Harilaxmi Alloys Private Limited Vs State of U.P. And 2 Others (Allahabad High Court)
The petition challenged the order dated 30.11.2021 passed by the appellate authority, which had upheld an earlier order imposing tax and penalty under Section 130 read with Section 122 of the GST Act. The case arose from a survey conducted at the petitioner’s business premises on 11.12.2018, where excess stock was allegedly found. The petitioner contended that the stock was assessed through eye estimation rather than actual weighment, and on that basis proceedings under Section 130 were wrongly initiated. It was argued that in such circumstances, proceedings ought to have been initiated under Sections 73 or 74 of the GST Act instead.
The petitioner relied on prior judicial decisions, including a judgment affirmed by the Supreme Court, to support the argument that Section 130 cannot be invoked merely on detection of excess stock. The State, however, supported the impugned orders.
Upon consideration, the Court noted that the survey and the finding of excess stock were undisputed. It further observed that consistent judicial precedent has established that where excess stock is found during a survey, the appropriate course is to initiate proceedings under Sections 73 or 74 of the GST Act, and not under Section 130. The Court also referred to its earlier decision holding that Section 130 proceedings cannot be invoked solely on the basis of excess stock detected during a survey.
