Proceedings u/s 130 of GST Act cannot be Initiated for Excess Stock Found During Survey: Allahabad HC [Read Order]

The Allahabad High Court has ruled that proceedings under Section 130 of the GST ( Goods and Services Tax ) Act, 2017 cannot be initiated solely on the basis of excess stock found during a survey.

The case involved a partnership firm, Banaras Industries engaged in the manufacture and sale of iron and steel products, which was subject to an inspection and search under Section 67 of the GST Act on November 23, 2021. Following the inspection, proceedings were initiated against the firm, culminating in an order dated May 11, 2022.

The petitioner challenged this order, arguing that the excess stock was noted through eye estimation without physical verification or video recording, and that the proceedings should have been initiated under Sections 73 or 74 of the GST Act, rather than Section 130.

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The petitioner relied on a precedent set by the court in S/s Dinesh Kumar Pradeep Kumar vs. Additional Commissioner, Grade - 2 & Another, which supported their position.

Justice Piyush Agrawal of the Allahabad High Court after reviewing the case, agreed that the initiation of proceedings under Section 130 was inappropriate, reiterating that such proceedings should be reserved for more severe infractions and not for cases involving excess stock found during a survey. The court, allowing writ petition,  quashed the  impugned GST orders.

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Aditya Gupta,Harsh Vardhan Gupta and A.S.G.I.,C.S.C. appeared for the assessee and respondents respectively.

To Read the full text of the Order CLICK HERE

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