Case Law Details
Eco Plus Steels Pvt. Ltd. Vs State Of U.P. And 3 Others (Allahabad High Court)
In the case of Eco Plus Steels Pvt. Ltd. vs State of U.P. and 3 Others, the Allahabad High Court deliberated on the legality of confiscation and penalty under Section 130 of the CGST Act, 2017, and Section 122 of the Act, respectively, based solely on estimation without physical verification.
The crux of the matter lay in whether the mere presence of additional stock warranted confiscation and subsequent penalty. The Court observed an inordinate delay in issuing the show cause notice, indicating a lackadaisical approach by the authorities. Moreover, it emphasized that burden of proof for imposition of penalty and confiscation of goods rests on the Department, which cannot be done solely on estimates. Physical verification through counting and weighing of goods is essential.
The Court cited precedents, including M/s Maa Mahamaya Alloys Pvt. Ltd. vs. State of U.P., highlighting that confiscation based on eye estimation lacks legal basis. The Appellate Authority’s reliance on estimates without proper quantification of stock was deemed unjustifiable.
Consequently, the Allahabad High Court set aside the impugned orders, quashing both the penalty and confiscation. The judgment underscores the necessity of adherence to due process and emphasizes the inadequacy of estimation as grounds for punitive measures. This verdict reinforces the principle of legal rigor in tax enforcement, protecting businesses from arbitrary action based solely on estimations.
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