Raj Trading Company Vs State of U.P. And 2 Others (Allahabad High Court)
The Allahabad High Court has allowed a writ petition filed by Raj Trading Company, quashing the order passed by the Additional Commissioner Grade-2, (Appeal)-3rd, State Tax, Prayagraj, along with the consequential demand order for A.Y. 2017-18. The court found that the appellate authority’s determination of evaded sales far exceeding the determined evaded purchases was arbitrary and lacked supporting reasoning. The matter has been remanded for fresh adjudication.
Background of the Dispute
Raj Trading Company, a business involved in trading Tin, Angle, and Iron Sheets, filed the petition challenging the first appellate order dated September 10, 2024. The dispute originated from a survey conducted at the company’s business premises on March 23, 2018.
Based on the survey findings, proceedings were initiated under Section 74 of the UPGST/CGST Act. The Adjudicating Authority passed an ex-parte order, determining the petitioner’s total evaded liability at a substantial Rs. 3,40,98,286/−. This amount was based on an estimation of evaded purchases amounting to Rs. 1,15,60,493/− and a significantly higher estimated sale turnover of Rs. 7 crore. The total demand included tax of Rs. 1,26,00,000/−, interest of Rs. 1,18,98,286/−, and a penalty of Rs. 1,26,00,000/−.
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