Penalty proceedings under Section 130 of the CGST Act cannot be initiated if excess stock was found

Last updated: 19 November 2025

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Quick Summary

The Allahabad High Court has ruled that penalty proceedings under Section 130 of the CGST Act cannot be initiated simply because excess stock was found. Instead, if excess stock is discovered, the relevant proceedings should be initiated under Section 73 or Section 74 of the CGST Act. This decision clarifies that Section 130 is not the appropriate avenue for penalties related to discrepancies in stock levels.

Court :
Allahabad High Court

Brief :
The Hon'ble Allahabad High Court in the case of PP Polyplast (P.) Ltd. v. Additional Commissioner Grade 2 [Writ Tax No. 1183 of 2024 dated July 30, 2024] allowed the writ petition and held that no penalty proceedings under Section 130 of the Central Goods and Services Tax Act, 2017 ("the CGST Act") is maintainable on the ground of excess stock. It was further stated that the proceedings relating to Section 73/74 should be initiated if prima facie view arises that excess stock was found.

Citation :
Writ Tax No. 1183 of 2024 dated July 30, 2024

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