Facts of the Case

The petitioner, M/s Gospell Press through its partner Rajiv Goyal, challenged a notice dated 17.09.2025 issued under Section 130 of the UPGST Act, 2017, and a seizure order dated 06.09.2025 issued under Form GST INS-02 read with Rule 139(7) of the U.P. GST Rules, 2017. The petitioner also sought refund of amounts totalling over Rs. 2.15 crore (Rs. 91,74,527 and Rs. 1,24,00,000) which it claimed had been illegally recovered under Section 74A(9) of the UPGST Act.

Issues Involved

  1. Whether a notice under Section 130 read with Section 122 of the UPGST Act could be issued alleging a violation of Section 35 of the Act without a prior determination of tax liability under Section 73 or 74.
  2. Whether the writ petition was maintainable at the show cause notice stage.

Petitioner's Arguments

  • Relying on a line of precedents including M/s Metenere Ltd., M/s Maa Mahamaya Alloys Pvt. Ltd., and M/s Dayal Product, it was submitted that a notice under Section 130 cannot be issued for an alleged violation of Section 35 of the Act.
  • The notice under Section 130 can only be issued once liability to pay tax is determined by the Department under Section 73 or 74 of the Act, as held in M/s Maa Mahamaya Alloys Pvt. Ltd.
  • The writ petition was maintainable against the show cause notice itself since it was issued without jurisdiction, relying on the exceptions carved out in Whirlpool Corporation v. Registrar of Trade Marks and Siemens Ltd. v. State of Maharashtra.

Respondent's Arguments

  • Learned counsel for the respondents primarily argued on the point of maintainability of the writ petition at the show cause notice stage.

Court Order / Findings

  • The Court held that the law is no longer res integra on the question of initiating proceedings under Section 130 of the Act without a prior determination of tax under Section 73/74, and that the show cause notice issued under Section 122 read with Section 130 was without jurisdiction.
  • Since the notice was without jurisdiction, the Court found itself bound to intervene notwithstanding the objection to maintainability.
  • The impugned notice dated 17.09.2025 and the impugned seizure order dated 06.09.2025 were quashed and set aside, with liberty to the Department to proceed in accordance with law by issuing show cause notices under the relevant provisions of the Act.
  • On the prayer for refund of the amount of Rs. 2,15,74,527, the petitioner was left at liberty to proceed in accordance with law.

Important Clarification

  • Confiscation and penalty proceedings under Section 130 of the GST Act cannot be invoked merely for an alleged violation of Section 35 (maintenance of accounts) without a prior determination of tax liability under Section 73 or 74; doing so renders the notice without jurisdiction and amenable to writ interference despite being at the show cause stage.
  • A jurisdictional challenge to a show cause notice falls within the recognised exceptions to the rule of exhausting alternative remedy, as explained in Whirlpool Corporation.

Sections Involved

  • Section 130, UPGST Act, 2017 – confiscation of goods/conveyances and levy of penalty, held inapplicable without prior tax determination.
  • Section 122, UPGST Act, 2017 – penalty for certain offences, read with Section 130 in the impugned notice.
  • Section 35, UPGST Act, 2017 – accounts and records provisions, alleged violation of which founded the impugned notice.
  • Section 73/74, UPGST Act, 2017 – determination of tax, held to be the necessary precursor before Section 130 can be invoked.
  • Section 74A(9), UPGST Act, 2017 – provision under which recovery was allegedly effected, refund of which was left open.

Decision – In Favour of

The petition is allowed in favour of the Assessee. The Section 130 notice and the seizure order are quashed for want of jurisdiction, with liberty to the Department to proceed under the appropriate provisions.

Case Details

  • Court: High Court of Judicature at Allahabad (Lucknow Bench)
  • Case No.: Writ Tax No. 1283 of 2025
  • Coram: Hon'ble Mr. Justice Shekhar B. Saraf and Hon'ble Mr. Justice Prashant Kumar
  • Date of Order: 13.11.2025

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