Seizure of Cash During a GST Search

Seizure of Cash During explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Currency found at business premises is one of the most frequently seized items in GST searches, and one of the least defensible.

Section 67(2) permits seizure of (a) goods liable to confiscation and (b) documents or books or things useful for or relevant to proceedings. Cash is not goods — s.2(52) defines goods to exclude money, and s.2(75) defines money to include Indian legal tender. So limb (a) cannot apply. Limb (b) requires that the thing be useful for or relevant to proceedings under the Act — and currency, as a medium of exchange, ordinarily proves nothing about a supply. High Courts have repeatedly ordered seized cash returned on this reasoning.

Cash is not goods

Section 2(52): "goods" means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply.

Section 2(75): "money" means Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as consideration to settle an obligation or exchange with Indian legal tender of another denomination, but shall not include any currency that is held for its numismatic value.

Put together: currency in ordinary circulation is money, money is excluded from goods, and only goods can be liable to confiscation under the first limb of s.67(2).

The one carve-out is instructive: currency held for its numismatic value — collectible coins and notes — is not money, and is therefore goods. That is the exception that proves the rule.

Is cash a "thing useful or relevant to proceedings"?

The second limb is where seizures are usually justified, and it is where the argument is actually joined.

What the limb requires: that the thing be, in the officer's opinion, useful for or relevant to any proceedings under this Act.

Proceedings under this Act are about supply — whether a supply was made, its value, its classification, the credit taken on it, the tax paid. The question is therefore whether the currency evidences something about a supply.

Ordinarily it does not. A bundle of notes is fungible and anonymous. It does not carry a date, a counterparty, a description of goods or a rate of tax. Its existence is consistent with recorded cash sales, withdrawals from the bank, capital introduced, a loan received, or personal funds. It proves the presence of money and nothing else.

Where it might. Currency found with a document tying it to specific unaccounted transactions, or cash whose denomination, packaging and placement correspond to a recovered record of off-book sales, may be relevant — but then it is the document that carries the evidentiary weight, and the practical need is to record and photograph the cash, not to remove it.

The line the courts have taken

The consistent judicial approach has been:

• Money is expressly excluded from "goods", so it cannot be seized as goods liable to confiscation;
• currency is a valuable asset, not a "thing" in the evidentiary sense the second limb contemplates;
• seizure of cash serves no purpose of the Act, because it neither secures goods for confiscation nor preserves evidence;
• retaining cash pending an unfinished investigation operates as an unauthorised recovery;
• accordingly, seized cash has been ordered returned, in a number of cases with interest.

The reasoning tracks the structure of s.67 exactly: a power exercised for a purpose the section does not have is an excess of the power. Seizure is to secure and identify →

What to do when cash is taken

1. Object at the time, in writing. State that currency is money under s.2(75), excluded from goods by s.2(52), and that it is not a thing useful for or relevant to proceedings. Have the objection recorded in the panchnama before signing.
2. Insist on it appearing in the inventory under Rule 139(5) — denomination-wise count, total, and where it was found. This is what makes recovery possible.
3. Get a copy of the inventory and the INS-02.
4. Explain the source promptly, with documents — cash book, bank withdrawal slips, recorded cash sales, loan confirmations, capital account entries. An explained balance is much harder to hold.
5. Write within days seeking release, referring to the objection recorded on the day.
6. Where it is not released, move a writ petition. There is no appeal against a seizure, and delay weakens the petition.
7. Ask for interest on the retained amount in the prayer.

What this does not mean

It does not mean unaccounted cash has no consequence. It means the consequence arises elsewhere:

• under the Income-tax Act, where unexplained money has its own regime;
• as evidence of unrecorded supplies, if it can be tied to them by documents;
• through a demand under s.73, s.74 or s.74A once the supplies are established.

The point is narrow and procedural: s.67(2) is not the provision, and holding cash under it is not how any of those consequences are lawfully pursued.

Key takeaways

• Section 2(52) excludes money from goods; s.2(75) defines money to include Indian legal tender.
• So cash cannot be goods liable to confiscation under the first limb of s.67(2).
• Cash is ordinarily not a thing useful for or relevant to proceedings either — it evidences nothing about a supply.
• Numismatic currency is the exception: not money, therefore goods.
• Courts have repeatedly ordered seized cash returned, sometimes with interest.
• Object on the day, in writing, insist on the inventory entry, and move quickly.

Read next

• Seizure Is to Secure and Identify, Not to Recover
• "Secreted": The Word That Decides a GST Search
• Rule 139 and the INS Forms: The Search and Seizure Procedure
• Spot Recovery During a GST Search Is Not Voluntary

Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition) and the ICAI Handbook on Inspection, Search, Seizure and Arrest under GST (July 2025). Judicial positions are stated in general terms; the outcome in any case turns on its own facts.