They Took the Cash During the GST Search —can the department keep it?

Many GST searches in Uttar Pradesh follow a similar pattern. Officers arrive with an authorisation, go through the premises, take away ledgers, phones and pen drives, and count the cash in the drawer or the locker. At the end of the day a seizure memo or panchnama lists the cash with everything else. Months later the business is still asking a simple question: on what legal basis was the money taken, and when will it come back?

Two High Court rulings reported in the last few weeks answer the first part directly. In September 2026 the Rajasthan High Court, and in October 2026 the Gauhati High Court, held that the search-and-seizure power in the CGST Act does not extend to cash. They join earlier decisions of other High Courts to the same effect.

What Section 67(2) actually allows

Section 67(2) of the CGST Act, 2017 applies where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that certain items are hidden in a place. It authorises a search and the seizure of two categories only:

• goods liable to confiscation; and
• documents, books or things which, in the officer's opinion, will be useful for or relevant to any proceedings under the Act.

Cash does not fit easily into either category. Under Section 2(52), "goods" means every kind of movable property other than money and securities. Cash in Indian currency falls within the definition of "money" in Section 2(75). Parliament has therefore kept money out of "goods" in express terms. The department's usual answer has been that cash is one of the "things" in the second category. That is the argument the High Courts have been rejecting.

The recent rulings

Rajasthan High Court: Shiv Shankar Oil Udyog v. Additional Director General (a batch led by Writ Petition No. 3912 of 2024, reported in September 2026). The Court held that Section 67(2) does not permit GST authorities to seize cash found during a search. It observed that "goods", "money" and "things" cannot be treated as synonyms. It also held that the provision cannot be read as a general power to seize money, even where the cash is alleged to be unaccounted for. In reaching this view the Court compared the CGST scheme with the Customs Act, 1962 and with Section 132 of the Income-tax Act, 1961. Those statutes deal with money in terms. Section 67 does not.

Gauhati High Court: Ankit Choudhary v. Union of India (reported in October 2026). Cash of ₹11 lakh was seized during a search on 5 June 2025. The department refunded it on 19 August 2026, while the writ petition was pending. The Court still examined the seizure and held it illegal, because cash does not fall within the goods or things liable to seizure under Section 67(2). It said that Section 67 exists to help an investigation, not to recover tax by taking cash, and that the Act has separate machinery for determining and recovering tax. The department relied on a pending Supreme Court matter in which conflicting High Court views are said to be under consideration. The Court found no legal bar to following the view taken by the Delhi and Karnataka High Courts.

Kerala High Court: Shabu George v. State Tax Officer. In this earlier line, the single judge accepted that "things" could include cash in an appropriate case. The Division Bench nonetheless held that seizing cash which was not part of the business's stock-in-trade was unwarranted. The Supreme Court declined to interfere with that decision in 2023.

Section 67 is a power to gather evidence and secure goods. It is not a short-cut to recovery.

Is the question fully settled?

Not entirely, and that should be said plainly. The Kerala decisions leave room for an argument that cash which is itself the subject of the business, or is shown to be directly connected with the evasion alleged, may be treated differently. As the Gauhati order records, the department also says the issue is before the Supreme Court. The Allahabad High Court's own view will decide matters arising in Uttar Pradesh. The weight of High Court authority, however, now points one way: an ordinary business's cash, found during a GST search, is not something Section 67(2) authorises officers to take.

A separate point is often missed. Cash that is returned is not cleared of every question. If the department believes the cash reflects unrecorded sales, it may still say so in a show-cause notice, and the same facts may interest other authorities. The cash book, bank deposits and the explanation of where the money came from remain important even after it is released.

Related rules on what was seized

The same section sets other limits that apply to everything taken during a search, not only cash:

• Section 67(3): documents, books or things seized but not relied upon in the notice must be returned within thirty days of the issue of that notice.
• Section 67(5): the person from whose custody documents are seized may make copies or take extracts in the officer's presence, unless that would prejudice the investigation.
• Section 67(6): seized goods may be released provisionally on a bond and security, or on payment of the applicable tax, interest and penalty.
• Section 67(7): where no notice is issued within six months of the seizure of goods, they must be returned. The proper officer may extend this by up to six more months for sufficient cause.

Phones and pen drives are "things" and may be seized if they are relevant. Once the show-cause notice has been issued, however, their continued retention needs a reason. A request for return under Section 67(3) is often worth making at that stage.

If cash was taken from your premises

Keep the source of the cash documented throughout: the cash book, sale bills and bank records. The argument over whether the seizure was lawful is about the officer's power. The explanation of the cash is about your own case. Both are worth having ready.