HC | Excess Stock Alone Can’t Trigger GST Confiscation Under Sec 130

Case Details: J.T. Steel Traders vs. State of U.P. - [2025] 177 taxmann.com 234 (Allahabad)

Judiciary and Counsel Details

• Piyush Agrawal, J.
• Pranjal Shukla for the Petitioner.

Facts of the Case

The petitioner, registered under the CGST Act and the Uttar Pradesh GST Act, was subjected to a survey at its business premises during which excess stock was found. The petitioner alleged that the stock assessment was conducted on the basis of eye measurement and that no actual weighment of the stock was undertaken. Based on the finding of excess stock, proceedings under Section 130 were initiated against the petitioner. The matter was accordingly placed before the High Court.

HC Held

The High Court held that the law is settled that where excess stock is found during survey, proceedings under Sections 73 or 74 of the CGST Act and the Uttar Pradesh GST Act should be invoked, rather than proceedings under Section 130, read with Rule 120 of the relevant GST Rules. It reiterated that Section 130 proceedings, relating to confiscation of goods or conveyances, cannot be initiated solely on the ground of excess stock detected at the time of survey. In view of the settled legal position, the Court quashed the impugned orders, thereby reinforcing that excess stock findings during survey must be addressed through determination of tax liability under the assessment and adjudication provisions, not through confiscation proceedings.

List of Cases Reviewed

• Dinesh Kumar Pradeep Kumar v. Additional Commissioner Grade 2 [2024] 165 taxmann.com 166/105 GST 894/89 GSTL 239 (Allahabad) (para 9), followed

List of Cases Referred to

• Vijay Trading Company v. Additional Commissioner, Grade – 2 [2024] 166 taxmann.com 69/105 GST 950/89 GSTL 196 (Allahabad) (para 3),
• Additional Commissioner Grade-2 v. Vijay Trading Company [2025] 174 taxmann.com 516 (SC) (para 3) and
• Dinesh Kumar Pradeep Kumar v. Additional Commissioner Grade 2 [2024] 165 taxmann.com 166/105 GST 894/89 GSTL 239 (Allahabad) (para 7).