GST Tribunal Upholds Relief For Trader Over Alleged ₹35.5 Lakh Excess Steel Stock, Rejects Confiscation Based On Visual Estimates Alone

In brief

The question

1. Whether the alleged excess stock, determined through visual estimation and approximate calculations, could justify confiscation under Section 130 of the CGST/UPGST Acts, 2017.

The court held

The Tribunal dismissed the Revenue’s appeal on merits and upheld the First Appellate Authority’s order setting aside the confiscation order.

01Facts

On 16 May 2025, the Department inspected M/s Poorvi Enterprises and alleged excess stock of 30,352.69 kg of stainless-steel bright bars and 9,046 kg of stainless-steel wires, valued at approximately ₹35,55,215.

The adjudicating authority initiated confiscation proceedings under Section 130 of the CGST/UPGST Acts, 2017, and confirmed a demand of ₹12,79,877.96.

The First Appellate Authority set aside the confiscation order, finding that the stock discrepancy rested on visual estimation and approximate calculations, without reliable physical weighment or independent evidence of an intention to evade tax. The Revenue appealed to the Tribunal under Section 112.

02Issues

i.1. Whether the alleged excess stock, determined through visual estimation and approximate calculations, could justify confiscation under Section 130 of the CGST/UPGST Acts, 2017.

ii.2. Whether confiscation under Section 130 could be sustained without establishing the statutory ingredients, including an intention to evade tax.

03Law Applied

Section 112 of the CGST/UPGST Acts, 2017, provides for an appeal to the Tribunal.

Section 130 permits confiscation only where its statutory requirements are established; mere detection of excess stock, without proof of the required ingredients and intention to evade tax, is insufficient.

The Tribunal also relied on M/s Vijay Trading Company and M/s PP Polyplast Private Limited for that principle.

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

Central Goods and Services Tax Act, 2017 Section 112 Section 130

04Reasoning

The Tribunal found that the alleged discrepancy was based on visual estimation and approximate calculations, rather than reliable physical weighment or independent evidence.

On those facts, the Department had not established the statutory basis for confiscation or an intention to evade tax. Applying Section 130 and the cited precedents, the Tribunal held that excess stock alone could not sustain confiscation.