Penalty Under Section 129(3) Imposed Despite Search and Seizure Under Section 67 | HC Nullified Penalty Order

Case Details: Poddar Trading Company v. Commissioner, Commercial Tax, U.P. - [2024] 160 taxmann.com 492 (Allahabad)

Judiciary and Counsel Details

• Shekhar B. Saraf, J.
• Pooja Talwar for the Petitioner.
• Rishi Kumar, Ld. Addl. Chief Standing Counsel for the Respondent.

Facts of the Case

The issue in the given case revolves around the imposition of penalties despite of a search and seizure operations carried under Section 67 of the CGST Act, 2017. The petitioner challenged the penalty order issued under Section 129(3) of the Act, along with the subsequent order passed in appeal. The petitioner argued that such actions lacked jurisdiction, citing the judgment of Allahabad High Court in the case of Mahavir Polyplast (P.) Ltd. v. State of U.P. [2022] 142 taxmann.com 8 (Allahabad) to support their claim.

High Court Held

The Hon’ble High Court also deliberated on the legality of initiating penalty proceedings when there had already been a search and seizure carried out under Section 67. The court found merit in the petitioner’s arguments and cited the judgment in Mahavir Polyplast Pvt. Ltd. v. State of U.P., which emphasized that penalty proceedings couldn’t be initiated when a search and seizure operation had already been conducted at the premises of the petitioner.

Consequently, the court deemed the penalty proceedings initiated against the petitioner under Section 129(3) of the Act to be without merit and subsequently quashed the impugned penalty order under section 129(3) of the CGST Act.

List of Cases Referred to

• Mahavir Polyplast (P.) Ltd. v. State of U.P. [2022] 142 taxmann.com 8/[2023] 95 GST 688 (All.) (para 4).