GST
TRT-2025-
Allahabad High Court
Date:-07-05-25
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 07 May 2025
Parties: M/s Gopal Trading Company vs. State of U.P. & 2 Others
Facts –
- The Petitioner, M/s Gopal Trading Company, engaged in the sale of paan masala, tobacco, cigarettes, and matchsticks, was subjected to an inspection under Section 67 of the GST Act by the SIB. During the inspection, excess stock was alleged to have been found, based solely on eye estimation without actual weighment.
- The petitioner argued that this method was unreliable and that instead of initiating proceedings under Section 130, the authorities ought to have proceeded under Sections 73/74 of the GST Act, which deal with determination and recovery of tax.
Issue –
- Whether proceedings under Section 130 of the GST Act can be initiated solely on the basis of excess stock found during a survey, without actual weighment and without invoking Sections 73/74?
Order –
- The Hon’ble High Court observed that on various occasions, this Court has held that if excess stock is found, then proceedings under sections 73/74 of the GST Act should be pressed in service and not proceedings under section 130 of the GST Act, read with rule 120 of the Rules framed under the Act. The law is clear on the subject that the proceedings under section 130 of the GST Act cannot be put to service if excess stock is found at the time of survey.
- A specific provision has been contemplated that if the goods are not recorded in the books of account, then the Proper Officer shall proceed as per the provision of sections 73/74 of the GST Act. Once the Act specifically contemplates that action to be taken, then the provision of section 130 of the GST Act cannot be pressed into service.
- In view of the above as well as the judgements of this Court in M/s Vijay Trading Company, which has been affirmed by the Apex Court vide judgement dated 04.04.2025, the impugned order dated 19.06.2020 passed by the respondents cannot be sustained in the eyes of law. The same are hereby quashed.
Download Case Law
