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Synopsis

The Allahabad High Court recently directed the Commissioner Commercial Tax Uttar Pradesh to look into the misconduct of two officers of the department’s mobile squad who had conducted a search at a business premise and seized goods.

Court said that both authorities of the Commercial Tax Department chose to exercise powers vested in them under Section 129(3) of the Uttar Pradesh Goods And Services Tax Act, 2017, to search a vehicle carrying goods during transportation to proceed against goods lying in a godown.

The bench of Justice Saumitra Dayal Singh held that the officers had exercised the power and jurisdiction that never existed and also their act appeared deliberate. 

Court, therefore, directed the Commissioner to look into the matter, call for an explanation and take appropriate action commensurate to the misconduct of the officers, if any, and to take consequential and corrective action to avoid such occurrences, in future.

Court opined that while conducting search and seizure of a business premise the erring officers not only closed their eyes to the power and jurisdiction that never existed but they deliberately described the subject search as vehicles.

Court observed, “They deliberately described the vehicle being checked as "UPGODOWN02" and "GODOWON"…. Therefore, they cannot deny that they were aware that the subject search was not directed at any vehicle but at an immovable property namely a godown premise”.

A search and seizure operation was conducted by two Assistant Commissioners of the Special Investigation Branch of the Commercial Tax Department, Agra at a godown, where a manufacturer of PVC pipes used to store the raw materials and manufactured goods.

In the panchnama, amongst others, the allegation of shortage of physical stock as compared to that recorded in the stock registers was made. The two Assistant Commissioners issued separate show cause notices to the assessee under Section 129(3) of the UP GST Act, 2017.

Pursuant to the above notices, seizure orders had been passed and tax and penalty were demanded from the assessee.

When the appellate authority dismissed the appeals moved by the assessee against the orders passed by the two officers, he moved the high court seeking relief.

The high court bench opined that the entire proceedings drawn up against the assessee under Section 129(3) of the Act, were without jurisdiction.

Section 129(3) of the Act provides for the power of seizure to be exercised only in the case of goods in transit and not for goods lying in a godown.

Case Title: Mahavir Polyplast Pvt. Ltd. V. State of UP and 2 Others & connected matter