Vidyarthi Dresses Vs State of Uttar Pradesh (Allahabad High Court)
The petitioner challenged the impugned orders dated 30.09.2019 and 24.10.2024 passed under the GST Act by the respondents. The dispute arose from a survey conducted at the petitioner’s business premises on 30.04.2019, during which authorities alleged the presence of excess stock. Proceedings under Section 130 of the GST Act were initiated against the petitioner on this basis. The petitioner argued that no actual counting of goods was carried out during the survey and submitted that the authorities should have proceeded under Sections 73 or 74 of the GST Act, which specifically deal with determination of tax in cases of unaccounted goods. The petitioner relied on precedents, including M/s Vijay Trading Company vs. Additional Commissioner (Writ Tax No. 1278/2024) and M/s PP Polyplast Private Limited vs. Additional Commissioner (Writ Tax No. 1183/2024), which were affirmed by the Supreme Court through respective Special Leave Petitions, establishing that Section 130 proceedings cannot be invoked merely due to excess stock observed in a survey. The State did not dispute these submissions.
The Court noted that Section 35 of the GST Act mandates registered persons to maintain correct accounts and provides that in case of unaccounted goods, the Proper Officer shall proceed under Sections 73/74 for tax determination. Since the GST Act provides a complete code for such cases, Section 130 cannot be applied. Following the binding precedents, the Court held that the impugned orders under Section 130 were not sustainable in law. Consequently, the writ petition was allowed, the impugned orders were quashed, and any amounts deposited pursuant to those orders were directed to be refunded to the petitioner within one month upon production of a certified copy of the order.
