Additional Commissioner Grade-2 & Anr. Vs Dayal Product (Supreme Court of India)
SC dismisses Revenue’s SLP against Allahabad HC judgment affirming no penalty order u/s 130 of the CGST Act for stock discrepancies found during surveys
The Hon’ble Supreme Court in the case of Additional Commissioner Grade-2 & Another v. Dayal Product [Special Leave Petition (Civil) Diary No. 44119/2025, order dated September 01, 2025] held that where a stock discrepancy is discovered during the survey of a registered dealer, the initiation of confiscation and penalty proceedings under Section 130 of the GST Act is unsustainable. Such issues must be addressed through assessment and recovery proceedings under Sections 73 or 74. The SLP against the Allahabad High Court’s judgment was dismissed, thereby upholding the High Court’s view.
Read HC Judgment: Stock Discrepancy Cases Require Sections 73/74, Not 130 of CGST Act
Facts:
Dayal Product (“the Petitioner”) is a registered dealer engaged in hosiery goods trading. The business premises were surveyed by Revenue and, based on alleged stock discrepancies found during survey, penalty and confiscation orders were passed under Section 130 of the GST Act.
The Additional Commissioner Grade-2 (“the Respondent”), disputed that these discrepancies merited proceeding exclusively under Section 130, invoking confiscation and heavy penalties based on inventory differences.
