Gopal Trading Company Vs State of U.P. And 2 Others (Allahabad High Court)
Allahabad High Court Rules Excess Stock Falls Under GST Sections 73/74, Quashes Orders Against Gopal Trading Company
Allahabad High Court has set aside impugned orders against Gopal Trading Company, a proprietorship engaged in the business of paan masala, tobacco, cigarettes, and matchsticks. The court ruled that proceedings initiated for excess stock found during a GST inspection should have been under Sections 73 or 74 of the GST Act, rather than Section 130, which deals with confiscation of goods or conveyances and levy of penalty.
The case stemmed from an inspection and search conducted under Section 67 of the GST Act at Gopal Trading Company’s premises on October 15, 2019. During this search, the Special Investigation Branch (SIB) assessed stock based on “eye measurement” and concluded that excess stock was present. This finding led to the initiation of proceedings under Section 130 of the GST Act against the petitioner. The initial order, dated June 19, 2020, was passed by the first appellate authority, and subsequently affirmed by a higher authority on July 20, 2022.
Petitioner’s Arguments and Judicial Precedents
Shri Gauransh Mishra, counsel for the petitioner, argued that the actual weighment of the stock was not performed by the authorities. His primary contention was that proceedings under Section 130 of the GST Act were inappropriate for a case of excess stock. Instead, he asserted that actions should have been initiated under Sections 73 or 74 of the GST Act, which address determination of tax and penalties in cases of non-payment or short payment of tax, or erroneous refunds.
