Excess stock discovery requires proceedings under Sections 73-74 UPGST Act, not Section 130 with Rule 122

The Allahabad HC set aside an assessment order involving confiscation of goods based on alleged excess stock found during a survey conducted on 24.08.2018. The court held that when excess stock is discovered, proceedings must be initiated under Sections 73-74 of the UPGST Act, not under Section 130 read with Rule 122. Following the precedent in M/s Shree Om Steels case, the court ruled that Section 130 proceedings cannot be initiated even if excess stock is found, making the impugned order legally unsustainable. The petition was allowed.

---

---

Issues:
Challenge to order dated 24.03.2022 passed in GST Appeal No.28/2020, Assessment Year 2018-19.

Analysis:
The petitioner, engaged in trading of Cement, Mauram, and Saria, challenged the order based on a survey conducted on 24.08.2018, where excess stock was found without proper procedure. The petitioner argued that proceedings should have followed Sections 73 & 74 of the UPGST Act instead of Section 130. The petitioner relied on a previous judgment (Writ Tax No. 1007 of 2022) to support the claim. The respondent, however, supported the impugned order. The Court noted the survey findings and emphasized that proceedings under Sections 73 & 74 should apply in cases of excess stock, not Section 130. Referring to previous judgments, the Court highlighted the need for proper assessment and penalty determination under the relevant sections of the Act. The Court specifically mentioned that Section 130 proceedings cannot be initiated even if excess stock is found, emphasizing the importance of following the correct legal procedures for tax assessment and penalty imposition. The Court set aside the impugned order, stating it cannot sustain under the law, and allowed the writ petition challenging the order.

---