2024 (6) TMI 1073 - HC - GST

Business Premises Search Leads to Quashing of GST Penalty Orders Under Section 129(3), Mandating Tax Refund Within Four Weeks

M/s. Gopi Chand Batra Traders Versus State Of U.P. And 2 Others

HC quashed penalty orders under Section 129(3) of UP GST Act following search of business premises. Relying on precedent, the court found no justification ... Penalty u/s 129 (3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - proceedings subsequent to search of premises - HELD THAT:- In the present case, the proceedings under Section 129 (3) of the Uttar Pradesh Goods and Services Tax Act, 2017 have been initiated subsequent to search of the business premises of the petitioner. It has been categorically held by the coordinate Bench of this Court in MAHAVIR POLYPLAST PVT. LTD. VERSUS STATE OF U.P. AND 2 OTHERS [2022 (8) TMI 410 - ALLAHABAD HIGH COURT] that search and seizure of the godown cannot result in penalty proceedings under Section 129 of the Act. The present proceedings are not justified, and accordingly, the impugned orders dated March 21, 2018 and August 31, 2018 are quashed and set aside - petition allowed. Issues:Penalty order under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017; Validity of penalty order post search of business premises; Interpretation of penalty proceedings under Section 129 of the Act; Refund of tax and penalty amount deposited by the petitioner.Analysis:The High Court judgment, delivered by Hon'ble Shekhar B. Saraf, J., addressed the penalty order issued under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017, along with the subsequent appeal order under Section 107 of the Act. The case stemmed from proceedings initiated post a search of the petitioner's business premises. The Court referred to a prior ruling in Mahavir Polyplast Pvt. Ltd. Vs. State of U.P., emphasizing that a mere search and seizure of premises do not warrant penalty proceedings under Section 129 of the Act. Consequently, the Court deemed the penalty orders dated March 21, 2018, and August 31, 2018 unjustified, leading to their quashing and setting aside.The Court, in its verdict, directed the respondents to refund the tax and penalty amounts deposited by the petitioner within four weeks from the date of the judgment. The writ petition was allowed with the specified terms, ensuring consequential reliefs. Notably, any sum deposited by the petitioner was mandated to be refunded within the stipulated four-week period. The judgment, therefore, provided a clear interpretation of the law regarding penalty proceedings post premises search and highlighted the necessity for justified actions in such cases, ultimately leading to the refund of the petitioner's deposited amounts.