Case Details
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Title of Case: Juhi Alloys Private Limited v. State of U.P. & Others
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Court: High Court of Judicature at Allahabad
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Petition No.: Writ Tax No. 1097 of 2024
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Date of Judgment: 19.02.2025
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Category of Dispute: Confiscation vs. Wrong Provision invoked (Survey stock discrepancy – Section 130/122 vs. Section 73/74)
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Relevant Sections: Sections 73, 74, 122, 130 of the CGST/UPGST Act
Facts (Paras 2–11)
The petitioner, Juhi Alloys Pvt. Ltd., faced a search on 13/14.03.2018 at its factory where a computerized weighbridge was installed. Certain discrepancies in stock of raw material and finished goods were recorded, leading to a seizure. A confiscation order dated 22.11.2018 was passed under Section 130. The petitioner challenged it in Writ Tax No. 618 of 2018, where this Court quashed the confiscation order on 15.03.2019 without remanding.
Despite this, a fresh SCN was issued on 18.10.2019 under Section 130 read with Section 122, alleging excess stock. On 23.11.2019, tax, penalty, and fine were imposed on 16 items. Appeal before respondent no. 3 partly reduced liability via order dated 16.04.2024. The petitioner again approached the Court, contending that proceedings under Section 130 were wholly without jurisdiction since once quashed, the matter was not remanded, and that the proper recourse was under Sections 73/74 for a registered dealer.
Questions for Determination (Paras 12–15)
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Whether initiation of proceedings under Section 130 read with Section 122 is valid when discrepancies in stock are found at the time of survey against a registered dealer?
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Whether after the Division Bench’s quashing of confiscation order in 2019 without remand, the authorities could again proceed under Section 130?
Court’s Observations (Paras 16–21)
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The Court noted that in cases of stock discrepancy with a registered dealer, multiple precedents (S/s J.H.V. Steels Ltd., S/s Dinesh Kumar Pradeep Kumar, and M/s PP Polyplast Pvt. Ltd.) have already settled that proceedings must be under Sections 73/74, not Section 130.
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Section 130, being a penal confiscation provision, cannot substitute adjudication under Sections 73/74 which deal with demand of tax, interest, and penalty.
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Once the 2018 confiscation order was quashed without remand, the authorities had no jurisdiction to reopen the same under Section 130.
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The respondents failed to cite any precedent allowing deviation from this settled position.
Judgment (Paras 22–24)
The High Court quashed both:
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The appellate order dated 16.04.2024, and
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The original order dated 23.11.2019 imposing tax, penalty, and fine.
It held that confiscation proceedings were unsustainable in law, reaffirming that discrepancies found in stock of a registered dealer can only be examined under Sections 73/74.
Writ petition allowed.
Table – Precedents Relied Upon
| Case | Citation/Details | Verdict |
|---|---|---|
| S/s J.H.V. Steels Ltd. v. Union of India | 2024 (12) ADJ 99 | Held that stock discrepancies in survey of registered dealer cannot attract Section 130; only Sections 73/74 apply. |
| S/s Dinesh Kumar Pradeep Kumar v. Addl. Commissioner | Writ Tax No. 1082 of 2022, decided 25.07.2024 | Reiterated that confiscation proceedings under Section 130 are not applicable to registered dealer’s stock discrepancies. |
| M/s PP Polyplast Pvt. Ltd. v. Addl. Commissioner | Writ Tax No. 1183 of 2024, decided 30.07.2024 | Confirmed principle that demand must be under 73/74, not confiscation under 130. |
Between Fine Lines
For industry, this judgment reiterates a key safeguard: mere excess or shortage in stock during survey does not amount to confiscation. Authorities must follow Sections 73/74, ensuring a proper adjudicatory process with opportunity to explain discrepancies. This prevents misuse of confiscation powers under Section 130, protecting businesses from arbitrary penalties.
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