Confiscation under GST cannot replace tax determination; Section 130 action without Sections 73 or 74 findings is without jurisdiction.

Confiscation proceedings under Section 130 of the Uttar Pradesh GST Act cannot be used as a substitute for determining tax liability where the dispute concerns alleged stock discrepancy or record-keeping violations. The High Court held that the statutory route under Sections 73 or 74 must first be invoked and concluded, and initiation of Section 130 action without that prior determination is without jurisdiction. Because the notice was unlawful, the consequential confiscation order also could not stand and was quashed, while the refund claim was left to be pursued separately in accordance with law.

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Issues: (i) 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 of the Uttar Pradesh Goods and Services Tax Act, 2017; (ii) whether the show cause notice and consequential confiscation order were liable to be quashed as without jurisdiction.

Issue (i): 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 of the Uttar Pradesh Goods and Services Tax Act, 2017.

Analysis: The governing position was treated as settled that confiscation proceedings under Section 130 cannot be founded merely on alleged contravention of record-keeping provisions or stock discrepancy unless the statutory route for determination of tax liability has first been invoked and concluded under Sections 73 or 74. On that footing, initiation of Section 130 proceedings at the threshold was held to be legally unsustainable.

Conclusion: The initiation of proceedings under Section 130 without prior determination under Sections 73 or 74 was held to be without jurisdiction and contrary to law.

Issue (ii): Whether the show cause notice and consequential confiscation order were liable to be quashed as without jurisdiction.

Analysis: Once the notice itself was found to be issued without jurisdiction, the consequential confiscation order could not survive. The petitioner's challenge to the notice therefore extended to the resulting order, while the claim for refund was left to be pursued in accordance with law.

Conclusion: The show cause notice and the confiscation order were quashed and set aside, and the refund claim was left open to be pursued separately.

Final Conclusion: The writ tax was disposed of after setting aside the impugned proceedings, while preserving liberty to the department to proceed afresh under the correct statutory framework and leaving the refund issue to be worked out in accordance with law.

Ratio Decidendi: Confiscation proceedings under Section 130 of the Uttar Pradesh Goods and Services Tax Act, 2017 cannot be initiated as a substitute for determination of tax liability and are without jurisdiction unless the statutory process under Sections 73 or 74 has first been undertaken where required.

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