SCN u/s. 130 Issued for Alleged S.35 Violation Held Without Jurisdiction: Allahabad HC Quashes GST Proceedings [Read Order]
The Court quashed both the notice and the seizure proceedings, allowing the department to act only under the proper statutory provisions.
The Lucknow Judicature of Allahabad High Court held that a show cause notice issued under Section 130 of the Uttar Pradesh Goods and Services Tax Act, 2017 (UPGST Act) could not be sustained when the alleged violation pertained only to Section 35 of the Act relating to maintenance of accounts, and therefore the proceedings initiated were without jurisdiction and liable to be quashed.
The writ petition was filed by M/s Gospell Press challenging the show cause notice issued under Section 130 of the UPGST Act, 2017 and the consequential seizure order. The petitioner submitted that the proceedings arose solely from an allegation regarding non-compliance with Section 35 of the UPGST Act, 2017.
But despite this, the Assessing Officer (AO) invoked confiscation powers under Section 130. The petitioner also sought refund of ₹2,15,74,527, contending that the amount was unauthorisedly recovered without authority.
The petitioner, represented by Prashant Kumar along with Sarvesh Kumar Tiwari and Fuhar Gupta, argued that a notice under Section 130 of the Uttar Pradesh Goods and Services Tax Act, 2017 cannot be issued unless tax liability is first determined under Section 73 or Section 74 of the Act.
They relied on multiple precedents supporting the contention that confiscation proceedings under Section 130 cannot be triggered for an alleged Section 35 lapse. They further submitted that the writ was maintainable at the show cause notice stage since the notice itself was issued without jurisdiction, invoking the principles laid down in Whirlpool Corporation v. Registrar of Trade Marks (1998).
All-in-One Manual with Updated GST Laws & Provisions, Click here
The High Court bench of Justice Shekhar B. Saraf and Justice Prashant Kumar held that the show cause notice issued under Section 130 of the Uttar Pradesh Goods and Services Tax Act, 2017 was without jurisdiction, as confiscation proceedings cannot be initiated for an alleged violation of Section 35 without first determining tax liability under Section 73 or Section 74, which is read as:
35. Accounts and other records -
(1) Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of-
(a) production or manufacture of goods;
(b) inward and outward supply of goods or services or both;
(c) stock of goods;
(d) input tax credit availed;
(e) output tax payable and paid; and
(f) such other particulars as may be prescribed:
Provided that where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business:
Provided further that the registered person may keep and maintain such accounts and other particulars in electronic form in such manner as may be prescribed.
(2) Every owner or operator of warehouse or godown or any other place used for storage of goods and every transporter, irrespective of whether he is a registered person or not, shall maintain records of the consigner, consignee and other relevant details of the goods in such manner as may be prescribed.
(3) The Commissioner may notify a class of taxable persons to maintain additional accounts or documents for such purpose as may be specified therein.
(4) Where the Commissioner considers that any class of taxable persons is not in a position to keep and maintain accounts in accordance with the provisions of this section, he may, for reasons to be recorded in writing, permit such class of taxable persons to maintain accounts in such manner as may be prescribed.
Accordingly, the Court quashed the impugned show cause notice and the seizure order. The department was granted liberty to proceed against the petitioner under the appropriate provisions of the UPGST Act, 2017.
As to the refund of Rs. 2,15,74,527, the Court permitted the petitioner to seek remedy in accordance with law. Thus, the writ petition was disposed of.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
