Delayed Stock Entries And Approximate Measurements Didn’t Justify ₹1.89 Lakh Confiscation, GSTAT Upholds Steel Trader’s Relief

On 20 March 2018, an SIB inspection found an alleged discrepancy between M/s Time Steels’ physical stock and its books of account. The taxpayer attributed the discrepancy to a temporary delay in recording transactions while its accountant was absent, produced an invoice dated 19 March 2018, and disputed the survey team’s use of approximate measurements instead of proper weighment.

Proceedings under Section 130 of the CGST/UPGST Act, 2017 resulted in confiscation, tax, penalty and redemption fine totalling Rs. 1,89,000. The Order-in-Appeal dated 13 April 2022 set those measures aside. The Department appealed to the GST Appellate Tribunal; the Tribunal also considered that, in separate proceedings under Section 74, the taxpayer’s explanations had been accepted on most issues, leaving only a minor stock discrepancy.

The Tribunal applied Section 130 of the CGST/UPGST Act, 2017, which provides for confiscation in the circumstances specified by that section; a stock discrepancy or delayed accounting, without more, does not automatically establish deliberate non-accountal warranting confiscation.

The Tribunal also considered findings from the separate Section 74 proceedings as relevant to the taxpayer’s explanations and the extent of the discrepancy. No judicial precedents are identified in the available order summary.

The Tribunal found that the taxpayer’s explanation of a temporary recording delay was consistent with the invoice produced and the subsequent reconciliation.

It also noted that the inspection relied on approximate measurements rather than proper physical weighment, and that the Section 74 proceedings had accepted the taxpayer’s explanations on most issues. In those circumstances, the remaining minor discrepancy did not establish deliberate non-accountal sufficient to sustain confiscation under Section 130.

The demand determined after the Tribunal’s order was nil.