Case Law Details
Poddar Trading Company Vs Commissioner, Commercial Tax U.P. And Another (Allahabad High Court)
Introduction: The case of Poddar Trading Company vs. Commissioner in the Allahabad High Court revolves around the challenge to penalty orders imposed under the Uttar Pradesh Goods and Services Tax Act, 2017. The petitioner contests the validity of the penalty proceedings initiated after a search and seizure operation.
Detailed Analysis:
1. Background: The petitioner challenges penalty orders dated June 15, 2018, and May 1, 2019, under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017. The penalty proceedings were initiated subsequent to a search and seizure operation conducted under Section 67 of the Act.
2. Legal Argument: The petitioner’s counsel relies on a judgment from a coordinate Bench of the Allahabad High Court in the case of Mahavir Polyplast Pvt. Ltd. v. State of U.P. The judgment highlights that penalty proceedings cannot be initiated when a search and seizure operation is conducted at the premises of the petitioner.
3. Court’s Decision: After considering the facts and legal arguments, the court concludes that the penalty proceedings initiated against the petitioner lack jurisdiction. Therefore, the impugned orders dated June 15, 2018, and May 1, 2019, are quashed and set aside.
Conclusion: The judgment of the Allahabad High Court in Poddar Trading Company vs. Commissioner underscores the importance of adhering to statutory provisions while initiating penalty proceedings under the Uttar Pradesh Goods and Services Tax Act. The court’s decision provides relief to the petitioner by quashing the penalty orders on grounds of jurisdictional error.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Mrs. Pooja Talwar, learned counsel appearing on behalf of the petitioner and Sri Rishi Kumar, learned Additional Chief Standing Counsel appearing on behalf of the State.
2. This is a writ petition under Article 226 of the Constitution of India, wherein the petitioner is aggrieved by the order dated June 15, 2018 passed under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘Act’) and the subsequent order passed in appeal dated May 1, 2019.
3. The factual matrix of the case is very clear that subsequent to search and seizure carried out under Section 67 of the Act, penalty proceedings have been launched against the petitioner under Section 129(3) of the Act.
4. Pooja Talwar, learned counsel appearing on behalf of the petitioner has relied upon a judgement of the coordinate Bench of this Court in the matter of Mahavir Polyplast Pvt. Ltd. v. State of U.P. and 2 others reported in (2022 U.P.T.C. [Vol.112]-1514) to buttress her arguments that the penalty proceedings cannot be initiated when search and seizure is carried out at the godown of the petitioner. The relevant paragraphs are delineated below :-
“9. Insofar as seizure of goods and demand of tax under Section-129 of the Act is concerned, it is unbelievable that two (not one), authority of the Mobile Squad of Commercial Tax Department chose to act with negligence. The provision of Section 129(3) of the Act could not be invoked to subject a godown premises to search and seizure operation unmindful of the Act that no action was taken or contemplated under Section 67 of the Act, as that would have mandated existence of “reasons to believe”, to subject that premise to search and seize goods or documents found therein. Also, both authorities of the Commercial Tax Department namely, Sri Vijay Kumar-VIII, Assistant Commissioner (Mobile Squad)-5, Agra and Sri Prashant Kumar Singh-I, Assistant Commissioner (Mobile Squad)-2 Agra chose to exercise powers vested in them to search a vehicle carrying goods during transportation to proceed against goods lying in a godown.
10. They not only closed their eyes to the power and jurisdiction that never existed but they deliberately described the vehicle being checked as “UPGODOWN02” and “GODOWON” (as has been noted above). That description was given by them, deliberately. Therefore, they cannot deny that they were aware that the subject search was not directed at any vehicle but at an immovable property namely a godown premise.
11. The Court does not wish to go deeper into the intention of the officers concerned in issuing such notices and drawing up such proceedings for which they had no jurisdiction as that would entail calling of personal affidavits of the officers at the cost of precious time of the Court. However, the officers are accountable for their acts. Therefore, let this order be communicated to the Commissioner Commercial Tax UP to look into the matter, call for explanation and take appropriate action commensurate to the misconduct, if any, that may be found committed by the erring officers and to take consequential and corrective action to avoid such occurrences, in future.
12. Insofar as the present petitioner is concerned, the entire proceedings drawn up against it under Section 129(3) of the Act, are found to be without jurisdiction.”
5. There does not seem to be any controversy with regard to the facts as penned in the writ petition with regard to the imposition of the penalty under Section 129 (3) of the Act, in spite of there being search and seizure carried out under Section 67 of the Act.
6. In light of the same, the entire proceedings that have been initiated have no feet to stand, and accordingly, the impugned orders dated June 15, 2018 and May 1, 2019 are quashed and set aside.
7. The instant writ petition is allowed. There shall be no order as to the costs.
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