The Supreme Court consisting of Justice Sanjay Kumar and Justice Satish Chandra Sharma has dismissed the Special Leave Petition (SLP) filed department against Allahabad High Court judgment which held that Section 130 of the CGST Act cannot be applied for mismatch in stock identified during any search proceedings.
The Allahabad High Court has held that at the time of survey, if some discrepancy in stock is found against the registered dealer, then the proceedings under sections 73/74 of the GST Act ought to have been initiated, instead of section 130 of the GST Act.
The petitioner is engaged in the business of purchase and sale of hosiery goods. He further submits that on 29.05.2018, an inspection/search was carried out at the business premises of the petitioner by the Special Investigation Branch without any physical measurement and by eye measurement and on the basis of the aforesaid inspection, proceedings under section 130 of the GST Act were initiated, to which the petitioner submitted its reply. Thereafter, the department by the impugned order dated 10.09.2018, imposed tax & penalty. Aggrieved by the said order, the petitioner preferred an appeal, which has been dismissed.
The survey, which was made under Section 67 of the UPGST Act, proceeded with the notice under Section 30 of the Act read with Rule 32. He next submits that even assuming without admitting that if the goods were found in excess, then the proceedings should have been initiated as per Sections 73 & 74 of the Act. He further submits that as per Section 35 (3) of the Act, proceedings under Section 130 of the UPGST Act are not permissible against a registered dealer.
The High Court held that the order passed under section 130 of the GST Act cannot be sustained in the eyes of law.
The department filed the special leave petition before the Supreme Court, which was dismissed.
Case Details
Case Title: Additional Commissioner Grade-2 & Anr. Versus M/S. Dayal Product
Case No.: Special Leave Petition (Civil) Diary No. 44119/2025
Date: 01-09-2025
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