Case Law Details
Fateh Chand Bhagwan Das Vs Additional Commisionerr Grade-2 (Appeal) -2 Commerrcial Tax (Allahabad High Court)
In a significant ruling, the Allahabad High Court has quashed the penalty proceedings under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017, following a search and seizure operation at a business premise. The case, titled Fateh Chand Bhagwan Das Vs Additional Commissioner Grade-2 (Appeal) -2 Commercial Tax, highlights the legal limitations of penalty imposition under the GST framework.
Detailed Analysis
The writ petition in question arose from a penalty order dated June 18, 2018, under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017, and an appellate order dated June 14, 2019, under Section 107 of the same Act. The petitioner, represented by Sri Shubham Agrawal, contended that the penalty proceedings were initiated following a search of their business premises. The State-respondent was represented by Sri Rishi Kumar, Additional Chief Standing Counsel.
Key Judicial Precedents
The court referred to two pivotal judgments in similar cases:
- Mahavir Polyplast Pvt. Ltd. Vs. State of U.P. and 2 others reported in (2022 U.P.T.C. [VOL.112] – 1514): This case established that the search and seizure of a godown cannot justify penalty proceedings under Section 129 of the Act.
- Poddar Trading Company vs. Commissioner, Commercial Tax, U.P. reported in (2024) 17 Centax 48 (All.): This judgment reinforced the principle that penalty under Section 129 cannot be imposed merely based on search and seizure operations.
Court’s Findings
The Allahabad High Court found that the penalty proceedings against Fateh Chand Bhagwan Das were not justified. The court categorically held that the search and seizure of the godown did not warrant penalty proceedings under Section 129 of the Act. Consequently, the penalty order dated June 18, 2018, and the appellate order dated June 14, 2019, were quashed and set aside.
Conclusion
In conclusion, the Allahabad High Court has directed the respondents to refund the amount of tax and penalty deposited by the petitioner within four weeks from the date of the order. The court allowed the writ petition, emphasizing that penalty proceedings under Section 129(3) of the UP GST Act cannot be justified solely based on the search and seizure of business premises.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Shubham Agrawal, learned counsel appearing on behalf of the petitioner and Sri Rishi Kumar, learned Additional Chief Standing Counsel appearing for the State-respondent.
2. Instant writ petition arises out of penalty order dated June 18, 2018 passed under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘Act’) and the order passed in appeal dated June 14, 2019, under Section 107 of the Act.
3. In the present case, the proceedings under Section 129(3) of the Act have been initiated subsequent to search of the business premises of the petitioner.
4. It has been categorically held by a coordinate Bench of this Court in Mahavir Polyplast Pvt. Ltd. Vs. State of U.P. and 2 others reported in (2022 U.P.T.C. [VOL.112] – 1514) and judgment of this Court in Poddar Trading Company vs. Commissioner, Commercial Tax, U.P. reported in (2024) 17 Centax 48 (All.) that search and seizure of the godown cannot result in penalty proceedings under Section 129 of the Act.
5. In light of the above, present proceedings are not justified, and accordingly, the impugned orders dated June 18, 2018 and June 14, 2019 are quashed and set aside.
7. This Court directs the respondents to refund the amount of tax and penalty deposited by the petitioner within a period of four weeks from date.
8. The instant writ petition is allowed in aforesaid terms. Consequential reliefs to follow.
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