M/S Bhagwati Ent Udyog vs. Union Of INDIA And 4 Others

Facts

The petitioner, M/s Bhagwati Ent Udyog, sought to quash a Seizure Memo and Panchnama dated June 22, 2022. During a search operation at the petitioner's workplace on June 22, 2022, authorities found that books of accounts, as required by Section 35 of the U.P. Goods and Services Tax Act, 2017, were not produced. Consequently, bricks valued at Rs. 42,21,200/- were seized. The estimated tax was Rs. 2,53,272/- and penalty Rs. 2,53,272/-, totaling Rs. 5,06,544/-. The petitioner claimed the seizure was unjustified as no partners were present and a demand could not be raised in the Panchnama without proper assessment. The petitioner also stated that the demanded tax had been deposited and requested the release of seized goods pending assessment.

Held

The Court noted that following the seizure, proceedings were initiated against the petitioner by serving summons under Section 70 of the 2017 Act. The petitioner was participating in these proceedings, though it was not clear if they had concluded. No release application for the seized goods was on record. Therefore, the Court disposed of the writ petition, granting the petitioner liberty to submit a release application, if not already submitted, and pursue it before the concerned authority. The petitioner was also granted liberty to participate in the proceedings initiated via summons under Section 70. The Court expressed an expectation that these proceedings would be brought to a logical conclusion, preferably within six weeks, subject to the petitioner's cooperation. If aggrieved by any subsequent order or action, the petitioner was free to pursue available legal remedies.

Key Issues

1. Whether the seizure of goods was validly made under the U.P. Goods and Services Tax Act, 2017, solely on the ground that books of accounts were not produced during an inspection, especially when no partners of the assessee were present and no formal assessment proceedings had been initiated. 2. Whether the Panchnama could raise a demand for tax and penalty without a proper assessment proceeding. Petitioner's arguments: The seizure was invalid because books of accounts were not produced only because no partners were present. A Panchnama cannot raise a demand; this requires formal assessment proceedings. The demanded tax has been deposited, and seized goods should be released pending assessment. Revenue's arguments: The Panchnama, though perhaps not perfectly worded, correctly recorded the non-production of required books of accounts, justifying the seizure. The Panchnama's valuation was an estimate for potential release. Release of seized goods can be sought under Section 67(6) of the Act, read with Rule 140. Summons under Section 70 of the Act have been issued for assessment, and the petitioner has not demonstrated that these proceedings have concluded or that an application for release has been decided.