Section 130 GST proceedings require prior tax determination; stock discrepancy alone did not sustain confiscation notice and order.

Proceedings under Section 130 of the Uttar Pradesh GST Act could not be initiated merely on an alleged stock discrepancy and record-keeping breach without prior determination of tax liability under Sections 73 or 74. The Court found that proceedings based only on alleged Section 35 violations and stock discrepancy were not maintainable in the manner adopted by the department, so the show cause notice was without jurisdiction. The consequential confiscation order also could not survive and was quashed, with liberty left for refund proceedings and any fresh action in accordance with law.

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Issues: Whether proceedings under Section 130 of the Uttar Pradesh Goods and Services Tax Act, 2017 could be initiated on the basis of alleged stock discrepancy and violation of record-keeping requirements without prior determination of tax liability under Sections 73 or 74, and whether the show cause notice and consequential confiscation order were liable to be quashed for want of jurisdiction.

Analysis: The Court held that the law on initiation of proceedings under Section 130 in such circumstances was settled and that, in the absence of prior determination of tax liability under Sections 73 or 74, the impugned notice could not be sustained. It further held that proceedings founded only on alleged violation of Section 35 and stock discrepancy were not maintainable under Section 130 in the manner adopted by the department. Once the notice was found to be without jurisdiction, the consequential confiscation order could not survive.

Conclusion: The impugned show cause notice was without jurisdiction and was quashed, the consequential confiscation order was also quashed, and the petitioner was left at liberty to pursue refund and any fresh action in accordance with law.

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