State Of U.P. And Another vs. Additional Commissioner And Another

The instant writ petition has been filed against the impugned order dated 19.07.2022 passed by the respondent no. 1 in so far as it exempts the levy of tax, penalty and fine on mentha oil and restoring the order dated 22.04.2021 passed by the Enforcement Officer. Learned ACSC submits that on 13.09.2019, the place of business of the respondent no. 2 was inspected by a team of Officers, in which certain drums of mentha oil and caustic soda were found unaccounted. Thereafter, the goods were seized and proceedings under sections 130 & 120 of the GST Act were initiated against the respondent no.

He further submits that on 22.04.2021, a release order was passed directing the petitioner to deposit penalty and fine on a total estimated value of goods seized amounting to Rs. 6,88,24,800/-. Aggrieved by the said order, the respondent no. 2 preferred a first appeal, which has been partly allowed vide order dated 19.07.2022 by setting aside the tax, penalty and fine imposed on the value of mentha oil. Hence, this writ petition. Learned ACSC further submits that the respondent no. 2 was indulged in tax evasion and therefore, the impugned order has been passed without considering the material available on record. . Per contra, learned counsel for the respondent no. 2 supports the impugned order and submits that the impugned order has rightly been passed. He further submits that at the time of survey, no actual measurement was done. He further submits that even assuming without admitting that some discrepancy was found, even then the proceedings ought to have been initiated under sections 73/74 of the GST Act. The petitioners have no juri iction to initiate proceedings under section 130 of the GST Act. In support of his submissions, he has placed reliance on the judgement of this Court in M/s Vijay Trading Company Vs. Additional Commissioner & Another [Writ Tax No. 1278/2024, decided on 20.08.2024], which has been affirmed by the Apex Court in Additional Commissioner, Grade - 2 & Another Vs. M/s Vijay Trading Company [Special Leave Petition (Civil) Diary No. 5881/2025, decided on 04.04.2025]. He further places reliance on another judgement of this Court in M/s

Section 35 of the GST Act clearly provides that every registered persons are required to keep and maintain at the principal place of business true and correct account of things as specified in clauses (a) to (f). Sub-section (6) of section 35 of the GST Act contemplates that if the registered dealer fails to account for the goods in accordance with the provision of sub-section (1), the Proper Officer shall determine the amount of tax payable on such goods that are not accounted for by such person and the provision of sections 73/74 of the GST Act, as the case may be, shall mutatis mutandis apply for determination of such tax. The GST Act is a complete Code in itself. A specific provision has been contemplated that if the goods are not recorded in the books of account, then the Proper Officer shall proceed as per the provision of sections 73/74 of the GST Act. Once the Act specifically contemplates that action to be taken, then the provision of section 130 of the GST Act cannot be pressed into service. The issue in hand is not res integra. This Court in M/s Vijay Trading Company (supra) has categorically held that the proceedings under section 130 of the GST Act cannot be put to service in case excess stock is found at the time of survey. The said judgement of this Court has been affirmed by the Apex Court in Special Leave Petition (Civil) Diary No. 5881/2025 (Additional Commissioner, Grade - 2 & Another Vs. M/s Vijay Trading Company) vide judgement and order dated 04.04.2025. Further, in M/s PP Polyplast Private Limited (supra), the Apex Court has held that the law is clear on the subject that the proceedings under section 130 of the GST Act cannot be put to service if excess stock is found at the time of survey. In view of the aforesaid facts & circumstances of the case, no interference is called for in the impugned orders. The writ petition fails and the same is hereby dismissed. Order Date :- 12.5.2025/Amit Mishra AMIT KUMAR MISHRA High Court of Judicature at Allahabad