Case Title, Court, Petition No., Relevant Sections, Category, Date

M/s. Narendra Polypack Industries v. Additional Director General, Directorate General of GST Intelligence & Ors.
Delhi High Court
W.P.(C) 8300/2023
Relevant Sections: Section 67(2), Section 130 of the CGST Act
Category: Search & Seizure – Legality of Seizure of Non-Trade Goods
Date of Order: 10.11.2023
Source:

Facts (with Para References)

The petitioner challenged the search and seizure operations carried out on 07.02.2023 at its premises in Delhi and Kanpur, during which officers of DGGI seized 309.75 kg of silver from Delhi and 289 kg of silver from Kanpur (Paras 2–4). The search was triggered based on alleged clandestine removal of packaging material, and not on any belief that the petitioner was trading in silver (Para 2). The respondents asserted that silver was purchased using proceeds of alleged GST-evasive activities (Paras 3–4).

Previously, by orders dated 24.08.2023 and 17.10.2023, the Court had directed the release of seized silver, relying upon the decision in Deepak Khandelwal v. CGST, Delhi West (Para 5–6). Despite release at the DGGI office on 09.11.2023, officers again seized the same silver on the ground floor of the same premises (Para 7), prompting the present application.

Questions / Issues Before the Court

1. Whether silver bullion found during a search can be seized under Section 67(2) of the CGST Act merely because it is suspected to be unaccounted wealth? (Paras 5–8)

2. Whether the respondents acted in contempt of earlier orders by releasing and re-seizing the same silver on the same day? (Paras 7–10)

3. Whether mere allegations of involvement in silver trading can justify confiscation under Section 130? (Para 11)

Observations (Para-Linked, Integrated Narrative)

The Court reiterated its earlier prima facie view that the issue is squarely covered by Deepak Khandelwal where it was held that Section 67(2) allows seizure only of goods liable for confiscation under the Act, not valuable articles representing alleged unaccounted wealth (Paras 5–6).

The Court analysed the architecture of Section 67 and emphasized that “goods” under the provision must relate to taxable supplies liable for confiscation, and the expression “things” must derive colour from documents and books, meaning only items containing information relevant to proceedings (Paras 4–9 of order dated 17.10.2023, reproduced at Paras 3–6 of this order).

The Court noted that the respondents openly re-possessed the silver moments after releasing it, demonstrating conduct intended to overreach judicial orders (Para 9–10). The respondents’ argument that the petitioner was subsequently found to be engaged in silver trading did not validate the seizure because the search authorization was not issued on those grounds (Para 11).

The Court indicated that proper action could still be taken if independent reasons to believe arise concerning silver-related supplies (Para 13 of reproduced order).

Judgment / Verdict (Flowing Narrative + Para References)

The Court held that the respondents had no statutory authority under Section 67(2) to seize silver bullion as the search was not premised on any alleged silver trading and the silver was not “goods liable for confiscation” within the meaning of the CGST Act (Paras 5–6, 11–12). The manner in which the officers released and immediately re-seized the silver was described as a “charade” aimed at circumventing the Court’s prior orders (Para 9–10).

To balance equities, the Court ordered that—subject to the petitioner depositing ₹16,00,000 with the Registry within one week—the respondents must release and deliver the silver to the petitioner at his residence on 20.11.2023 at 10:30 AM (Para 13). Timelines for counter and rejoinder were also fixed (Paras 14–16).

Cases Cited – Summary in Tabular Form

Between Fine Lines (Practical Takeaways for Industry)

The decision underscores that search under GST cannot convert into a general tax-enforcement raid for unaccounted assets. Officers must demonstrate clear reasons to believe that seized items constitute goods liable for confiscation under GST law, not merely assets suspected to be bought from unaccounted money. Businesses can rely on this judgment to challenge over-broad seizures and insist on statutory limits governing search powers.

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