2026-VIL-194-GSTAT-AGR
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SGST Tribunal

GST - Validity of proceedings under Section 130 for unaccounted goods found during inspection - Adjudicating Officer imposed penalty and fine in lieu of confiscation under Section 130(2) of the CGST Act - FAA set aside the orders holding that seizure and confiscation cannot be made for unaccounted goods and that proceedings under Section 73/74 should be launched - Revenue filed appeals against the setting aside of tax, penalty and fine - Whether the FAA rightly set aside the tax, penalty and fine imposed under Section 130(2) - HELD - Section 35(1) requires registered persons to keep true and correct accounts, and Section 35(6) empowers the proper officer, where goods are not accounted for, to determine the tax payable as if such goods had been supplied by the person, with the provisions of Section 73 or 74 applying mutatis mutandis. Read together, these provisions make it clear that the proper officer is bound to determine the tax in accordance with Section 73 or 74. The Allahabad High Court has held that where excess stock is found on survey, proceedings must be initiated under Section 73/74 and not under Section 130 read with Rule 120, and that proceedings under Section 130 in place of or in addition to Section 73/74 are unsustainable and liable to be quashed - Where excess or unaccounted goods are found at survey, the proper officer is empowered only to initiate proceedings under Section 73/74 and is not authorised to initiate proceedings under Section 130 and levy penalty in lieu of confiscation - The FAA rightly set aside the orders and the appeals of the Revenue are dismissed
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