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2024 (8) TMI 513 - HC - GSTValidity of proceedings initiated against petitioner under section 130 of the GST Act - excess stock found - initiation of proceedings - it is submitted that the proceedings under section 130 of the GST Act could not have been initiated against the petitioner, rather, proceedings under sections 73/74 of the GST Act should have been initiated - HELD THAT - It is not in dispute that survey was conducted at the business premises of the petitioner on 23.11.2021. It is also not in dispute that excess stock was found, which triggered the initiation of the present proceedings against the petitioner. 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. This Court in S/s Dinesh Kumar Pradeep Kumar 2024 (8) TMI 71 - ALLAHABAD HIGH COURT has held ' even if excess stock is found, the proceedings under section 130 of the UPGST Act cannot be initiated.' 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. The impugned order dated 11.05.2022 passed by the respondent no. 5 under section 130 read with section 122 of the UPGST Act as well as the impugned order dated 10.04.2023 passed by the first appellate authority, the respondent no. 4 cannot be sustained in the eyes of law - Petition allowed.
Issues:
Challenge to impugned orders under UPGST Act, validity of proceedings under sections 73/74 of the GST Act, applicability of section 130 of the GST Act, determination of tax and penalty, proper assessment procedures. Detailed Analysis: The High Court heard a writ petition challenging orders dated 11.05.2022 and 10.04.2023 under the UPGST Act. The petitioner, a partnership firm in the iron and steel business, contested the initiation of proceedings under section 130 of the GST Act, arguing that proceedings under sections 73/74 of the GST Act should have been initiated instead. The petitioner highlighted the lack of physical verification and video recording during the stock inspection, relying on a previous judgment (S/s Dinesh Kumar Pradeep Kumar Vs. Additional Commissioner). The State and Union of India supported the impugned orders (para 3-6). The Court noted the excess stock found during the survey at the petitioner's premises, leading to the proceedings. Referring to previous judgments, the Court emphasized that proceedings under sections 73/74 of the GST Act should be invoked in cases of excess stock, not section 130 of the GST Act. Citing a recent judgment (S/s Dinesh Kumar Pradeep Kumar), the Court reiterated the necessity of proper assessment procedures under the Act, specifically mentioning the provisions of Section 74 for determining tax liabilities (para 8-9). The Court extensively quoted from previous judgments to establish the correct legal principles. It highlighted that the entire tax assessment and penalty determination process should align with the provisions of Section 73 or Section 74 of the Act. The Court emphasized that proceedings under section 130 of the GST Act cannot be valid if excess stock is found during a survey, as the liability to pay tax arises at the time of supply. The Court quashed the impugned orders dated 11.05.2022 and 10.04.2023, ruling in favor of the petitioner and allowing the writ petition (para 9-13). In conclusion, the judgment clarified the legal position that proceedings under section 130 of the GST Act cannot be initiated solely based on excess stock found during a survey. Proper assessment procedures under sections 73/74 of the GST Act must be followed, and tax liabilities should be determined in accordance with the statutory provisions. The Court upheld the petitioner's arguments and quashed the impugned orders, allowing the writ petition.
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