State of U.P. Vs Additional Commissioner Grade-2 (Allahabad High Court)
The Allahabad High Court decided a group of writ petitions involving the same issue, with Writ Tax No. 609 of 2024 treated as the lead case. The dispute arose after the business premises of the respondents were surveyed on 1 September 2022, during which certain discrepancies, including excess stock, were allegedly found. Based on the survey, the authorities initiated proceedings under Section 130 read with Section 122 of the GST Act. The respondents argued that such proceedings were not sustainable because, in cases of excess stock found during a survey, the proper course of action was to proceed under Sections 73 or 74 of the GST Act. They relied on several earlier decisions of the High Court, including Vijay Trading Company and PP Polyplast Private Limited, which had also been affirmed by the Supreme Court.
The State’s counsel could not dispute the legal propositions laid down in those decisions. The Court examined the statutory provisions, particularly Section 35 of the GST Act, which requires registered persons to maintain true and correct accounts. Section 35(6) specifies that if a dealer fails to properly account for goods, the tax on such goods must be determined under Sections 73 or 74. The Court noted that the Act provides a complete code for such situations and that when a specific procedure exists for unaccounted goods, Section 130 cannot be invoked.
