The GST Appellate Tribunal (GSTAT), Lucknow Bench, has dismissed a departmental appeal against relief granted to a taxpayer whose stock records showed a discrepancy during an inspection and held that a temporary delay in recording genuine transactions does not automatically establish deliberate non-accountal of goods or justify confiscation under Section 130 of the GST law.

The bench of Santosh Kumar Srivastava (Judicial Member) and Arvind Kumar (Technical Member) confirmed the appellate authority’s order setting aside confiscation and a total demand of ₹1.89 lakh, including tax, penalty and redemption fine.

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The dispute arose from an inspection by the Special Investigation Branch (SIB) on March 20, 2018, when officials alleged a difference between the physical stock and the stock recorded in the taxpayer’s books. The taxpayer attributed the discrepancy to a temporary delay in making entries because its accountant was absent.

The department initiated proceedings under Section 130 of the Central Goods and Services Tax Act and the Uttar Pradesh GST Act after the SIB inspection.

The taxpayer maintained that the goods were supported by a valid invoice dated March 19, 2018. It also relied on statutory returns to establish that the stock and underlying transactions were genuine.

The taxpayer questioned the method used by the survey team to determine the stock, pointing out that officials had relied on approximate measurements rather than proper physical weighment. Its explanation was that the difference in the records could be reconciled and did not amount to deliberate non-accountal.

The appellate authority, by an order set aside the confiscation and the tax, penalty and redemption fine imposed on the taxpayer. The department challenged that decision before the GSTAT.

The tribunal’s summary records that the original proceedings involved a total of ₹1.89 lakh. Its demand table separately identifies disputed tax of ₹63,000 and penalty of ₹63,000. The summary does not separately specify the amount of the redemption fine in that table.

The tax and penalty determined by the tribunal were shown as nil.

The bench also considered the outcome of separate proceedings under Section 74 of the GST law. According to the order summary, the taxpayer’s explanations were accepted on most issues in those proceedings, leaving only a minor stock discrepancy.

The tribunal took account of the delayed accounting, the approximate method of measurement and the subsequent reconciliation. In these circumstances, it found that the stock discrepancy did not justify the confiscation proceedings.

The bench held that a temporary delay in recording genuine transactions does not, by itself, establish deliberate non-accountal or justify confiscation under Section 130.

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