Case Title:
Mahavir Polyplast Pvt. Ltd. Versus State Of U.P. And 2 Others
Bench
Hon'ble Saumitra Dayal Singh,J.
Parties:
Petitioner :- Mahavir Polyplast Pvt. Ltd.
Respondent :- State Of U.P. And 2 Others
Counsel for Petitioner :- Nishant Mishra
Counsel for Respondent :- C.S.C.
Order Date
6.8.2022
SUBJECT
- The Court held that the provision of Section 129(3) of the CGST Act could not be invoked to subject a godown premises to a search and seizure operation. The department was unmindful of the Act as no action was taken under Section 67. Two authorities of the Mobile Squad of the Commercial Tax Department chose to act with negligence.
IMPORTANT PROVISIONS
- section 129 of the CGST Act - Detention, seizure and release of goods and conveyances in transit. Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,-
on payment of the applicable tax and penalty equal to one hundred per cent.
- Section 67 of the CGST relates to the existence of "reasons to believe" that premise is subject to search and seizure of goods or documents found therein.
OVERVIEW
- The petitioner/assessee is in the business of manufacturing PVC pipes.
- However, the business premises of the petitioner were subjected to a search and seizure operation by the Special Investigation Branch of the Commercial Tax Department Agra.
- A Panchnama was drawn, alleging the shortage of physical stock as compared to that recorded in the stock registers.
- The assessee moved an application to the S.I.B. authorities disputing the allegation of a shortage of stock.
- The department proceeded to issue separate show cause notices to the assessee under Section 129(3) with respect to the search and seizure operation conducted by the Special Investigation Branch at the business premises of the petitioner.
- The seizure order was passed. The tax and penalty were demanded. The appellate authority dismissed the appeals filed by the petitioner.
ISSUES RAISED
Whether the entire proceedings drawn up against the present petitioner under Section 129(3) of the Act are within the jurisdiction or not?
JUDGEMENT ANALYSIS
- The Allahabad High Court has held that the goods lying in the gowndown cannot be seized by invoking section 129 of the CGST Act. The power of seizure can be exercised only in the case of goods in transit and not for goods lying in godown.
- The department was unmindful of the Act as no action was taken under Section 67.
- The court noted that the department not only closed its eyes to the power and jurisdiction that never existed, but they deliberately described the vehicle being checked as "UPGODOWN02" and "GODOWON."
- The court held that the officers are accountable for their acts.
CONCLUSION
Therefore, let this order be communicated to the Commissioner Commercial Tax UP to look into the matter, call for explanation, and take appropriate action commensurate to the misconduct, if any, that may be found committed by the erring officer and to take consequential and corrective action to avoid such occurrences in future," the court said.
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