Dee Control And Electric Private Ltd Vs Additional Commissioner Grade-2 And Another (Allahabad High Court)
Allahabad High Court quashed proceedings under Section 130 of the U.P. Goods and Services Tax Act (UPGST) against Dee Control and Electric Private Ltd. The case stemmed from a survey conducted by the Special Investigation Branch (SIB) on October 25, 2018, where authorities claimed to have found excess stock through visual estimation. Based on this, proceedings were initiated under Section 130, leading to tax and penalty assessments. The petitioner challenged this action, arguing that as a registered dealer, any discrepancies in stock should have been addressed under Sections 35(6), 73, or 74 of the UPGST Act, which deal with unaccounted goods and tax determinations, rather than under Section 130, which pertains to confiscation and penalties for tax evasion. The court relied on precedents, including Metenere Limited and Maa Mahamaya Alloys Pvt. Ltd., which held that tax assessments must follow the procedures outlined in Sections 73 or 74 and that Section 130 cannot be invoked merely based on unaccounted stock.
The court ruled that the proceedings against Dee Control and Electric Private Ltd. were unsustainable, emphasizing that Section 130 applies only in cases of tax evasion and not for unaccounted stock discovered during surveys. It reaffirmed that tax determination must be done through proper assessment under Sections 73 or 74, which involve notices and opportunities for response. The decision reinforces that mere stock discrepancies do not justify direct invocation of confiscation provisions without following due tax assessment procedures. Consequently, the impugned orders were set aside, and the writ petition was allowed, providing clarity on the legal recourse available in similar cases of alleged stock misreporting.
