Russia on Tuesday opened a legal case against election monitoring group Golos (Voice) after it failed to declare foreign funding and its status as "foreign agent" under a controversial new law.
The move comes as the authorities carry out a wide-ranging crackdown on NGOs that has included raids by prosecutors and sparked international concern.
The justice ministry accused Golos and its executive director Lilia Shibanova of receiving foreign funding but failing to declare itself as a "foreign agent" as required by the new law which has been criticised as a throwback to the Soviet past.
The high-profile group vowed to fight back in court as it faces a possible fine of up to 500,000 rubles ($16,000)while its executive director could be fined up to 300,000 rubles ($9,600).
"The group receives foreign funding and carries out political activities in Russia, thus it fulfils the functions of a foreign agent," the ministry said in a statement.
It specified that the group's work was "political" because it was proposing reforms of the country's electoral laws. The ministry said it would send the documents to court on Wednesday.
"We understand the full seriousness of the intentions of finding us guilty of administrative offences and are preparing to defend our position in court," the group said in a statement posted on its Facebook page late Tuesday.
The first use of the Soviet-sounding charge against a prominent group came after Russian prosecutors carried out an unprecedented wave of searches of more than 100 NGOs, including Amnesty International and Human Rights Watch.
The justice ministry said in a report published Tuesday that it planned 7,357 checks of NGOs this year.
Golos, which has reported widespread irregularities in recent parliamentary and presidential polls, said Tuesday that the justice ministry had cited as its foreign funding only a 7,728.40 euro ($10,118) rights prize from Norway.
"Golos does not receive any foreign funding and is financed only from Russian resources", the group insisted in its statement.
The group said the accusation only concerned the Sakharov Freedom Prize, awarded to the group last year by the Norwegian Helsinki Committee, and posted a scanned letter from a state financial watchdog backing this up.
But it insisted it had sent back the money to Norway, seeing the risk of being accused under the new law.
"Understanding the risks that could arise from receiving the financial part of the Sakharov Freedom Prize 2012 while the law on agents was in force, we took a decision to refuse the funds," it said.
"The 7,728.40 euros reached a transit account in the bank. The funds were not transferred to the association's current account and Golos never had the opportunity to spend them since it sent a letter to the bank asking for the transferred money to be returned."
"This is a political order," the group's deputy executive director Grigory Melkonyants wrote on Facebook.
Putin in an interview with German ARD television last week complained that NGOs had received 28.3 billion rubles ($909 million) in funding from abroad in the first four months after the law was passed.
USAID, the US agency for international development, used to provide significant funding to Golos but was banned from working in Russia last year.
Golos embarrassed President Vladimir Putin by publishing findings that he won less than 51 percent in March 2012 polls, against the official result of 64 percent.
Nevertheless the group's executive director Shibanova is a member of the presidential rights council, an advisory body to Putin.
Ahead of parliamentary elections in 2011, Putin icily compared groups that received international funding to monitor polls to Judas, the disciple who betrayed Jesus Christ.