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of <h1>Section 130 actions not maintainable for excess stock revealed by survey; pursue assessment under Sections 73/74 and Rule 120</h1> <h3>M/s Harilaxmi Alloys Private Limited Versus State Of U.P. And 2 Others</h3> HC held that proceedings under section 130 of the CGST Act are not maintainable where a survey discloses excess stock, and such matters should be pursued ... Levy of tax and penalty - stock was measured on eye measurement instead of actual weightment of the goods on the basis of which the proceedings under Section 130 of the Act read with Section 122 of the Act was initiated - HELD THAT:- It is not in dispute that survey was conducted at the business premises of the petitioner on 11.12.2018. 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 CGST Act, read with rule 120 of the Rules framed under the Act. The issue is not res integra. This Court in the case of S/s Dinesh Kumar Pradeep Kumar [2024 (8) TMI 71 - ALLAHABAD HIGH COURT] has held 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 30.11.201 cannot be sustained in the eyes of law and same is hereby quashed - petition allowed. Survey at petitioner's business premises (11.12.2018) recorded excess stock by eye measurement without actual weighment. Proceedings were initiated under Section 130 of the CGST Act (read with Section 122 of the Act and rule 120 of the Rules) resulting in tax and penalty; the appeal was dismissed on 30.11.2021. Court notes established precedent that where excess stock is found on survey, liability should be pursued under sections 73/74 of the GST Act and not by invoking section 130. Reliance placed on prior decisions, including one affirmed by the Apex Court. As held, 'the proceedings under section 130 of the GST Act cannot be put to service if excess stock is found at the time of survey.' Impugned order dated 30.11.201 cannot be sustained and is quashed. Any amounts deposited by the petitioner are to be refunded in accordance with law.
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