Introduction

In a recent judicial decision by the Hon’ble Allahabad High Court, the matter of penalty imposition following a search and seizure of a godown under the Central Goods and Services Tax Act, 2017 (“CGST Act”) was deliberated upon, resulting in significant implications for taxation and procedural fairness.

Facts of the Case

M/s. Gopi Chand Batra Traders, engaged in the transportation and storage of goods, faced a search operation by the Proper Officer under the Uttar Pradesh Goods and Services Tax Act, 2017 (“UPGST Act”). Subsequently, penalty proceedings were initiated under Section 129(3) of the UPGST Act, leading to the issuance of a Penalty Order dated March 21, 2018. Despite an appeal, an adverse order was upheld by the Appellate Authority.

Issue

The pivotal issue examined in this case was whether the mere act of conducting a search and seizure of a godown can legally lead to penalty proceedings under relevant GST legislation.

Held

The Hon’ble Allahabad High Court, in Writ Tax No. 1632 of 2018, deliberated on the matter and referenced a precedent set by the Coordinated Bench of the same court in Mahavir Polyplast Pvt. Ltd. v. State of U.P., where it was clearly established that: