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TMI Blog2024 (8) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner. 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. The impugned order dated 03.04.2024 passed by the respondent no. 1, the first appellate authority, as well as the impugned order dated 24.01.2023 passed by the respondent no. 2 cannot be sustained in the eyes of law. The same are hereby quashed - petition allowed. - Hon'ble Piyush Agrawal, J. For the Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de - 2 Another [Writ Tax No. 1082 of 2022, decided on 25.07.2024]. He prays for allowing the writ petition. 5. Per contra, learned Additional Standing Counsel for the State - respondents supports the impugned orders. 6. After hearing learned counsel for the parties, the Court has perused the record. 7. It is not in dispute that survey was conducted at the business premises of the petitioner on 11.05.2022. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the provisions of Sub-section 1 of Section 35, the proper officer is empowered to determine the amount of tax payable on the goods or the services which are unaccounted for as if such goods or services had been supplied by such person and the provisions of Section 73 or 74 shall mutatis mutandis apply for determination of the said tax. 25. A perusal of the said section 35(6) makes it clear that proper officer is empowered to determine the taxes payable and while determining the said tax payable he is bound to determine the same in accordance with the provisions of Sections 73 74 of the Act. 26. In the present case, the proper officer was empowered to determine the liability of payment of tax in terms of the powers conferred under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable with tax. (4) The service of statement under sub-section (3) shall be deemed to be service of notice under sub-section (1) of section 73, subject to the condition that the grounds relied upon in the said statement, except the ground of fraud, or any wilful-misstatement or suppression of facts to evade tax, for periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice. (5) The person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble thereon under section 50 and a penalty equivalent to fifty per cent. of such tax within thirty days of communication of the order, all proceedings in respect of the said notice shall be deemed to be concluded. 27. Although in terms of the provisions of Section 35 (6), the unaccounted goods are ''deemed to be supplied' however, determination and quantification of the tax on the said ''deemed supply' has to be done in accordance with Section 73 or Section 74 of the Act.. 11. 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. 12. Further, in M/s Maa Mahamaya Alloys Pvt. Ltd. (supra), this Court has held a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 73 or Section 74 of the Act, as the case may be. 12. In the light of what has been decided by this Court in the case of M/s Metenere Limited (Supra), it is clear that the entire exercise resorted to under Section 130 of the GST Act for assessment/ determination of the tax and the penalty is neither stipulated under the Act, nor can be done in the manner in which it has been done, more so, in view of the fact that the department itself had undertaken the exercise of quantifying the tax due, by taking recourse under Section 74. 13. As the entire tax has been determined and the penalty has been levied only on the basis of a survey by taking recourse under Section 130 of the GST Act and not taking a recourse to Section 74, the order im ..... X X X X Extracts X X X X X X X X Extracts X X X X
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