After Jay Jay Bricks Failed To Produce Stock Books For 5,66,500 Bricks, GSTAT Sends Penalty Dispute Back For Fresh Review

In brief

The question

Whether the absence of stock registers and books of account at the time of inspection could attract confiscation proceedings under Section 130(1)(ii) of the CGST/UPGST Act, 2017.

The court held

The Tribunal set aside the First Appellate Authority’s order dated 04.09.2025 and remanded the matter to that authority for fresh adjudication on the merits, including proper examination of the records and the applicability of Section 130(1)(ii).

It also directed

Although the form records “whether remand order: No,” its operative disposition expressly orders a remand.

01Facts

The dispute arose from an SIB inspection on 16.04.2025 at Jay Jay Bricks’ premises, where 5,66,500 bricks valued at Rs. 22,25,798 were found.

The taxpayer did not produce stock registers or books of account during the inspection.

The department treated the stock as unaccounted and imposed a penalty of Rs. 1,33,548 and fine of Rs. 1,33,547.88 under Sections 122 and 130 of the CGST/UPGST Act, 2017.

The First Appellate Authority quashed those amounts by order dated 04.09.2025.

The Tribunal’s order summary states that the matter came before it in APL/144/LCK/2026.

The record is internally inconsistent about the appellant: the case heading names Vishal Singh, while the order-in-brief describes the appeal as filed by the Revenue Department.

02Issues

i.Whether the absence of stock registers and books of account at the time of inspection could attract confiscation proceedings under Section 130(1)(ii) of the CGST/UPGST Act, 2017.

ii.Whether the First Appellate Authority properly examined and reconciled the taxpayer’s books and the stock found before quashing the penalty and fine.

03Law Applied

The Tribunal considered Sections 122 and 130 of the CGST/UPGST Act, 2017, including Section 130(1)(ii).

It stated that failure to maintain or produce records could attract Section 130(1)(ii), which does not specifically require proof of an intent to evade tax.

It also considered the judicial precedents relied upon by the taxpayer, but held them distinguishable on the facts.

Provisions in the judgment · 2 · Linked ones open on LawLens

Central Goods and Services Tax Act, 2017 Section 122 Section 130

04Reasoning

The Tribunal considered that the taxpayer’s failure to produce stock registers and books of account during the inspection could be relevant to proceedings under Section 130(1)(ii).

It found that the First Appellate Authority had not adequately verified the books or reconciled the stock before deleting the entire demand.

Because the cited precedents were distinguishable and the record required further examination, the Tribunal concluded that the dispute should be reconsidered on its merits.