GST
TRT-2025-
High court of Allahabad
Date:-27-08-25
In:-
Issue Favourable to Tax Payer ?:-
Order date: 27 Aug 2025
Parties: M/s Harilaxmi Alloys Pvt. Ltd. v. State of U.P. & Ors.
Facts -
- On 11.12.2018, a survey was conducted at petitioner’s premises and excess stock was found, measured only by eye estimation rather than actual weighment.
- Based on this, proceedings under Section 130 CGST Act (confiscation) read with Section 122 were initiated, resulting in order dated 23.06.2020 imposing tax and penalty. Appeal was dismissed on 30.11.2021.
- Petitioner argued Section 130 was wrongly invoked; only Section 73/74 proceedings could be initiated. Reliance was placed on Vijay Trading Company v. Addl. Commissioner (All HC, 20.08.2024), affirmed by the Supreme Court.
Issue -
- Whether initiation of proceedings under Section 130 is valid when excess stock is found during survey, or whether action should lie only under Sections 73/74?
Order -
- The single bench of the Hon’ble High court held that excess stock detected in survey cannot justify confiscation under Section 130; the only valid recourse is adjudication of tax liability under Sections 73/74.
- The issue is settled by earlier rulings (Dinesh Kumar Pradeep Kumar, Vijay Trading Co.), with SC also affirming this view. Since stock was not properly weighed and only eye-estimated, reliance on Section 130 was legally unsustainable.
- Impugned appellate order dated 30.11.2021 and original order imposing tax/penalty under Section 130 were quashed; any deposit made by petitioner to be refunded in accordance with law.
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