Time of Supply under GST — Sections 12 & 13 Explained

Here is a summary of the judgment: --- **1. Outcome** The writ petition filed by M/S Dee Control And Electric Private Ltd is **allowed**. The impugned order dated 27.02.2024 (passed in appeal), the original order dated 05.04.2019, and the notice dated 15.12.2018, all issued/passed under Section 130 of the UPGST/CGST Act, are hereby **quashed**. **2. Core Issue** The core issue was whether proceedings under Section 130 of the UPGST/CGST Act are the appropriate mechanism for a registered dealer when excess stock is found during a survey/inspection, or if such matters pertaining to unaccounted goods should be dealt with under the provisions of Sections 35(6), 73, or 74 of the Act for the determination of tax and penalty. **3. Key Facts** * M/S Dee Control And Electric Private Ltd is a registered dealer involved in manufacturing, trading, and services of transformers and other electric parts, primarily supplying to the government sector. * On 25.10.2018, the Special Investigation Branch (S.I.B.) conducted a survey/inspection at the petitioner's business premises under Section 67 of the UPGST Act. * During this survey, it was alleged, based on "eye estimation," that excess stock of material was found. * Subsequently, proceedings were initiated against the petitioner under Section 130 of the UPGST/CGST Act, which led to the issuance of a notice dated 15.12.2018, an order dated 05.04.2019, and an appellate order dated 27.02.2024, all of which were challenged by the petitioner. **4. Arguments (Taxpayer vs Revenue)** * **Taxpayer (M/S Dee Control And Electric Private Ltd):** * Argued that proceedings under Section 130 of the UPGST Act are not permissible against a registered dealer for merely finding excess stock. * Submitted that for such situations, the authorities ought to have initiated proceedings under Section 35(6), 73, or 74 of the UPGST Act. * Relied on the Allahabad High Court's judgment in *S/S Dinesh Kumar Pradeep Kumar Vs. Additional Commissioner Grade 2 and Another*. * **Revenue (Additional Commissioner Grade-2 and Another):** * Supported the impugned orders, asserting that the proceedings initiated against the petitioner were valid and correctly invoked under Section 130. **5. Court’s Reasoning** * The Court emphasized its consistent position that if excess stock is found, the appropriate course of action involves proceedings under Section 73 or 74 of the UPGST Act, rather than Section 130. * It extensively referred to and relied upon its own precedents, including *S/S Dinesh Kumar Pradeep Kumar*, *M/s Shree Om Steels*, *Metenere Limited*, and *M/s Maa Mahamaya Alloys Pvt. Ltd.*. * Drawing from *Metenere Limited*, the Court highlighted that Section 35(6) allows the proper officer to determine tax payable on unaccounted goods "as if supplied," but mandates that this determination and quantification of tax must strictly follow the procedures outlined in Section 73 or 74 of the Act. * The Court in *S/S Dinesh Kumar Pradeep Kumar* had already unequivocally held that proceedings under Section 130 cannot be initiated solely based on the discovery of excess stock. * Furthermore, referencing *M/s Maa Mahamaya Alloys Pvt. Ltd.*, the Court analyzed Section 130(1) clauses (ii) and (iv): * It clarified that liability to pay tax under Section 130(1)(ii) arises at the point of supply, not merely when excess stock is found prior to any supply being occasioned. * For Section 130(1)(iv) to apply, there must be a contravention coupled with an "intent to evade payment of tax," which was neither alleged nor established in the show cause notice or impugned orders. * Based on these principles, the Court concluded that the proceedings initiated and the subsequent orders passed under Section 130 of the UPGST/CGST Act were legally unsustainable as they bypassed the prescribed procedures under Sections 73 or 74 for tax determination on unaccounted goods. **6. Statutory References** * **Central Goods and Services Tax Act, 2017 (CGST Act):** * Section 9 (Levy and Collection) * Section 12 (Time of supply of goods) * Section 12(2) * Section 35(1) (Accounts and other records) * Section 35(6) (Determination of tax on unaccounted goods/services) * Section 50 (Interest on delayed payment of tax) * Section 67 (Power to inspection, search and seizure) * Section 73 (Determination of tax without fraud/misstatement) * Section 74 (Determination of tax with fraud/misstatement/suppression) * Section 122 (Penalty for certain offences) * Section 130 (Confiscation of goods or conveyances and levy of penalty) * Section 130(1)(ii) * Section 130(1)(iv) * Section 169 (Service of notice and communication) * **Uttar Pradesh Goods and Services Tax Act, 2017 (UPGST Act):** * Section 67 * Section 73 * Section 74 * Section 130 * **Uttar Pradesh Goods and Services Tax Rules, 2017:** * Rule 56 * Rule 57 * Rule 122 **7. Precedents Cited** * S/S Dinesh Kumar Pradeep Kumar Vs. Additional Commissioner Grade 2 and Another (Writ Tax No. 1082 of 2022), decided on 25.07.2024 (Allahabad High Court) * M/s Shree Om Steels Vs. Additional Commissioner Grade-2 and Another (Writ Tax No. 1007 of 2022) (Allahabad High Court) * Metenere Limited (supra) (Allahabad High Court) * M/s Maa Mahamaya Alloys Pvt. Ltd. (supra) (Allahabad High Court) ---

As a Senior GST Legal Analyst, here is a summary of the judgment: **1. Outcome** The writ petition was allowed. The impugned order dated 09.01.2020 passed by the Deputy Commissioner and the appellate order dated 31.05.2022 passed by the Additional Commissioner were quashed. **2. Core Issue** The core issue was whether proceedings under Section 130 of the GST Act (confiscation of goods or conveyances and levy of penalty) could be initiated solely on the finding of excess stock during a survey at the business premises, or if the proper course of action should be under Sections 73/74 of the GST Act (determination of tax and penalty for non-payment, short payment, etc.). **3. Key Facts** * The petitioner, M/s J.T.Steel Traders, is a registered company engaged in the business of steel coils and other steel items. * On 08.08.2019, a survey was conducted at the petitioner's business premises by respondent no. 3 (Deputy Commissioner). * During the survey, stock was assessed by eye measurement, and excess stock was allegedly found. * Actual weighment of the stock was not done by the authorities. * Proceedings were initiated against the petitioner under Section 130 of the GST Act based on the alleged excess stock. **4. Arguments** * **Taxpayer (M/S J.T.Steel Traders):** * Submitted that excess stock was found based on eye measurement, not actual weighment. * Contended that proceedings under Section 130 of the GST Act were erroneously initiated. * Argued that proceedings for finding excess stock should have been initiated under Sections 73/74 of the GST Act, which provide the mechanism for demand and recovery of tax. * Relied on the judgment of the Allahabad High Court in *M/s Vijay Trading Company Vs. Additional Commissioner, Grade - 2 & Another* (Writ Tax No. 1278 of 2024), which was affirmed by the Apex Court. * **Revenue (State Of U.P. And 2 Others):** * Supported the impugned orders passed by the Deputy Commissioner and Additional Commissioner. **5. Court’s Reasoning** The Court reiterated its consistent view that if excess stock is found during a survey, proceedings should be initiated under Sections 73/74 of the GST Act, not Section 130 of the SGST Act (read with Rule 120, though likely a general reference to rules under the Act). The Court relied heavily on its previous judgments, particularly *S/s Dinesh Kumar Pradeep Kumar*, which referenced *M/s Shree Om Steels* and *Metenere Limited*, and *M/s Maa Mahamaya Alloys Pvt. Ltd.*, which also referenced *Metenere Limited*. The key points of the reasoning were: * **Section 35(6) and Sections 73/74:** Even if unaccounted goods are "deemed to be supplied" under Section 35(6) of the Act (requiring registered persons to maintain accounts and allowing proper officers to determine tax if accounts are not kept), the determination and quantification of tax payable on such deemed supply *must* be done in accordance with the procedures laid down in Section 73 or Section 74 of the Act. * **Non-applicability of Section 130:** * The entire exercise of assessing/determining tax and levying penalty based on a survey under Section 130, when alternative provisions (Sections 73/74) exist for quantifying tax due, is not stipulated under the Act and is therefore unsustainable. * Regarding Section 130(1)(ii), the Court held that it would not be attracted because the liability to pay tax arises at the "time of supply" and not merely upon finding goods in excess of records. Section 130(1)(ii) applies when an assessee liable to pay tax does not account for goods *after* the time of supply. * Regarding Section 130(1)(iv), the Court found it inapplicable as it requires a contravention of the Act or Rules *coupled with an intent to evade tax*. Since no such intent was alleged in the show cause notice or orders, this clause was also not attracted. * **Valuation by eye estimation:** While not the direct reason for quashing, the court's reference to *Maa Mahamaya Alloys Pvt. Ltd.* implicitly questions valuation based solely on eye estimation. Based on this consistent legal position, the Court found that the impugned orders, which determined tax and levied penalty under Section 130 for excess stock, were legally unsustainable. **6. Statutory References** * Central Goods and Services Tax Act, 2017 (CGST Act) / State Goods and Services Tax Act (SGST Act) / Uttar Pradesh Goods and Services Tax Act (UPGST Act): * Section 9 (Charging Section) * Section 12(2) (Time of supply of goods) * Section 35(1) (Accounts and records) * Section 35(6) (Determination of tax on unaccounted goods/services) * Section 50 (Interest on delayed payment of tax) * Section 73 (Determination of tax in non-fraud cases) * Section 74 (Determination of tax in fraud cases) * Section 122 (Penalty for certain offences) * Section 130 (Confiscation of goods or conveyances and levy of penalty) * Section 130(1)(ii) * Section 130(1)(iv) * Section 169 (Service of notice) * Central Goods and Services Tax Rules, 2017 (CGST Rules): * Rule 56 (Maintenance of records) * Rule 57 (Electronic records) * Rule 120 (Mentioned as part of the SGST Act context, though typically for appeals in CGST Rules, it is referenced as stated in the text). **7. Precedents Cited** 1. **M/s Vijay Trading Company Vs. Additional Commissioner, Grade - 2 & Another** [Writ Tax No. 1278 of 2024, decided on 20.08.2024], affirmed by the Apex Court in Special Leave Petition (Civil) Diary No. 5881 of 2025. 2. **S/s Dinesh Kumar Pradeep Kumar** (Writ Tax No. 1082 of 2022 decided on 25.07.2024). 3. **M/s Shree Om Steels Vs. Additional Commissioner Grade-2 and Another** (Writ Tax No. 1007 of 2022) (referenced in *Dinesh Kumar Pradeep Kumar*). 4. **M/s Metenere Limited (supra)** (foundational case for the reasoning, referenced in *Shree Om Steels* and *Maa Mahamaya Alloys Pvt. Ltd.*). 5. **M/s Maa Mahamaya Alloys Pvt. Ltd. (supra)**.

Here is a summary of the judgment from the perspective of a Senior GST Legal Analyst: --- **1. Outcome** The writ petition was allowed. The impugned orders dated 16.05.2024 (appellate) and 26.09.2022 (original) were quashed. The Court directed that any amount deposited by the petitioner shall be refunded in accordance with law. **2. Core Issue** The core issue was whether proceedings under Section 130 of the Central Goods and Services Tax Act, 2017 (CGST Act) / Uttar Pradesh Goods and Services Tax Act, 2017 (UPGST Act), read with Rule 120 of the Rules, are appropriate for determining tax liability and imposing penalties/confiscation when excess stock is found during a survey, or if proceedings under Sections 73/74 of the CGST/UPGST Act should be initiated instead. **3. Key Facts** * **Petitioner:** M/S Janta Machine Tools, a partnership firm engaged in the business of purchase and sale of machines, machinery parts, and hardware goods, registered in Agra (GSTIN No. 09AAKFJ9517B1Z9). * **Survey/Search:** On 04.05.2022, a search was conducted by respondent no. 3 at the petitioner's business premises. * **Finding:** Excess stock was found during the survey. * **Initiation of Proceedings:** Proceedings were initiated under Section 130 read with Section 122 of the CGST/UPGST Act via a notice dated 20.07.2022. * **Proposed Demand:** A proposed demand of Rs. 7,17,560/- as tax, along with an equal penalty of Rs. 7,17,560/- and a confiscation fine of Rs. 7,17,560/-, was raised. * **Petitioner's Reply:** The petitioner submitted a reply on 27.07.2022. * **Original Order:** Respondent no. 3 passed an order dated 26.09.2022, not satisfied with the reply, confirming the demand. * **Appellate Order:** The petitioner filed an appeal, which was partly allowed, granting relief of Rs. 6,93,869/- but confirming the remaining demand of Rs. 14,58,811/- via order dated 16.05.2024. **4. Arguments** * **Taxpayer (M/S Janta Machine Tools):** * Proceedings under Section 130 of the GST Act were erroneously initiated; the correct procedure for dealing with excess stock should have been under Sections 73/74 of the GST Act. * The issue is squarely covered by previous High Court decisions, including *S/s Dinesh Kumar Pradeep Kumar* (affirmed by the Apex Court). * **Revenue (State Of U.P. And 2 Others):** * Learned Standing Counsel for the State-respondents supported the impugned orders, implying that the proceedings initiated and demands confirmed were in accordance with law. **5. Court’s Reasoning** The Court noted that it was undisputed that excess stock was found during the survey. It consistently held that in such situations, proceedings under Sections 73/74 of the GST Act should be invoked, not Section 130 of the GST Act read with Rule 120. The reasoning was heavily based on the following precedents: * ***S/s Dinesh Kumar Pradeep Kumar Vs. Additional Commissioner, Grade - 2 & Another*** (affirmed by the Apex Court): This case explicitly held that even if excess stock is found, proceedings under Section 130 of the UPGST Act cannot be initiated. * ***M/s Shree Om Steels Vs. Additional Commissioner Grade-2 and Another*** (which cited *Metenere Limited*): * Section 35(6) of the CGST Act empowers the proper officer to determine tax on unaccounted goods "as if such goods or services had been supplied," but explicitly states that "the provisions of Section 73 or 74 shall mutatis mutandis apply for determination of the said tax." * Therefore, even if unaccounted goods are "deemed to be supplied," the quantification and determination of tax must follow the procedure laid down in Sections 73 or 74. * ***M/s Maa Mahamaya Alloys Pvt. Ltd.***: * Reiterated that the entire exercise under Section 130 for assessment/determination of tax and penalty for excess stock is unsustainable. * Analyzed Section 130(1)(ii) and (iv): * Section 130(1)(ii) (not accounting for goods liable to tax) is not applicable because the liability to pay tax arises at the "time of supply," and the mere presence of excess stock does not, by itself, occasion a supply. * Section 130(1)(iv) (contravention with intent to evade tax) requires the department to establish a clear "intent to evade payment of tax," which was not alleged in the show cause notice or established in the orders. The Court concluded that the law is clear: proceedings under Section 130 of the GST Act cannot be used when excess stock is found during a survey. Consequently, the impugned orders were legally unsustainable. **6. Statutory References** * Section 9 (CGST Act) - Levy and collection of tax * Section 12 (CGST Act) - Time of supply of goods * Section 35(1) (CGST Act) - Accounts and other records * Section 35(6) (CGST Act) - Power to determine tax on unaccounted goods * Section 50 (CGST Act) - Interest on delayed payment of tax * Section 73 (CGST/UPGST Act) - Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for reasons other than fraud or willful misstatement or suppression of facts. * Section 74 (CGST/UPGST Act) - Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts. * Section 122 (CGST/UPGST Act) - Penalties for certain offences * Section 130 (CGST/UPGST Act) - Confiscation of goods or conveyances and levy of penalty * Section 169 (CGST Act) - Service of notice * Rule 56 (CGST Rules) - Maintenance of accounts by registered persons * Rule 57 (CGST Rules) - Records of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples * Rule 120 (Rules framed under the Act) - Mentioned in context of Section 130 proceedings. **7. Precedents Cited** * *S/s Dinesh Kumar Pradeep Kumar Vs. Additional Commissioner, Grade - 2 & Another* [Writ Tax No. 1082 of 2022, decided on 25.07.2024] * Special Leave Petition (Civil) Diary No. 5879 of 2025 vide order dated 17.04.2025 (affirming *S/s Dinesh Kumar Pradeep Kumar*) * *M/s Shree Om Steels Vs. Additional Commissioner Grade-2 and Another* [Writ Tax No. 1007 of 2022] (cited within *S/s Dinesh Kumar Pradeep Kumar*) * *Metenere Limited* (cited within *M/s Shree Om Steels*) * *M/s Maa Mahamaya Alloys Pvt. Ltd.* (cited within *S/s Dinesh Kumar Pradeep Kumar*) ---

Here is a summary of the judgment: **1. Outcome** The Review Petition (RP No.42/2024) filed by M/s Kapil Kumar Khattar was dismissed. The Court found no error apparent on the face of record, no discovery of new facts, nor any other sufficient reason to recall its earlier judgment dated 3rd November, 2023, which had dismissed the petitioner's writ petition (WP(C) No.1379/2021). **2. Core Issue** The core issue was whether the petitioner (a works contractor) was liable to pay the differential Goods and Services Tax (GST) amount, arising from a reduction in GST rates on works contracts from 18% to 12% *after* the bid submission date but *before* the formal notification of the reduced rates. Specifically, the petitioner sought review of an earlier judgment that upheld this liability, arguing that the applicable GST rate at the time of bid submission was already 12% or that their tender considered the impending reduction. **3. Key Facts** * **Initial GST Rate:** SRO-GST-11 dated 8th July, 2017, notified construction services under Heading 9954 (including composite supply of works contract under item No. 3(ii)) to be taxed at 18%. * **GST Council Recommendation:** The 20th GST Council meeting on 5th August, 2017, recommended reducing GST on works contract services from 18% to 12%. * **Petitioner's Bid:** The review petitioner submitted its bid on 28th August, 2017. The last date for submission of bids was 16th September, 2017. * **Formal Rate Reduction:** A formal notification by the Government of Jammu & Kashmir (SRO-GST-06 (Rate)) was issued on 21st September, 2017, reducing GST rates on works contracts from 18% to 12%. * **Work Allotment:** Works were allotted and commenced after 21st September, 2017. * **Demand Notice:** The respondent (Garrison Engineer) issued letters dated 16th June, 2021, calling upon the petitioner and other contractors to deposit the differential tax amount. * **Prior Judgments:** * A Division Bench in WP(C) No.2183/2019 (M/s Pardeep Electricals and Builders Private Limited) dated 23rd December, 2020, found the recovery notices violated natural justice but affirmed the liability to pay the tax. * The same issue was re-agitated in WP(C) No.170/2021 (Pardeep Electricals) and dismissed on 3rd November, 2023, reiterating that GST Council recommendations are not statutory notifications. * The petitioner's original writ petition (WP(C) No.1379/2021) was also dismissed on 3rd November, 2023, based on the judgment in WP(C) No.170/2021. * **Contractual Condition:** Special Condition No.49 of the tender document stated that tendered rates would be inclusive of all taxes prevailing on the last due date for receipt of tenders. It also provided for reimbursement to the contractor for any increase in tax rates and refund/deduction by the Government for any decrease. **4. Arguments** * **Taxpayer (M/s Kapil Kumar Khattar):** * The work order was issued after 21st September, 2017, when the GST rate had already been reduced to 12%. * Special Condition No.49 of the tender document was against statutory provisions of the GST Act, particularly Section 13 (time of supply). * SRO-GST-06 dated 21st September, 2017, did not reduce GST on *all* works contracts. Instead, SRO-GST-2(Rate) dated 22nd August, 2017, already notified 12% for *composite supply of works contracts* as defined in Section 2(119) of CGST Act when supplied to Government/local authority for specific works (e.g., historical monuments, canals, pipelines). Therefore, the petitioner's bid considered the 12% rate prevailing at the time, and it was not a case of reduction from 18% to 12%. * **Revenue (Union of India):** * All issues raised by the review petitioner had already been conclusively decided by previous judgments of the Court (WP(C) No.2183/2019 and WP(C) No.170/2021). * There was no error apparent on the face of the record, nor any discovery of new facts or law to warrant a review. * The review petition was an attempt to re-litigate a settled matter. **5. Court’s Reasoning** * **No Grounds for Review:** The Court found no error apparent on the face of record, no discovery of new facts, or any other sufficient reason to exercise its review jurisdiction. * **Binding Nature of Contract:** The Special Condition No.49 of the tender document explicitly stated that the quoted rates were inclusive of taxes prevailing on the *last date for receipt of tenders*. It also clearly provided for reciprocal adjustment (reimbursement for increase, refund/deduction for decrease) based on rates prevailing on that date. This condition was not challenged by the petitioner at any point. * **GST Rate on Bid Submission Date:** Indisputably, on the last date for receipt of tenders (16th September, 2017), the statutory GST rate on works contracts was 18% under SRO-GST-11 dated 8th July, 2017. * **GST Council Recommendations vs. Statutory Notification:** GST Council recommendations are not statutory and do not have the force of law until formally notified. The reduction to 12% was formally notified only on 21st September, 2017. This point was already elaborated upon and decided in the earlier judgment (WP(C) No.170/2021). * **Applicability of CGST Act Provisions:** The Court held that arguments based on Sections 13 and 14 of the CGST Act (time of supply, change in rates) did not assist the petitioner, especially given the clear contractual terms in Special Condition No.49. * **Interpretation of SRO-GST-2(Rate) dated 22nd August, 2017:** The Court clarified that SRO-GST-11 dated 8th July, 2017, taxed *general construction services* (including composite supply of works contract under item 3(ii)) at 18%. SRO-GST-2(Rate) dated 22nd August, 2017, only brought changes for *specific types* of works contracts supplied to Government/local authorities for certain specified works (e.g., historical monuments, canals, pipelines, railways, low-cost housing), which were originally classified under item No. 3(iii) of SRO-GST-11. It did *not* alter the 18% rate for the general composite supply of works contract (item No. 3(ii) of SRO-GST-11). Therefore, the prevailing rate for the petitioner's contract on the bid submission date was indeed 18%, which subsequently reduced to 12% on 21st September, 2017. * **New Argument:** The argument regarding SRO-GST-2(Rate) dated 22nd August, 2017, was raised for the first time in the review petition and was not specifically pleaded in the original writ petition. **6. Statutory References** * SRO-GST-11 dated 8th July, 2017 (Government of Jammu & Kashmir) * SRO-GST-06 (Rate) dated 21st September, 2017 (Government of Jammu & Kashmir) * SRO-GST-2(Rate) dated 22nd August, 2017 (Government of Jammu & Kashmir) * Central Goods and Services Tax Act, 2017 (CGST Act, 2017) * Section 2, Clause 119 (Definition of "composite supply of works contract") * Section 13 (Time of supply of services) * Section 14 (Change in rate of tax in respect of supply of goods or services) * Article 265 of the Constitution of India (No tax save by authority of law) **7. Precedents Cited** * M/s Pardeep Electricals and Builders Private Limited v. Union of India and others, WP(C) No.2183/2019, decided on 23rd December, 2020. * M/s Pardeep Electricals and Builders Private Limited v. Union of India and others, WP(C) No.170/2021, decided on 3rd November, 2023. * M/s Kapil Kumar Khattar v. Union of India and others, WP(C) No.1379/2021, decided on 3rd November, 2023 (the judgment under review).

Here's a summary of the judgment: **1. Outcome** The writ petition was allowed. The impugned orders dated 31.05.2022 (passed by Additional Commissioner) and 20.07.2021 (passed by Deputy Commissioner) were quashed, as they could not be sustained in the eyes of law. **2. Core Issue** The core issue was whether proceedings under Section 130 of the GST Act are appropriate for dealing with excess stock found during a survey at a taxpayer's business premises, or if proceedings under Sections 73/74 of the GST Act should be initiated for the determination of tax and penalty. **3. Key Facts** * **Taxpayer:** M/S Magma Industries, a registered Public Limited Company engaged in manufacturing and selling bulk drugs. * **Survey:** On 28.01.2021, a survey was conducted at the petitioner's business premises by an SIB team. * **Finding:** Excess stock was found based on "eye measurement." * **Dispute:** The authorities did not conduct actual weighment of the stock. Proceedings were initiated against the petitioner under Section 130 of the GST Act. * **Impugned Orders:** The petitioner challenged an order dated 31.05.2022 by the Additional Commissioner and an order dated 20.07.2021 by the Deputy Commissioner, both stemming from the Section 130 proceedings. **4. Arguments (Taxpayer vs Revenue)** * **Taxpayer's Arguments:** * Submitted that the assessment of excess stock was based solely on eye measurement, without actual weighment. * Contended that proceedings under Section 130 of the GST Act were incorrectly initiated. * Argued that the appropriate proceedings should have been under Sections 73/74 of the GST Act. * Relied on the judgment of the Allahabad High Court in *M/s Vijay Trading Company Vs. Additional Commissioner, Grade - 2 & Another*, which was affirmed by the Apex Court. * **Revenue's Arguments:** * Supported the impugned orders without providing specific detailed counter-arguments in the judgment text. **5. Court’s Reasoning** * The Court acknowledged that excess stock was found during the survey, which led to the proceedings. * It reiterated its consistent view that when excess stock is found, proceedings under Sections 73/74 of the GST Act should be initiated, not under Section 130 of the SGST Act (read with Rule 120). * Referred to its previous judgments in *S/s Dinesh Kumar Pradeep Kumar*, *M/s Shree Om Steels*, and particularly *Metenere Limited*, which established the principle that: * While Section 35(6) empowers the proper officer to determine tax on unaccounted goods (deemed supply), this determination and quantification must follow the procedures laid down in Sections 73 or 74. * Section 130 cannot be used for the assessment/determination of tax and penalty in such cases. * Further cited *M/s Maa Mahamaya Alloys Pvt. Ltd.*, which similarly held that an exercise under Section 130 for assessment/determination of tax and penalty is not stipulated under the Act in this context. * Specifically addressed Section 130(1)(ii) and (iv), stating that they would not be attracted for excess stock found during a survey: * Section 130(1)(ii) is inapplicable because the liability to pay tax arises at the time of supply, not at an earlier point when excess stock is merely found. * Section 130(1)(iv) requires the establishment of an "intent to evade payment of tax" in conjunction with a contravention, which was neither alleged in the show cause notice nor established in the orders. * Concluded that the law is clear: Section 130 of the GST Act cannot be invoked if excess stock is found at the time of a survey. **6. Statutory References** * Central Goods and Services Tax Act, 2017 (CGST Act) / State Goods and Services Tax Act (SGST Act / UPGST Act): * Section 9 (Charging section) * Section 12, 12(2) (Time of supply of goods) * Section 35(1), 35(6) (Accounts and other records) * Section 50 (Interest on delayed payment of tax) * Section 73 (Determination of tax not paid or short paid – non-fraud cases) * Section 74 (Determination of tax not paid or short paid – fraud/wilful misstatement cases) * Section 122 (Penalty for certain offences) * Section 130 (Confiscation of goods or conveyances and levy of penalty) * Section 169 (Service of notice in certain circumstances) * GST Rules: * Rule 56, 57 (Records to be maintained) * Rule 120 (Likely relating to confiscation proceedings, though not explicitly detailed) **7. Precedents Cited** * *M/s Vijay Trading Company Vs. Additional Commissioner, Grade - 2 & Another* [Writ Tax No. 1278 of 2024, decided on 20.08.2024] (affirmed by the Apex Court in Special Leave Petition (Civil) Diary No. 5881 of 2025). * *S/s Dinesh Kumar Pradeep Kumar* (Writ Tax No. 1082 of 2022 decided on 25.07.2024). * *M/s Shree Om Steels Vs. Additional Commissioner Grade-2 and Another* (Writ Tax No. 1007 of 2022). * *Metenere Limited (supra)* (a foundational judgment for the Court's reasoning on this matter). * *M/s Maa Mahamaya Alloys Pvt. Ltd. (supra)*.

Here is a summary of the judgment in the requested format: **1. Outcome** The review petition was dismissed, finding no merit in the grounds raised by the petitioner for recalling the original judgment dated 3rd November, 2023. **2. Core Issue** The core issue was whether the judgment dated 3rd November, 2023, dismissing the petitioner's challenge to the recovery of differential GST amount, suffered from any error apparent on the face of the record or warranted review due to discovery of new facts or other sufficient reasons. Specifically, it concerned the applicable GST rate for works contracts tendered in August 2017 and the validity of a contractual condition regarding tax rate changes. **3. Key Facts** * **Petitioner:** Rajinder Kumar Gupta, Sole Proprietor of M/s Rajinder Kumar Contractors. * **Original Judgment:** The review petition sought to recall the High Court's judgment dated 3rd November, 2023, in WP(C) No.934/2021. * **Initial GST Rate:** Vide SRO-GST-11 dated 8th July, 2017, construction services under Heading 9954 were notified to be taxed at 9% (implying 18% CGST+SGST). * **GST Council Recommendation:** In its 20th meeting on 5th August, 2017, the GST Council recommended reducing the GST rate on Works Contract Services from 18% to 12%. * **Tender Submission:** The petitioner submitted his tender on 28th August, 2017, after the GST Council recommendation. The last date for bid submission was 1st September, 2017. * **Formal Notification:** The Government of Jammu & Kashmir formally notified the reduced GST rate of 12% via SRO-GST-06 (Rate) on 21st September, 2017. * **Bid Acceptance:** The petitioner's bid was accepted on 22nd September, 2017. * **Demand for Differential Tax:** Respondent No.6 issued a letter dated 6th April, 2021, demanding the petitioner deposit a differential tax amount of Rs.22,79,020 (representing the difference between 18% and 12% GST) by 30th April, 2021. * **Previous Litigation:** * WP(C) No.2183/2019 (M/s Pardeep Electricals and Builders Private Limited) disposed of on 23rd December, 2020, found the GST rate on the last bid submission date was 18% and later reduced to 12%. It clarified that the *liability* to pay tax was not disputed, only the *quantum*. * WP(C) No.170/2021 (M/s Pardeep Electricals and Builders Private Limited) decided on 3rd November, 2023, rejected the argument that GST Council recommendations were immediately binding, upholding that the statutory notification on 21st September, 2017, was the effective date. * The petitioner's WP(C) No.934/2021 was dismissed on 3rd November, 2023, in light of the judgment in WP(C) No.170/2021. * **Contractual Condition:** Special Condition 49 of the tender document stipulated that rates quoted by the contractor were inclusive of all taxes prevailing on the *last due date for receipt of tenders*, with provisions for reimbursement or deduction for any subsequent increase or decrease in tax rates. **4. Arguments (Taxpayer vs Revenue)** * **Taxpayer (Rajinder Kumar Gupta):** * The work allotment order was issued *after* 21st September, 2017, when the reduced 12% GST rate was already in effect. * Special Condition 49 of the tender document was "in the teeth of" statutory provisions of the CGST Act, 2017, particularly Section 13 (time of supply), and should have been ignored. * Bids were submitted considering the GST Council's recommendation of 5th August, 2017, reducing the rate to 12%, thus the demand for differential tax was incorrect. * (New argument raised for the first time in review) SRO-GST-06 dated 21st September, 2017, did not reduce the GST on works contracts; instead, works contracts were already governed by SRO-GST-02 (Rate) dated 22nd August, 2017, which had set the rate at 12%. Therefore, no reduction occurred that would authorize recovery of a differential amount. Specifically, the contract fell under S.No.3 of the 22nd August, 2017 notification for specific government works, attracting 12%. * **Revenue (Union of India):** * All issues raised in the review petition had already been comprehensively addressed and settled by the previous judgments in WP(C) No.2183/2019 (23.12.2020) and WP(C) No.170/2021 (03.11.2023), which fully covered the petitioner's case. * There was no error apparent on the face of the record, nor any discovery of new facts, to justify the exercise of review jurisdiction. * The review petition was merely an attempt to re-litigate a concluded judgment on previously argued grounds. **5. Court’s Reasoning** * **Review Scope:** The Court reiterated that its review jurisdiction could only be exercised for errors apparent on the face of the record, discovery of new facts, or other sufficient reasons, none of which were demonstrated by the petitioner. * **Contractual Obligation (Special Condition 49):** The Court emphasized the binding nature of Special Condition 49, which clearly stated that quoted rates included taxes prevailing on the *last due date for receipt of tenders*. It explicitly provided for reciprocal adjustment (reimbursement for increases, refund/deduction for decreases) if tax rates changed *after* that date. The petitioner, as a contracting party, was bound by this condition, and had not challenged its validity previously. * **Applicable GST Rate on Bid Date:** On the last date for tender receipt (1st September, 2017), the prevailing GST rate for the composite supply of works contract was 18% as per SRO-GST-11 dated 8th July, 2017 (specifically item No.3(ii) of Heading 9954). * **GST Council Recommendations vs. Statutory Notification:** The Court affirmed its earlier ruling that GST Council recommendations are merely advisory and do not become legally binding or effectuate new tax rates until formally notified by statutory instruments, consistent with Article 265 of the Constitution. The statutory reduction to 12% occurred only on 21st September, 2017. * **Analysis of SRO-GST-2(Rate) dated 22nd August, 2017 (New Argument):** * The Court meticulously examined the petitioner's new argument. * It clarified that SRO-GST-2(Rate) dated 22nd August, 2017, did *not* change the 18% rate applicable to the general category of "composite supply of works contract" (under item No.3(ii) of SRO-GST-11 dated 8th July, 2017). * Instead, the 22nd August, 2017 notification made changes *only* to *specific* types of construction services (e.g., those for historical monuments, canals, pipelines) which fell under item No.3(iii) of the 8th July, 2017 notification (dealing with "construction services other than (i) and (ii) above"). * Therefore, the 18% rate for the petitioner's type of composite supply of works contract remained unchanged until the 21st September, 2017 notification reduced it to 12%. * **Conclusion:** The Court found no error in its previous judgment, and the petitioner's arguments lacked merit. **6. Statutory References** * **Acts:** * Central Goods and Services Tax Act, 2017 (CGST Act, 2017) * Section 2(119) (definition of 'composite supply of works contract') * Section 13 (time of supply of services) * Section 14 (effect of change in rate of tax on supply of services) * **Constitution of India:** * Article 265 * **Notifications/SROs:** * SRO-GST-11 dated 8th July, 2017 (Jammu & Kashmir Government) * SRO-GST-06 (Rate) dated 21st September, 2017 (Jammu & Kashmir Government) * SRO-GST-02 (Rate) dated 22nd August, 2017 (Jammu & Kashmir Government) * **GST Council:** * 20th GST Council meeting (5th August, 2017) * **Other:** * Heading 9954 (Construction services) **7. Precedents Cited** * *Rajinder Kumar Gupta v. Union of India and others*, WP(C) No.934/2021 (Judgment dated 3rd November, 2023) - *This is the judgment under review.* * *M/s Pardeep Electricals and Builders Private Limited*, WP(C) No.2183/2019 (Judgment dated 23rd December, 2020) * *M/s Pardeep Electricals and Builders Private Limited*, WP(C) No.170/2021 (Judgment dated 3rd November, 2023)