not only protects the rights of individuals subjected to tax-related searches but also sets a precedent for cases involving Section 67(2) of the CGST Act. The judgment underscores the importance of adhering to legal boundaries in investigations, offering a safeguard against arbitrary actions by tax authorities.

 

In conclusion, the Rajeev Chhatwal case serves as a significant milestone in clarifying the limits and scope of Section 67(2) of the CGST Act, promoting transparency and accountability in tax enforcement procedures. As legal precedents continue to shape the evolving landscape of tax laws, this decision stands as a beacon of protection for individuals caught in the crosshairs of such investigations.

*Rajeev Chhatwal Vs Commissioner of Goods And Services Tax (East) (Delhi High Court)

 

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Article Compiled by:-

Mayank Garg

(LegalMantra.net Team)

+91 9582627751

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