Proceedings U/S 130 Of UPGST Act Not Applicable If Excess Stock Is Found At Time Of Survey: Allahabad High Court
Recently, the Allahabad High Court has held that proceedings under Section 130 of the Uttar Pradesh Goods and Service Tax Act, 2017 cannot be initiated where stock is found excess at the time of survey. Section 130 of the UPGST Act provides for confiscation of goods and penalty in cases where supply, transport of goods has been made in contravention to the provisions of the Act with...
Recently, the Allahabad High Court has held that proceedings under Section 130 of the Uttar Pradesh Goods and Service Tax Act, 2017 cannot be initiated where stock is found excess at the time of survey.
Section 130 of the UPGST Act provides for confiscation of goods and penalty in cases where supply, transport of goods has been made in contravention to the provisions of the Act with the intention to evade tax. It also includes penalty when an assesee does not account for the goods on which tax is to be paid.
Petitioner approached the High Court against the order passed under Section 130 of the GST Act read with Section 122 of the Act and the subsequent order of the Appellate Authority upholding the order.
Counsel for petitioner submitted that the order under Section 130 was passed pursuant to a search conducted at petitioner's premises. It was argued that order under Section 130 of the Act could not be issued against the petitioner, and proceedings, if any, could only be initiated under Section 73/74 of the Act.
The Court relied on S/s Dinesh Kumar Pradeep Kumar Vs. Additional Commissioner, Grade - 2 & Another wherein the Allahabad High Court had held that liability to pay tax under the Act arises only at the time of supply, therefore, for excess stock found in the gowdown, proceedings under Section 130 cannot be initiated.
“On a plain reading of the allegations levelled against the petitioner with regard to the improper accounting of goods, the only stipulation contained in Clauses (ii) and (iv) of sub-section (1) of Section 130 can at best be invoked by the department, however, in the present case, even assuming for the sake of argument, that the goods were lying in excess of the goods in record, the case against the petitioner would not fall under Clause (ii) of sub-section (1) of Section 130 for the simple reason that the liability to pay the tax arises at the time of point of supply, and not at any point earlier than that.”
Accordingly, Justice Piyush Agrawal held that proceedings under Section 130 cannot be initiated for stock found excess during survey.
The writ petition was allowed and order under Section 130 of the UPGST Act was set aside.
Case Title: S/S J.H.V. Steels Ltd v. Union Of India And 4 Others [WRIT TAX No. - 808 of 2024]