IMPORTANT POINT
Proceedings under Section 130 of the UPGST Act cannot be initiated for excess stock; Sections 73 and 74 must be followed for tax determination.

JUDGMENT :

(Piyush Agrawal, J.)

Supplementary-affidavit filed today is taken on record. Parcha filed by Shri K.J. Shukla on behalf of the Union of India is also taken on record.

2. Heard Shri Aditya Pandey, learned counsel for the petitioner, learned Standing Counsel for the State - respondents and learned counsel for the Union of India.

3. The instant writ petition has been filed challenging the impugned order dated 11.5.2022 passed by the respondent No. 5 under Section 130 read with Section 122 of the UPGST Act as well as the impugned order dated 10.4.2023 passed by the first appellate authority, the respondent No. 4.

4. With the consent of the learned counsel for the parties, the instant writ petition is being decided finally without calling for the counter-affidavit.

5. Learned counsel for the petitioner submits that the petitioner is a partnership firm and is engaged in the business of manufacture and sale of iron and steel (ingot, patri, channel, etc.). On 23.11.2021, an inspection/search under Section 67 of the GST Act was conducted at the business premises of the petitioner by the SIB and proceedings under the GST Act were initiated by issuing notice, to which the petitioner submitted its reply on 24.4.2022. Thereafter, the impugned order dated 11.5.2022 has been passed. Aggrieved by the said order, the petitioner preferred appeal, which has been partly allowed vide impugned order dated 10.4.2023. He further submits that the stock at the time of survey was noted by the authority by eye estimation without any physical verification and no video recording of the alleged stock was made. He further submits that the proceedings under Section 130 of the GST Act could not have been initiated against the petitioner, rather, proceedings under Sections 73/74 of the GST Act should have been initiated. In support of his submissions, he has placed reliance on the judgement of this Court in S/s Dinesh Kumar Pradeep Kumar v. Additional Commissioner, Grade - 2 and another [Writ Tax No. 1082 of 2022, decided on 25.7.2024]. He prays for allowing the writ petition.

6. Per contra, learned Standing Counsel for the State - respondents as well as the counsel for the Union of India support the impugned orders.

7. After hearing learned counsel for the parties, the Court has perused the record.

8. It is not in dispute that survey was conducted at the business premises of the petitioner on 23.11.2021. It is also not in dispute that excess stock was found, which triggered the initiation of the present proceedings against the petitioner. On various occasions, this Court has held that if excess stock is found, then proceedings under Sections 73/74 of the GST Act should be pressed in service and not proceedings under Section 130 of the GST Act, read with Rule 120 of the Rules framed under the Act.

9. Recently, this Court in S/s Dinesh Kumar Pradeep Kumar (supra) has held as under :

''9. Recently, this Court in Writ Tax No. 1007 of 2022 (M/s. Shree Om Steels v. Additional Commissioner Grade-2 and another) alongwith connected cases has held in para Nos. 10, 11, 12 & 13 as under :

''10. The issue in hand is covered by the judgement of this Court in Metenere Limited (supra), in which following observations have been made :

''22. From the perusal of the scheme of the Act and the statutory provisions what emerges is that Section 9 of the CGST is the charging section which provides for levy of tax on supplies of goods or services. Section 12 of the CGST Act provides for time on which the tax are to be paid and elaborates the ''time of supply of goods'' and Section 12 (2) clearly provides that the ''time of supply of goods'' is the date of issue of invoices or the date of receiving of the payment in respect to such supplies.

23. Section 35 (1) clearly provides that all the registered person are required to keep and maintain at the principal place of business a true and correct account of things specified in Clause (a) to (f). The Second proviso to Section 35 (1), Rule 5