In the course of proceedings under Section 67, quantification was done by eye estimation and
goods were held to be in excess of recorded goods. It was contended by petitioner that while
proceeding to pass an order under Section 130 of the GST Act, no power is vested in the
authority to undertake determination of liability of tax, which can only be done by taking
recourse to Section 73 or Section 74 of the Act, as the case may be.
-Relying upon the decision in the matter of M/s Metenere Limited vs Union of India and
another; Writ Tax No.360 of 2020 wherein it was held that demand for tax can be quantified
and raised only in the manner prescribed in Section 73 or Section 74 of the Act, as the case
may be, the High Court observed that entire exercise resorted to under Section 130 of GST
Act for assessment/ determination of the tax and penalty is neither stipulated under the Act,
nor can be done in the manner in which it has been done, more so, in view of the fact that
department itself has undertaken the exercise of quantifying the tax due, by taking recourse
under Section 74.
-Scope of proceedings under Section 130(1)(ii) for not accounting for any goods on which
taxpayer is liable to pay tax is only available when an assessee who is liable to pay tax but
does not account for such goods, after the time of supply has occasioned.
-Scope of Proceedings under Section 130(1)(iv) for contravention of any of the provisions of
the Act or the rules made thereunder with intent to evade payment of tax is only available when
the department establishes that there were a contravention of the Act and Rules coupled with
the ‘intent to make payment of tax’.
-Service of Notice on the Accountant of the firm is neither contemplated nor provided for under
Section 169(1)(a) and thus, service cannot be held to be a valid service and entire proceedings
are liable to be quashed.
-There is no prescriptions for valuation of goods on the basis of eye estimation under Section
15 of CGST Act, 2017 as has been done by department or the manner in which has been
carried out by appellate authority, thus the impugned order was held to be not sustainable.