The Allahabad High Court, in the ruling, hit the GST officials for seizing the goods inside the godown excluding any jurisdiction.
The taxpayer, a manufacturer of PVC pipes, stores its raw materials and manufactured goods at a godown located on the same premises. Without any dispute, the taxpayer was not found engaged in any transaction of the transportation of any goods or finished goods, or raw materials. But on the date 7/8/2018. A search operation is initiated on the business premise of the petitioner by the Special Investigation Branch of the Commercial Tax Department, Agra. from there on 07.08.2018 a Panchnama was brought specifying that among others the charge of lack of physical stock compared with that recorded in the stock records. On 8/8/2018 the taxpayer proceeds with an application to SIB authorities for the issue of an allegation of the lack of shortage of stock. As per the taxpayer the stock reconciliation can incur by considering the stock of raw materials and finished goods stored in its other godown which was not for search proceedings, dated 07.08.2018.
Hence under Section 129(3) of the Act, both heads move to provide separate show cause notices to the taxpayer towards the investigation operation which would get held by the Special Investigation Branch of the Commercial Tax Department, on the business premises of the petitioner, on 07.08.2018. Tax and penalties have been ordered as per the above notices, and seizure orders that pass.
Justice Saumitra Dayal Singh found the provision of Section 129(3) of the Act can not be summoned to the case of godown premises to search operation without learning of the act that no action would get chosen under Section 67 of the Act, since it has a compulsory existence of “reasons to believe”, to the case that premise to search the goods or documents discovered here.
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“They not only closed their eyes to the power and jurisdiction that never existed but they deliberately described the vehicle being checked as “UPGODOWN02” and “GODOWON” (as has been noted above). That description was given by them, deliberately. 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,” the Court mentioned.
Opposing the actions of the council, the court ruled that “the Court does not wish to go deeper into the intention of the officers concerned in issuing such notices and drawing up such proceedings for which they had no jurisdiction as that would entail calling of personal affidavits of the officers at the cost of precious time of the Court. However, the officers are accountable for their acts. 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 officers and to make consequential and corrective action to avoid such occurrences, in future.”
