2025 (2) TMI 927 - HC - GST

Challenge to search and seizure order - alleged discrepancies found during a survey - initiation of proceedings under sections 73/74 of the GST Act or u/s 130 of the GST Act - HELD THAT - It is admitted that the survey was conducted at the factory premises of the petitioner on 13/14.03.2018 in which certain discrepancy with regard to raw material semi/finished product etc. was found to which confiscation/proceedings under section 130 read with section 122 of the GST Act were initiated against the petitioner. The issue in hand is no more res integra. This Court in various cases has held that at the time of survey if some discrepancy in stock is found against the registered dealer then the proceedings under sections 73/74 of the GST Act ought to have been initiated instead of section 130 of the GST Act. Reference may be had to S/s Dinesh Kumar Pradeep Kumar 2024 (8) TMI 71 - ALLAHABAD HIGH COURT S/s J.H.V. Steels Limited 2024 (10) TMI 1450 - ALLAHABAD HIGH COURT and M/s PP Polyplast Private Limited 2024 (8) TMI 144 - ALLAHABAD HIGH COURT . Conclusion - At the time of survey if some discrepancy in stock is found against the registered dealer then the proceedings under sections 73/74 of the GST Act ought to have been initiated instead of section 130 of the GST Act The impugned order dated 16.04.2024 passed by the respondent no. 3 as well as the order dated 23.11.2019 passed by the respondent no. 4 cannot be sustained in the eyes of law - Petition allowed.

Summary

The issues presented and considered in the judgment are as follows:1. Whether the initiation of proceedings under section 130, read with section 122 of the GST Act, against the petitioner for alleged discrepancies found during a survey was legally justified?2. Whether the respondent had jurisdiction to reopen the case of the petitioner and decide on the confiscation of seized goods under section 130 of the GST Act after a previous confiscation order had been quashed by the court?Issue 1: Initiation of Proceedings under GST ActThe relevant legal framework and precedents cited in the judgment include sections 73, 74, and 130 of the GST Act. The court interpreted that if discrepancies in stock are found against a registered dealer during a survey, proceedings under sections 73/74 of the GST Act should be initiated, rather than section 130. This interpretation is supported by precedents such as S/s Dinesh Kumar Pradeep Kumar, S/s J.H.V. Steels Limited, and M/s PP Polyplast Private Limited.Key evidence and findings indicate that a survey conducted at the petitioner's factory premises revealed discrepancies in stock, leading to the initiation of proceedings under section 130 of the GST Act. The court found that the initiation of proceedings under section 130 was not legally justified based on the precedents and legal framework.Issue 2: Jurisdiction to Reopen Case and Decide ConfiscationThe court considered whether the respondent had the jurisdiction to reopen the case of the petitioner and decide on the confiscation of seized goods under section 130 of the GST Act after a previous confiscation order had been quashed. The petitioner argued that the respondent did not have the jurisdiction to reopen the case after the earlier confiscation order was quashed by the court.The court found that the impugned order passed by the respondent and the subsequent order imposing tax, penalty, and fine could not be sustained in the eyes of the law. The court quashed both the impugned order and the order imposing tax, penalty, and fine, ruling in favor of the petitioner.Significant Holdings:The court held that the initiation of proceedings under section 130 of the GST Act against the petitioner was not legally justified, and the respondent did not have the jurisdiction to reopen the case and decide on the confiscation of seized goods after a previous confiscation order had been quashed. As a result, the impugned orders were quashed, and the writ petition was allowed in favor of the petitioner.