Vridhi Enterprises Vs State of U.P. and Another (Allahabad High Court)
Allahabad High Court has set aside the GST penalty imposed on Vridhi Enterprises by Respondent No.2 under Section 129(1)(b) of the CGST Act. The petitioner challenged the penalty order issued on September 17, 2024, arguing that it should have been levied under Section 129(1)(a) as per a CBIC clarification dated December 31, 2018. While the petitioner did not dispute the applicability of Section 129(1)(a), the penalty was imposed based on a communication from the Deputy Commissioner, CGST, Delhi (North), stating that the firm was non-existent and cancellation proceedings had been initiated. The petitioner contested this claim, submitting GSTIN status reports and evidence of return filings, proving the firm’s continued existence and compliance. The petitioner also cited previous High Court rulings in M/s Margo Brush India and M/s Singh Traders, which supported their argument.
The respondents acknowledged that the CBIC clarification and prior judgments supported the petitioner’s case. However, they contended that since the firm was deemed non-existent, the relief under Section 129(1)(a) was not applicable. The court, after reviewing the records, found no substantial evidence supporting the claim that cancellation proceedings had been initiated. The GSTIN status report showed returns were filed as recently as October 20, 2024. Consequently, the court ruled that the penalty order was unsustainable, quashed the demand, and remanded the matter back to the competent authority for a fresh decision within two months.
