Wrongful Invocation of GST S. 130 Instead of S. 74: Allahabad HC Finds Prima Facie Case, Restrains Coercive Recovery [Read Order]
The bench granted interim protection to the petitioner by restraining coercive recovery actions until the next date of listing, provided the petitioner deposits 10% of the remaining tax liability within 15 days.
![Wrongful Invocation of GST S. 130 Instead of S. 74: Allahabad HC Finds Prima Facie Case, Restrains Coercive Recovery [Read Order] Wrongful Invocation of GST S. 130 Instead of S. 74: Allahabad HC Finds Prima Facie Case, Restrains Coercive Recovery [Read Order]](https://images.taxscan.in/h-upload/2025/07/22/2067706-allahabad-hc-gst-taxscan.webp)
The Allahabad High Court, restrained coercive recovery in which it has prima facie found that there was merit to the claim that the proceedings under Section 130 was wrongly invoked instead of Section 74 of the Goods and Services Tax ( GST ) Act, 2017.
The writ petition was filed by the assessee, M/s Bindal Smelting Private Limited challenging the orders dated 24.12.2024 and 27.07.2022, passed by the departmental authorities.
According to the petitioner, a survey was conducted on its business premises on 14.03.2022, during which excess stock was allegedly discovered. Based on this finding, the authorities proceeded to initiate action under Section 130 read with Section 122 of the CGST Act, treating the case as one involving outright tax evasion and invoking confiscation provisions.
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However, the petitioner vehemently argued that the circumstances of the case did not justify proceedings under Section 130, which deals with confiscation of goods and conveyances and penal action in cases of fraudulent intent or wilful misstatement.
It was submitted that instead, Section 74 procedures should have been started in order to recover taxes that were either underpaid or underpaid as a result of fraud or suppression.
The petitioner used the same Court's ruling in M/s Gopal Trading Company v. State of U.P., where related problems were decided, to support this claim.
JusticePiyush Agrawal heard both sides. It was observed that the matter requires consideration and directed the respondents to file their counter affidavit within six weeks. The bench granted interim protection to the petitioner by restraining coercive recovery actions until the next date of listing, provided the petitioner deposits 10% of the remaining tax liability within 15 days.
Advocates Aanya Verma and Alok Saxena appeared for the petitioner.
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