The main legal point established in the judgment is that the gold bullion seized during the search was stock-in-trade and duly accounted in the books of accounts, as per the relevant provisions of FEMA and the Act of 1961.

ORDER :

1. The factual matrix of the case in brief is that the official respondents conducted a search operation at the business premises of the petitioners on 15.02.2020/16.02.2020. During such search operations, gold bullion of 3773.52 gm. was seized along-with other articles like electronic devices mobile phones, hard disk etc.

2. The petitioners filed instant writ petition stating that they are engaged in the business of trade of gold bullion and the petitioner firm is duly registered under the VAT/Goods and Service Tax Act (GST). During the search operations by the respondents, 3773.52 gm. Gold bullion which is stock in trade was seized along-with other articles. It is further stated that the petitioners requested the respondents that all the seized goods are duly recorded in the accounts of books of the petitioner firm and also are in stock in trade, which as per the law cannot be seized but the respondents did not pay any heed to their request and at the time of seizure, the persons of the Raid Party misbehaved, mishandled and physically assaulted the petitioner No.2 and the employees of the petitioner firm. It has been further stated that a representation was submitted to the respondents on 19.02.2020 but the respondents did not care to consider and pass any order on the same. The petitioners by way of present writ petition have prayed that the gold bullion which was seized from the petitioners during the search operation which is stock in trade, may be ordered to be released by the respondents to them.

3. The respondents in the reply to the writ petition raised a preliminary issue that Section 16 of the Foreign Exchange Management Act, 1999 (for short ‘the FEMA’) provides for adjudication of disputes by the Adjudicating Authority and further Section 19 of the FEMA provides for an appeal to the Appellate Tribunal. If one feels aggrieved by the decision of the Appellate Tribunal, an appeal can be preferred under Section 35 of the FEMA to the High Court. The respondents have also submitted that summons have been issued to the petitioners but they are not cooperating in the on-going investigation. The respondents also stated that input was received that smuggled gold was being purchased by the bullion traders/jewelers of different locations and the transactions were done via hawala and on the basis of the information the search and seizure were made and during the search, various gold bars, unaccounted cash, unrecorded gold jewelery, foreign currencies etc. and voluminous incriminating documents including digital devices were also recovered. The search at the premises of the petitioners also resulted in recovery of unaccounted and unrecorded gold bullion and incriminating documents, digital messages which may result in establishing connection between the persons involved in dealings of smuggled gold. The respondents have denied the allegations leveled in the petition and stated that all the seizure proceedings have been conducted as per the procedure given under the law.

4. In rejoinder to the reply to writ petition, the petitioners have also stated that Section 37 of the FEMA read with Sections 132 and 132B of the Income Tax Act, 1961 (for short ‘the Act of 1961’) provides that where a person makes an application to the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and nature and source of acquisition of any such asset is explained to the satisfaction of the Assessing Officer, such asset or any portion thereof shall be released within a period of one hundred and twenty days from the date on which the last of the authorizations for such search under Section 132 or for requisition under Section 132A, as the case may be, was executed. He further submitted that the gold bullion seized by the respondent authorities during the search was stock in trade and the petitioners are entitled to retain the same. Therefore, the petitioners after seizure of this 3773.52 gm