Shree Om Steels Vs Additional Commissioner and Ors. (Allahabad High Court)
In Shree Om Steels v. Additional Commissioner, the Allahabad High Court ruled that confiscation proceedings under Section 130 of the Central Goods and Services Tax (CGST) Act cannot be initiated solely on the basis of excess stock discovered during a survey. The petitioner, M/s Shree Om Steels, challenged the confiscation of goods and penalties imposed following a survey under Section 67 of the CGST Act. The authorities initiated proceedings under Sections 130 and 122, claiming excess stock was found. However, the petitioner argued that the tax demand should have been quantified under Sections 73 or 74. The court, relying on a previous judgment, held that even if excess stock is found, proceedings under Section 130 are inappropriate without following proper procedures for tax assessment under Sections 73 or 74. The court allowed the writ petition and set aside the confiscation order. This decision underscores that confiscation proceedings should not be initiated without first quantifying the tax demand as per the appropriate legal provisions.
Also Read SC Judgment in this case: Excess Stock Alone Cannot Trigger GST Confiscation Proceedings: SC Upholds HC Ruling
The Hon’ble Allahabad High Court in the case of Shree Om Steels v. Additional Commissioner and Ors. [Writ Tax No. 1007 of 2022 dated July 19, 2024], allowed the writ petition and held that confiscation proceedings under Section 130 of the Central Goods and Services Tax Act (“the CGST Act”) cannot be initiated for excess stock solely based on survey, as the tax demand must be quantified under Section 73 or 74 of the CGST Act.
