Penalty proceedings under Section 129 of the Act cannot be initiated solely based on search and seizure of godown

Facts of the Case:- 

• The petitioner’s business premises were searched, leading to the initiation of penalty proceedings under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017.
• A penalty order dated June 18, 2018, was passed against the petitioner.
• The petitioner appealed the penalty order, but the appeal was dismissed on June 14, 2019.
• The petitioner filed a writ petition challenging both the penalty and appellate orders.
• The petitioner challenges the penalty order passed under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017, and the appellate order upholding the penalty.

Petitioner's Contention:-   Cited the judgments of the coordinate Bench in Mahavir Polyplast Pvt. Ltd. vs. State of U.P. and Poddar Trading Company vs. Commissioner, Commercial Tax, U.P. which held that search and seizure of the godown cannot result in penalty proceedings under Section 129 of the Act.

Held:-  The Court referred to the coordinate Bench's rulings in Mahavir Polyplast Pvt. Ltd. vs. State of U.P. and Poddar Trading Company vs. Commissioner, Commercial Tax, U.P., which establish that search and seizure of the godown cannot justify penalty proceedings under Section 129 of the Act. Based on these precedents, the Court found the penalty proceedings against the petitioner to be unjustified.

The penalty and appellate orders were quashed as the proceedings under Section 129(3) were deemed unjustified. The respondents are directed to refund the amount of tax and penalty deposited by the petitioner within four weeks from the date of the order.

To read the complete judgment 2024 Taxo.online 905