“Section 129(3) of the Goods and Services Tax 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.” – Allahabad High Court
A Single Bench of the Allahabad High Court has once again held that, the penalization of search and seizure actions within the framework of Section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017 cannot be applied to operations at godowns without due jurisdiction.
Under Section 129 of the Act, a specified procedure is outlined for the detention, seizure, and subsequent release of goods and conveyances intercepted during transit, found to be in violation of the statute.
The legal proceedings under Section 129(3) were initiated against the petitioner-assessee following a search and seizure operation at their premises. The penalty order issued under Section 129 was initially upheld by the first appellate authority. Faced with the absence of a GST Tribunal in the state, the petitioner sought recourse from the Allahabad High Court.
The court referred to the precedent set in the case of Mahavir Polyplast Pvt. Ltd. Vs. State of U.P. and 2 Others, where the bench held that invoking Section 129(3) should be contingent upon the existence of “reasons to believe” and a corresponding action under Section 67 of the Act.
Justice Saumitra Dayal had Singh observed in the earlier case that, that the provision of Section 129(3) of the Goods and Services Tax 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.
Consequently, the Allahabad High Court quashed both the penalty order under Section 129 of the Uttar Pradesh Goods and Services Tax Act and the decision of the first appellate authority.
Counsel Shubham Agrawal appeared for the Petitioner and the Respondent was represented by Ravi Shanker Pandey.
The Single Bench of Justice Shekhar B. Saraf directed the respondent-department to refund any tax and penalty amount deposited by the petitioner within four weeks.
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