SC dismisses Revenue's SL Pagainst Allahabad HC judgment affirming no penalty order u/s 130 of the CGST Act for stock discrepancies found during surveys

Last updated: 09 October 2025

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The Supreme Court has ruled that stock discrepancies discovered during business surveys cannot be penalised under Section 130 of the GST Act, which deals with confiscation and penalties. Instead, such issues must be addressed through standard assessment and recovery proceedings under Sections 73 or 74 of the Act. This decision upholds a previous High Court judgment and clarifies the correct legal procedure for handling inventory differences found during tax surveys.

Court :
Supreme Court of India

Brief :
The Hon'ble Supreme Court in the case of Additional Commissioner Grade-2 & Another v. Dayal Product [Special Leave Petition (Civil) Diary No. 44119/2025, order dated September 01, 2025] held that where a stock discrepancy is discovered during the survey of a registered dealer, the initiation of confiscation and penalty proceedings under Section 130 of the GST Act is unsustainable. Such issues must be addressed through assessment and recovery proceedings under Sections 73 or 74. The SLP against the Allahabad High Court's judgment was dismissed, thereby upholding the High Court's view.

Citation :
Special Leave Petition (Civil) Diary No. 44119/2025, order dated September 01, 2025

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

BEST VALUE

3 Years PLAN

4999

(Excl. of GST ₹899)

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Attached File : 671907_5880_sc_all_hc_ms_dayal_product.pdf

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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