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2024 (7) TMI 1205 - HC - GSTInitiation of proceedings u/s 130, read with section 122 of the UPGST Act - case of the petitioner is that once the survey was conducted and alleged excess stock was found, then sections 73 74 of the UPGST Act come into play - HELD THAT - The issue in hand is covered by the judgement of this Court in M/S METENERE LTD. VERSUS UNION OF INDIA AND ANOTHER 2020 (12) TMI 790 - ALLAHABAD HIGH COURT , in which it was held that ' In the present case, the proper officer was empowered to determine the liability of payment of tax in terms of the powers conferred under Section 35 (6) after resorting to the procedure as established under Section 74 of the Act.' In the aforesaid case, this Court has specifically held that even if excess stock is found, the proceedings under section 130 of the UPGST Act cannot be initiated. The impugned orders passed by the authorities below in all the writ petitions cannot be sustained in the eyes of law. The same are hereby quashed - Petition allowed.
Issues:
Challenge to impugned orders under UPGST Act for Assessment Years 2019-20 and 2020-21. Analysis: The judgment pertains to three writ petitions concerning Assessment Years 2019-20 and 2020-21 under the UPGST Act. The main issue revolves around the validity of the impugned orders passed against a registered dealer engaged in the trading of iron & steel. The petitioner contested the initiation of proceedings under section 130 of the UPGST Act following a survey that allegedly revealed excess stock. The petitioner argued that sections 73 and 74 should have been applied instead. The petitioner relied on precedents such as M/s Maa Mahamaya Alloys Pvt. Ltd. and Metenere Limited to support their case. Conversely, the Additional Chief Standing Counsel defended the impugned orders, citing malpractice due to unaccounted excess stock found during the survey. The court examined the contentions of both parties and referred to the judgment in Metenere Limited, emphasizing that proceedings under section 130 cannot be initiated solely based on excess stock. The court also cited M/s Maa Mahamaya Alloys Pvt. Ltd. to highlight that tax assessment and penalty imposition under section 130 must align with the procedures outlined in sections 73 and 74 of the Act. The court found that the impugned orders were unsustainable as they were solely based on a survey under section 130 without recourse to section 74 for tax quantification and penalty determination. Consequently, the court quashed the impugned orders in all writ petitions, ruling in favor of the petitioners. In conclusion, the judgment underscores the importance of adhering to the prescribed procedures under the UPGST Act, particularly in cases involving tax assessment and penalty imposition. It establishes that proceedings under section 130 cannot be standalone grounds for determining tax liability and levying penalties, emphasizing the need to follow the provisions of sections 73 and 74 for such determinations.
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