Allahabad High Court Grants Interim Relief On Plea Challenging Order U/S 129 UPGST Act Claiming Asst Commissioner Was Not 'Proper Officer'

Recently, the Allahabad High Court has granted interim relief in a writ petition challenging the order under Section 129 of the Uttar Pradesh Goods and Service Tax Act, 2017.

Petitioner was transporting Arecanuts, when the shipment was intercepted by the Mobile Squad. Due to alleged reuse of bill and e-way bills, physical verification of the goods was ordered. Though no discrepancies were found upon physical verification, an order of detention of goods was passed. Subsequently, the Assistant Commissioner, Sector-3, (Mobile Squad)-10, State Tax Kanpur passed and order under Section 129(3) of the Act imposing penalty on the petitioner.

In the writ petition, petitioner relied on Article 265 of the Constitution of India to argue that no tax can be levied without any authority of law and that only 'proper officer' could pass an order under Section 129(3). It was argued that proper officer ought to adjudicate by issuing show cause notice to the assesee and considering the reply filed. Accordingly, it was argued that the proper officer acts as an adjudicating authority.

It has been further stated that by virtue of Section 2(4) of the Act which defines 'adjudicating authority' , Commissioner cannot be an adjudicating authority and there is no jurisdiction conferred upon the Commissioner to issue any show cause notice.

Before the Court, it was argued that since the order was passed by a Proper Officer and not an Adjudicating Authority, the same is not appealable under Section 107 of the Act.

Further, petitioner challenged Circular No.278/GST/2017-18/File No.118/State Tax, dated 01.07.2017 to the extent that the Commissioner had delegated his powers to adjudicate show cause notice under Section 129 to the Assistant Commissioner, Mobile Squad. Challenge was also raised to the jurisdiction exercised by the Assistant Commissioner, Sector-3, (Mobile Squad)-10, State Tax Kanpur on grounds that the interception could have been made by the officers at Rai Bareli and not the Mobile Squad of Kanpur. It was also stated that no prior approval had been taken from the Joint Commissioner/ Additional Commissioner by the Mobile Squad for intercepting goods in transit.

The bench on Justice Shekhar B. Saraf and Justice Vipin Chandra Dixit directed that affidavits be exchanged in the matter and in the interim upon deposit of security, the goods of the petitioner be released.

Case Title: M/S Jai Shree Traders v. State Of U.P. And 2 Others [WRIT TAX No. - 1731 of 2024]

Counsel for Petitioner : Sameer Gupta, Ragini Gupta, Rohan Gupta

Click Here To Read/Download Order