TMI Blog2020 (12) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... er was empowered to determine the liability of payment of tax in terms of the powers conferred under Section 35 (6) after resorting to the procedure as established under Section 74 of the Act - Although in terms of the provisions of Section 35 (6), the unaccounted goods are deemed to be supplied however, determination and quantification of the tax on the said deemed supply has to be done in accordance with Section 73 or Section 74of the Act - A perusal of Section 73 and 74 makes it clear that a show cause notice is bound to be served prior to determination of the tax leviable on the deemed supply whereas in the present case no such notice is available on record and it is common ground that apart from the said proceedings, no other proceedings have been initiated and concluded under Section 73 or 74 of the Act. Confiscation of goods - Section 130 of the Act - HELD THAT:- In the present case, even if it is admitted, for the sake of arguments, that the documents were not maintained at the registered office or the other place of business, there is no finding to the effect that any supply was made with an intent to evade payment of tax as is required under Section(i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned orders dated 15.1.2020 and 27.1.2020 (Annexure No. 5) is set aside insofar as it relates to confiscation of goods and imposition of penalty in excess of ₹ 10,000/-, as the confiscation has been set aside, there is no question of payment of redemption fine - the total penalty imposed upon the petitioner is quantified at ₹ 10,000/- - Appeal allowed in part. - Writ Tax No. - 360 of 2020 - - - Dated:- 17-12-2020 - Hon'ble Pankaj Bhatia, J. For the Petitioner : Anil Prakash Mathur For the Respondent : A.S.G.I.,B.K.Singh Raghuvanshi,Krishna Ji Shukla ORDER 1. Heard Sri A.P. Mathur, counsel for the petitioner, Sri B.K.S. Raghuvansi, counsel for the respondents and perused the record. 2. Petitioner has filed the present writ petition challenging the order passed by the Additional Commissioner GST, Gautam Buddh Nagar being the order dated 27.1.2020 as well as the Appellate Order dated 15.1.2020, whereby the appeal filed by the petitioner has been dismissed. As the Tribunal as provided for under the GST Act has not been constituted and in absence thereof the party cannot be left remediless as such the present petition has been filed. 3. By me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 of CGST Act, 2017 Section 130 of Uttar Pradesh GST Act, 2017, read with Section 35(6) of the CGST Act'2017 Section 35(6) of the Uttar Pradesh GST Act'2017 and Section 74(1) of the CGST Act 2017 Section 74(1) of the Uttar Pradesh GST Act'2017. (ii) Penalty should not imposed upon them under Section 122(1)(xvi) and 122(1)(xvii) of CGST Act, 2017 read with Section 122(1)(xvi) and 122(1)(xviii) of Uttar Pradesh GST Act, 2017. (iii) Personal penalty should not imposed upon Shri Raman Gupta, Director of M/s Metenere Limited, Village Bheel Akbarpur, Main GT Road, Dadri, under Section 122 (3) (a) of the CGST Act 2017 read with Section 122 (3) (a) of the Uttar Pradesh GST Act 2017. 6. Petitioner Company and its Director to the show cause notice were called upon to file their written submissions within 30 days. 7. A perusal of the shows cause notice makes it clear that the main allegations that emerged from investigation were recorded as under:- (i) The party i.e. M/s Metenere Ltd, were not maintaining the records/accounts related to input tax credit, production, inward and outward supply or goods, output tax payble and paid etc, which are man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , present writ petition has been preferred as the Tribunal envisaged under the GST Act has not be constituted. 11. Sri A.P. Mathur, counsel for the petitioner extensively has drawn my attention to the provisions of CGST Act particularly Section 35, Section 122 and Section 130 of the said Act to impress that the allegations levelled were wholly baseless inasmuch as it was throughout the case of the petitioner that all the records were maintained at the principal place of business of the petitioner, which is situated at 138, East Delhi-110096, which was duly mentioned in the registration certificate also. He further argues that even, at the factory premises, the documents in the electronic form were stored in the computer, however, the same could not be given to the respondent authorities on their visit as internet was not functional on the said date. Subsequently, the said records were produced on various dates as indicated in the writ petition. He further argues that there is no allegation or averment with regard to evasion of duty nor has any exercise been conducted by the department to establish and ascertain the duty evaded. He further argues that the said search occurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. He, thus, justifies that the orders passed against the petitioner do not call for any interference in exercise of powers under Article 226 of the Constitution of India. 13. A perusal of the show cause notice, which is filed as Annexure No. 1, reveals that on the visit by the officers of the Department on 10.1.2018, it was informed to the officers that all the documents related to production and Cenvat are generally kept at their Head Office located at Ghazipur, Delhi. Paragraph 3 of the show cause notice is quoted hereinbelow: 3. Consequently, Shri Ajay Kumar Agarwal in his statement recorded on 10.01.2018 before the Superintendent (Anti Evasion), CGST Central Excise, Gautam Budh Nagar under Section-70 of the CGST ACT'2017 (RUD-3), interalia, stated that: (a) He is working in the factory since 2014 as General Manager, HR. (b) He informed that Sh. Ranjeet Singh Yadav is the Unit Head of Dadri Unit, who looks after day to day work of the factory and Sh. Manish Goyal is the Director of the unit. (c) He informed that Sh. Ranjeet Singh Yadav is absent today and he is the immediate senior most person of the unit. (d) On being asked about Taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at this stage. 16. After the filing of the reply, Additional Commissioner being an adjudicating authority duly recorded that the documents, as were required to be maintained as specified under Section 35, were not maintained, even under Rules 56 and 57, the documents were required to be maintained electronically and assessee is required to produce the relevant records on being asked to do so and recorded and that the petitioner failed even to produce and submit required accounts before the adjudicating authority during the personal hearing held on 20.7.2018, 1.11.2018 and 8.1.2019. 17. In view of the submission made before the adjudicating authority, he further recorded that party through its letter dated 6.5.2019 had submitted computer print outs of ten sheets of the monthly summary of various goods, however, the adjudicating authority was not satisfied with the said summary and recorded that no accounts pertaining the production or manufacture were made available and thus, it was recorded that the party has failed to produce the records and to justify the various figures as disclosed in the ten computer sheets produced before the adjudicating authority. Considering the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST Act, 2017 and UPGST Act, 2017) on the grounds mentioned hereinabove. The adjudged dues shall be paid by the party forthwith. 19. The petitioner preferred an appeal before the Appellate Authority. The Appellate Authority, once again, after referring to Section 35 of the CGST Act read with Rules 56 and 57 of the CGST Rules, recorded that it was mandatory for the appellant to have maintained the records of production at the principal place of business/additional place which they failed to do so. Thus, he proceeded to uphold the order of the adjudicating authority to the effect that appellant has failed to maintain the records as required to be maintained under Section 35 (1) of the CGST Act read with Rule 56 and 57 of the said Rules. 20. On the basis of the material available on the record and the arguments advanced, the point of determination that arise for consideration are; (i) Whether the respondents were justified in recording that the petitioner-appellant has failed to maintain the records as required to be maintained under Section 35 (1) of the CGST Act read with Rules 56 and 57 of the CGST Rules? (ii) Whether the order of confiscation as passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund vouchers. (2) Every registered person, other than a person paying tax under section 10, shall maintain the accounts of stock in respect of goods received and supplied by him, and such accounts shall contain particulars of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample and the balance of stock including raw materials, finished goods, scrap and wastage thereof. (3) Every registered person shall keep and maintain a separate account of advances received, paid and adjustments made thereto. (4) Every registered person, other than a person paying tax under section 10, shall keep and maintain an account, containing the details of tax payable (including tax payable in accordance with the provisions of sub-section (3) and sub-section (4) of section 9), tax collected and paid, input tax, input tax credit claimed, together with a register of tax invoice, credit notes, debit notes, delivery challan issued or received during any tax period. (5) Every registered person shall keep the particulars of (a) names and complete addresses of suppliers from whom he has received the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax paid on receipts or on supply of goods or services effected on behalf of every principal. (12) Every registered person manufacturing goods shall maintain monthly production accounts showing quantitative details of raw materials or services used in the manufacture and quantitative details of the goods so manufactured including the waste and by products thereof. (13) Every registered person supplying services shall maintain the accounts showing quantitative details of goods used in the provision of services, details of input services utilised and the services supplied. (14) Every registered person executing works contract shall keep separate accounts for works contract showing (a) the names and addresses of the persons on whose behalf the works contract is executed; (b) description, value and quantity (wherever applicable) of goods or services received for the execution of works contract; (c) description, value and quantity (wherever applicable) of goods or services utilized in the execution of works contract; (d) the details of payment received in respect of each works contract; and (e) the names and addresses of supplie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout issue of any invoice or issues an incorrect or false invoice with regard to any such supply; (ii) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder; (iii) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; (iv) collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; (v) fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51, or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax; (vi) fails to collect tax in accordance with the provisions of sub-section (1) of section 52, or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Any registered person who supplies any goods or services or both on which any tax has not been paid or short-paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilised,- (a) for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty of ten thousand rupees or ten per cent. of the tax due from such person, whichever is higher; (b) for reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty equal to ten thousand rupees or the tax due from such person, whichever is higher. (3) Any person who (a) aids or abets any of the offences specified in clauses (i) to (xxi) of sub-section (1); (b) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder; (c) receives or is in any way concerned with the supply of, or in any other manner deals w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon. (3) Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in subsection (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance. (4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard. (5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government. (6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession. (7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice. (2) The proper officer shall issue the notice under subsection (1) at least six months prior to the time limit specified in sub-section (10) for issuance of order. (3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax. (4) The service of statement under sub-section (3) shall be deemed to be service of notice under sub-section (1) of section 73, subject to the condition t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6), the unaccounted goods are deemed to be supplied however, determination and quantification of the tax on the said deemed supply has to be done in accordance with Section 73 or Section 74of the Act. 28. A perusal of Section 73 and 74 makes it clear that a show cause notice is bound to be served prior to determination of the tax leviable on the deemed supply whereas in the present case no such notice is available on record and it is common ground that apart from the said proceedings, no other proceedings have been initiated and concluded under Section 73 or 74 of the Act. Confiscation of goods. 29. Now, coming to the provisions of Section 130 of the Act which empowers the confiscation of the goods and levy of penalty. Clause (i) to Clause (v) of Section 130 (1) are the events which can trigger the initiation and conclusion of the confiscation proceedings. 30. In the present case, even if it is admitted, for the sake of arguments, that the documents were not maintained at the registered office or the other place of business, there is no finding to the effect that any supply was made with an intent to evade payment of tax as is required under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered under this Act but fails to obtain registration; (ii) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder; (xii) furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently; (iii) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; (xiii) obstructs or prevents any officer in discharge of his duties under this Act; (iv) collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; (xiv) transports any taxable goods without the cover of documents as may be specified in this behalf; (v) fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51, or deducts an amount which is less than the amount required to be deducted u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irregularly, or the refund claimed fraudulently, whichever is higher . 37. Thus, from a plain reading, it is clear that the penalty imposable for the offences specified in Column A above is ₹ 10,000/- or the amount of tax evaded whereas for the offences specified in Column B , the penalty can be ₹ 10,000/-only as in the said case there is no question of tax evasion. 38. The facts of the present case makes it clear that even if the allegations of the department, as adjudicated and confirmed in an appeal are accepted to be true, the offence committed by the petitioner would fall under the offence specified in Column B above for following reasons; firstly, the only allegations are that the petitioner has not maintained the Book of Accounts as are required under the Act and the Rules and secondly the penalty has been imposed holding the Petioners conduct in violation of Section 122 (1) (xvi) and (xvii) of CGST Act read with Section 122(1) (xvi) (xvii) of UP GST Act and thirdly, no exercise for quantification of the tax evaded has been done in pursuance to the powers conferred under Section 35 (6) read with Section 73 or 74 of the Act, as such, I have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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