The Hon’ble Allahabad High Court in the case of M/s Maa Amila Coal Depot v. State of U.P. and Ors [Writ Tax No. 1772 of 2025, dated May 30, 2025] held that proceedings under Section 130 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) cannot be initiated in cases where excess stock is found and thus the confiscation and penalty proceedings initiated under Section 130 were quashed, directing for refund of any amount already deposited.
Facts:
Maa Amila Coal Depot (“the Petitioner”) filed the present writ petition challenging confiscation and penalty orders issued under Section 130 of the CGST Act which were passed by the State of Uttar Pradesh and Others (“the Respondents”).
The Petitioner challenged the Order dated July 27, 2022 and summary order dated January 03, 2023, passed by Respondent No. 3, and the Order dated November 27, 2024 passed by Respondent No. 2, under Section 130 of the CGST Act, concerning confiscation and penalty on alleged excess stock.
The Petitioner submitted that the issue is squarely covered by the judgement of the Allahabad High Court in S/s Dinesh Kumar Pradeep Kumar vs. Additional Commissioner Grade 2 & Anr. [Writ Tax No. 1082 of 2022, dated July 25, 2024], which has been affirmed by the Supreme Court in [Special Leave Petition (Civil) Diary No. 5879 of 2025, dated April 17, 2025].
The Respondents, in this matter did not file a counter affidavit despite the time being granted to them.
Issue:
Whether confiscation and penalty proceedings under Section 130 of the CGST Act can be initiated for excess stock found?
Held:
The Hon’ble Allahabad High Court in Writ Tax No. 1772 of 2025 held as under:
- Observed that, the issue raised in the present writ petition was squarely covered by the judgment of the Court in S/s Dinesh Kumar Pradeep Kumar v. Additional Commissioner, Grade–2 & Another [Writ Tax No. 1082 of 2022, dated July 25, 2024], which was affirmed by the Hon’ble Supreme Court in [Special Leave Petition (Civil) Diary No. 5879 of 2025, dated April 17, 2025].
- Noted that, in Dinesh Kumar Pradeep Kumar (supra), the Court had categorically held that mere presence of excess stock would not justify invocation of confiscation proceedings under Section 130 of the CGST Act. Instead, the matter would be governed by Sections 73 and 74 of the CGST Act dealing with determination of tax liability and recovery.
- Held that, following the settled law in Dinesh Kumar Pradeep Kumar (supra), the Orders passed under Section 130 of the CGST Act were liable to be quashed.
- Directed that, any amount deposited by the Petitioner in connection with the impugned proceedings shall be refunded in accordance with law.
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