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2021 (4) TMI 798 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPURClandestine Removal - excess stock found during the physical stocks verification against entries made in stock register - seizure of such excess goods - Confiscation - levy of penalty upon the Firm under Section 122(1) (xvi) and (xviii) of CGST Act, 2017 - levy of penalty upon Partner of the Firm under Section 122(3) of CGST Act, 2017. Confiscation - appellant/department has contended that adjudicating authority has erred in holding the seized goods deserved to release as the same is not liable to confiscation - HELD THAT:- The respondent/assessee has no where raised any objection about the search proceedings as well as panchnama proceedings conducted by the investigating team. From which it may be inferred that the said proceedings were conducted in transparent and fair manner - during the proceedings the physical stock was also verified and it was found excess against the entries of stock register. The whole proceedings were done in the presence of two independent witnesses and in presence of the employees of the respondent/assessee. Further, the statements of the Supervisor, Accountant and Authorized Signatory of the Firms were recorded under Section 70 of CGST Act, 2017 before the proper officer. The Supervisor of the Firm has stated in his voluntary statement that they did not maintain stock register and also did not prepare daily production slip and they used to note down the details in Kachhi Parchi. The same facts was admitted by Authorized Signatory of the Firms and brother of Partner of the Firms, in his statement. Thus, it is emerged that during the search proceedings the excess stock were found against the entry of stock register. Therefore, findings of the adjudicating authority that the unaccounted / excess stocks were not deliberately kept unaccounted is not tenable. Further, the respondent/assessee contended that the Supervisor were not aware about the fact position of stock and Authorized Signatory could not understand the question in correct prospective is also not acceptable - it is obvious that the assessee have not followed the procedures with regard to maintenance of proper record as provided in Section 35 of CGST Act and 56 of CGST Rules made thereunder hence he contravened the said Act and Rules made thereunder. This act of omission and commission on the part of assessee is nothing but to keep the unaccounted goods for removal the same clandestinely with intent to evade the proper tax liability. The respondent/assessee has emphasized that the excess stocks were found due to non updations of stock register and after obtaining photocopies of the seized records, the stock register was updated and accordingly it was found that there was no excess stocks rather it was slightly short - the investigating authority has rightly arrived the value of the said excess goods as the sale invoice price can not be relied as it was undervalued upto the 60% of the actual price of the sale. Moreover in view of the above facts, the recording of statement of the Partner Sh.Lalit Goyal would have not served the purpose for arriving the value as it is very much clear that the ‘Kachha Systems’were in place rather the proper recording of accounting systems of purchase, sale, production and stocks of the goods. The adjudicating authority has erred by holding that the seized goods is not liable for confiscation. Contrary to this view, the respondent/ assessee has contravened the provisions of Section 35 of CGST Act read with Rule 56 of CGST Rules,2017. Therefore, the seized goods is liable to confiscation in terms of Section 130 of CGST Act and Rules made thereunder - confiscation upheld. Levy of penalty upon the Firm under Section 122(1) (xvi) and (xviii) of CGST Act, 2017 - HELD THAT:- In view of above discussions and findings it has established that the assessee did not maintained the proper books of account at the time of search proceedings hence he violated the provisions of Section 35 of CGST Act and Rules made thereunder - the penalty under Section 122(1) (xvi) and (xviii) of CGST Act, 2017 upon the assessee is very well attracted in the instant case - penalty upheld. Levy of penalty upon Partner of the Firm under Section 122(3) of CGST Act, 2017 - HELD THAT:- On going through the section 122(3) of CGST Act it may be seen that this particular penalty is imposable on the person who aids or abets any of the offences specified in clause (i) to (xxi) of sub section 1 of Section 122 of CGST Act. From the perusal of records it has been established that the Partner of the firm is the key person who deals all the affairs of the Assessee firm. Therefore, he can not be escaped from any offence of the firm and it can not be imagined that without his involvement such kind of violations of the provisions of the act or rules made thereunder would be happened. Further, the Partner has himself admitted the said offence in his statement recorded under the provisions of law - penalty upheld. Appeal allowed - decided in favor of Revenue.
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