Survey-discovered factory stock discrepancies warrant assessment under ss.73/74 GST, not confiscation under ss.130/122 and challenged revenue orders quashed

HC held that discrepancies found during a factory survey should give rise to proceedings under sections 73/74 of the GST Act, not confiscation proceedings under section 130 read with section 122. Consequently, the impugned orders issued by the revenue authorities were quashed as unsustainable in law and the petition was allowed. The court reiterated its consistent view that survey-discovered stock discrepancies warrant assessment proceedings under ss.73/74.

---

---

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 justifiedRs. 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 courtRs.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.

---