Dayal Product Vs Additional Commissioner (Allahabad High Court)
The Allahabad High Court heard a writ petition filed against the orders passed by the Additional Commissioner, Grade-2, Kanpur, and respondent no. 2 under Section 130 of the GST Act. The petitioner, engaged in the purchase and sale of hosiery goods, contended that on 29.05.2018, an inspection was conducted at its business premises by the Special Investigation Branch using visual estimation rather than physical measurement. Based on this inspection, proceedings under Section 130 of the GST Act were initiated, followed by an order dated 10.09.2018 imposing tax and penalty. The petitioner’s subsequent appeal was dismissed by an order dated 02.04.2024. The petitioner argued that the survey, conducted under Section 67 of the UPGST Act along with notice under Section 30 read with Rule 32, was incorrectly treated under Section 130. Even if discrepancies were found, proceedings should have been initiated under Sections 73 and 74, as Section 35(3) prohibits invoking Section 130 against a registered dealer. The petitioner relied on prior Allahabad High Court judgments in S/s Dinesh Kumar Pradeep Kumar, M/s Maa Mahamaya Alloys Private Limited, and M/s Shree Om Steels, which held that discrepancies in stock during a survey of a registered dealer must be addressed under Sections 73/74, not Section 130. The State counsel could not provide authority to the contrary. Upon reviewing the records and hearing the parties, the Court observed that the survey had indeed found a stock discrepancy and that the law clearly required action under Sections 73/74, not Section 130. Consequently, the Court quashed the impugned orders dated 10.09.2018, 05.08.2020, and 02.04.2024, holding them unsustainable in law. The writ petition was allowed.
