01.03.2024: Penalty Proceedings u/s 129 can’t be initiated pursuant to search and seizure operations at premises of assessee: Allahabad High Court

The Allahabad High Court in the case of M/s. Gopi Chand Batra Traders v. State Of U.P. And 2 Others vide WRIT TAX No. – 1632 of 2018 dated 23.02.2024, has held that that search and seizure of a godown of an assesee cannot be penalised in proceedings under Section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017.

In this case, the petitioner challenged the penalty proceedings initiated by the department under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017. The proceedings under Section 129(3) have been initiated subsequent to search of the business premises of the petitioner.

The Court relied upon the judgment of Court in the case of Mahavir Polyplast Pvt. Ltd. Vs. State of U.P. and 2 others reported in (2022 U.P.T.C. [VOL.112] – 1514), wherein it was held that 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.

Accordingly, the Court quashed the penalty order under Section 129 of the Act as well as the order of the first appellate authority.

To read the complete judgment 2024 Taxo.online 383

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