Issue: Whether proceedings under Section 130 of the CGST Act, 2017 can be initiated for alleged excess stock found during a survey, or whether the proper recourse lies under Sections 73/74.

Held: The Court observed that Section 35(6) of the CGST Act clearly provides that if goods are not accounted for, the Proper Officer shall determine the amount of tax payable on such goods, and for such determination, the provisions of Sections 73/74 shall apply.

Since the Act is a complete code, once a specific procedure is laid down for unaccounted goods, the department cannot bypass it by invoking Section 130.

The Court further stated that such law on the subject is already settled in the case of M/s Vijay Trading Company (affirmed by the Supreme Court), wherein it was held that excess stock cases must be dealt with under Sections 73/74, not under Section 130. Also, in the case of M/s PP Polyplast Pvt. Ltd., same principle was reiterated.

Accordingly, the Court held that proceedings under Section 130 cannot be invoked merely because excess stock is found. The proper course is to proceed under Sections 73/74 for determination of tax. The impugned order to be set aside

Case name: M/s Nikhil Trade & Exports Versus Addititional Commissioner Grade-2 (Appeals) 3, State Tax, Kanpur And 2 Others dated 12.08.2025

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