TMI Blog2021 (2) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... that they had purchased perfume/compound from M/s. Gupta Company, Delhi and M/s. Kelkar Company. Regarding excess/unaccounted stock of perfume/compound valued at ₹ 15,79,200/- found unaccounted during search on 10-11-2017, no plausible explanation regarding their procurement/non-accountal of the same in their records/books of account was put forward by the appellant neither during the time of search nor afterwards. Sh. Ashok Agarwal, Director of the appellant company who was looking after the day-to-day affairs of the company and also personally supervised daily activities also admitted the unaccounted stock of perfume/compound and agreed to pay the applicable tax. Further, he has abetted and assisted the clandestine manufacture and removal of taxable goods by acquiring possession, removing, depositing, keeping, concealing and dealing in goods which he knew were liable to confiscation. The appellants have acted intentionally in order to avoid payment of CGST/SGST and did not maintain proper record of the stock of raw material perfume/compound found excess stored in their residence premises, as required under Rule 56 of the CGST Rules, 2017. Further, they did not file m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , H-20A, RIICO Industrial Area, Kukas, Teh-Amer, Distt-Jaipur-302028 (Rajasthan) (hereinafter also referred to as the appellant ) holding Central Excise Registration No.AAGCM4747FEM001/ GSTIN : 08AAGCM474F1ZC are engaged in the manufacture of Scented Betel Nut product known as Supari falling under Tariff Item 2106 90 30 of the first schedule to the Central Excise Tariff Act, 1985/GST Tariff. 2.2 A search operation was conducted on 10-11-2017 by the officers of Jaipur Zonal Unit of the Directorate General of GST Intelligence (DGGI), Jaipur at the factory premises of M/s. Marie Products Pvt. Ltd., situated at Plot No. H-20A, RIICO Industrial Area, Kukas, Tehsil Amer, Jaipur-302028 and residences of the Directors situated at Plot No. 41, Gupta Garden, Behind Amer Hotel, Tilak Marg, Govind Nagar (West), Jorawar Singh Gate, Amer Road, Jaipur and other various premises. 2.3 During the course of search at the residence of Director M/s. MPPL, certain incriminating documents/records relevant to investigation indicating evasion of Central Excise duty and CGST/SGST were recovered and seized. The physical stock of the Raw Material i.e. Perfume/Compound of M/s. MPPL was also lying at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. MPPL could not submit any plausible reply/document between 10-11-2017 to 15-11-2017 in respect of detained goods, therefore, Panchnama dated 15-11-2017 was drawn in the residence at Plot No. 41, Gupta Garden, Behind Amer Hotel, Tilak Marg, Govind Nagar (West), Jorawar Singh Gate, Amer Road, Jaipur of Director M/s. MPPL, wherein the detained goods were procured without having any valid document/invoice and the same were to be used in the manufacture and supply of finished goods without payment of appropriate tax. The above goods were seized through GST INS-02 dated 15-11-2017 by the officers under Section 67(2) of the CGST Act, 2017 read with Rule 139 of CGST Rules, 2017 on the reasonable belief that the said unaccounted perfume/compound, were meant for clandestine manufacturing of their final product i.e. scented betal nuts and removal without payment of CGST/SGST and the same were liable to confiscation under Section 130 of the CGST Act, 2017. The seized goods were handed over to Sh. Akash Agarwal, s/o Sh. Ashok Agarwal under Supardnama dated 15-11-2017 for safe custody. 2.6 Statement of Sh. Ashok Agarwal, Director M/s. MPPL was recorded on 2-5-2018 under Section 14 of Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of Director M/s. MPPL intentionally in order to avoid of CGST/SGST did not maintain record of the stock of perfume/compound as detailed in INS-02 dated 15-11-2017 and found excess stored in their residence premises, as required under Rule 56 of the CGST Rules, 2017. They did not file monthly/periodically returns in respect of the said goods procured and stored in their factory premises as required under the law. They did not maintain stock details of the aforesaid goods in the stock register and did not file monthly GSTR-1 and GSTR-3B returns as these raw material were procured without bill/invoice and intended for manufacture of finished goods to be cleared without payment of tax and the finished goods were intended for clandestine removal without payment of CGST/SGST. 2.11 Sh. Ashok Agarwal, Director, M/s. MPPL in his statement dated 2-5-2018 and during pachnama proceedings on 10-11-2017 have admitted the unaccounted stock of perfume/compound, but he could not put forward any plausible reply for the non-accountable of these in their books of account/records. Accordingly, a Show Cause Notice C. No. DGGSTI/JZU/INT/CE/02/ 2017/1442, dated 11-5-2018 was issued proposing co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed under Section 67(2) of the CGST Act, 2017 read with Rule 139 of the CGST Rule, on 15-11-2017 and valued at ₹ 15,79,200/-, subsequent of Detention Memo dated 10-11-2017, liable for confiscation under the provisions of Section 130 of the CGST Act, 2017 read with Rule 139 of CGST Rules, 2017. (A.2) The investigation has alleged that the perfume/com-pound were detained on 10-11-2017 as the appellant were not maintaining proper records of stock of raw material. In the detained electronic gadgets the appellant was also maintaining all the accounts in Tally. In the SCN it was wrongly mentioned that no document/record, regarding stock, was being maintained by the appellant in the factory. While recording statement of Shri Ashok Aggarwal on 11-11-2017 in the factory premises of the appellant, the DGGI in question number 5 of his statement, it has referred that the appellant were maintaining accounts of stock in the computer. Further, they also forcibly made him to mention that they were also selling the goods without tax invoice. The statement of Shri Ashok Kumar were recorded by using coercive measures. However, the appellant retracted his st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the complete stock, irrespective of their entries in the books of accounts, was unlawful since only the alleged excess stock was required to be seized by the investigation. In view of the above, the Hon'ble Additional Commissioner (Appeals) is beseeched to set aside the impugned order. (B) PANCHNAMA PROCEEDINGS DATED 10-11-2017, 15-11-2017 ARE UNLAWFUL ON VARIOUS SCORES : (B.1) Search Panchnama in legal matters remains the main document and it leads to achieve the motto of justice. But in the present case the whole panchnama dated 10-11-2017 and 15-11-2017 are based on illegal/baseless premises and misinterpretation of the evidences to hold the appellants unlawfully liable to pay huge amount of Central Excise/GST, which is not due on them. During the panchnama proceedings the appellants were forced to deposit the Central Excise duty without extending them any chance to defend themselves. The meticulous study of the panchnama other evidences will overtly establish that how the things were manipulated during the investigations and the innocent taxpayers i.e. appellants were subjugated to accept al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed significant quantum of documents (As per Annexure A to the Panchnama) which contained the complete business proceedings of the years of the appellant. However, in this Show Cause Notice, neither any document has been relied upon by the investigation nor the non-relied upon documents have been returned to the appellant. The investigation could not make out any mala fide intent of the appellant from the documents/equipments resumed during the panchnama proceedings. This fact is enough to establish that the documents/equipments resumed from the premises did not carry anything unlawful and unaccounted. In the detained electronic gadgets the appellant was also maintaining all the accounts in Tally. In the SCN it has been wrongly mentioned that no document/record, regarding stock, was being maintained by the appellant. The DGGI wrongly unlawfully resumed the documents/equipments from the premises without examining the facts and further wrongly alleged that it did not contain any stock position. (B.2.3) The Panch witnesses did not offer their personal search when they left the premise after search : As per Section 100 of Cr PC, after the comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not rely in the SCN. (C.2) Further, the appellant had submitted the stock position in writing on 13-11-2017 (Annexure-3 details of stock) to the DGGI immediately after the detention, but the DGGI did not acknowledge the same on record and wrongly converted the detention into seizure. The stock position submitted by the appellant contained every minute details and also reasons for shortage/excess (if any). However, the DGGI has not relied upon that submission and violated the principle of natural justice. (D) STATEMENT DATED 2-5-2018 OF SHRI ASHOK AGGARWAL, DIRECTOR OF MSPPL, RECORDED UNDER SECTION 14 OF THE CENTRAL EXCISE ACT, 1944 AND SECTION 70 174 OF CGST ACT, 2017: (D.1) Statement of Shri Ashok Aggarwal were also recorded under Section 14 of the Central Excise Act, 1944 and Section 70 174 of CGST Act, 2017 on 2-5-2018. (D.2) In the statement dated 2-5-2018, Shri Ashok Aggarwal tendered that the flavourant/compound lying at the premises Gupta Garden belong to M/s. Marie Products Pvt. Ltd., and building belongs to Shri Asho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Government or tax not collected under Section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher. 122(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 with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder; (d) fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an inquiry; 125. Any person, who contravenes any of the provisions of this Act or any rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with Section 10A of U.P. Trade Tax Act, 1948 - Object of statute, language of relevant section and nature of penalty are relevant factors to be considered - Prevention of misuse of registration certificate is object of Section 10(b) of U.P. Trade Tax Act, 1948 but words falsely represents used as against wrongly represents - Use of words falsely represents indicating that offence under Section 10(b) ibid comes into existence only when dealer acts deliberately in defiance of law or is guilty of contumacious or dishonest conduct - Burden on Revenue to prove existence of circumstances leading to offence for imposing penalty under Section 10A ibid - Prosecution provided for breach of any provision as per heading in Section 10A ibid - Mens rea is an essential ingredient for penalty under Section 10(b) read with Section 10A ibid in view of language used in section and nature of penalty provided - Sections 10(b) and 10A ibid . [paras 8, 17, 18, 22] Penalty - Imposition of - Factors to be considered while imposing penalty - Object of statute, language of relevant section and nature of penalty are relevant factors to be considered for imposition of pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder. In the instant case, there is no allegation regarding receipt or supply of service, which made him liable for penalty under the Act ibid. Accordingly, this provision is not applicable. (F.6) Section 122(3)(d) deals with, if a person fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an inquiry. In the instant case, there is no allegation regarding non-appearance before the authority in compliance of summons. Accordingly, this provision is not applicable. (F.7) Thus, none of the provisions of Section 122(3) are applicable in the present case. Hence the proposal in the SCN for imposition of penalty under Section 126(3) on Shri Ashok Aggarwal are clearly unsustainable. (F.8) Moreover, the penalty under Section 122(1) and Section 125 of the Central Goods and Services Tax Act, 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the 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 sub-section (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 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the judicial forums superior to them in hierarchy. (H.3) In this regard, the appellant relies on the following decisions of the Hon ble Supreme Court : (H.3.1) A three Judge Bench of Hon ble Supreme Court in the case of South Central Railway Employees Co-operative Credit Society Employees Union v . B. Yashodabai and others [(2015) 2 SCC 727)] Union of India v . Topland Engines Pvt. Ltd . - 2010 (253) E.L.T. A17 (S.C.), the Hon ble Supreme Court while dismissing the revenue appeal upheld the decision of the Gujarat High Court reported at 2006 (199) E.L.T. 209 (Guj.) = 2008 (9) S.T.R. 331 (Guj.) ( Topland Engines Pvt. Ltd v Union of India ). The Hon ble Supreme Court in the case of IDL Industries Ltd. v . Commissioner of Central Excise Customs reported at 2016 (337) E.L.T. 496 (S.C.) Commissioner v . Jain Vanguard Polybutlene Ltd. - 2015 (326) E.L.T. A86 (S.C.) Commissioner v . Jain Vanguard Polybutlene Ltd. reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2017. Also given an option to pay in lieu of confiscation a fine of 2,00,000/- (Rs. Two Lakhs) under Section 130(2) of CGST Act, 2017 and Two Lakhs under Section 130(2) of Rajasthan GST Act, 2017 and imposed a penalty amounting to ₹ 1,42,128/- in terms of Section 122(1)(xvi) and (xviii) and a penalty of ₹ 25,000/- in terms of Section 125 of the CGST Act, 2017 on the appellant. Also imposed a penalty of ₹ 1,42,128/- in terms of Section 122(1)(xvi) and (xviii) and a penalty of ₹ 25,000/- in terms of Section 125 of the Rajasthan GST Act, 2017 on M/s. Marie Products Pvt. Ltd., H-20A, RIICO Industrial Area, Kukas, Tehsil Amer, Jaipur- 302028 and also imposed a penalty amounting to ₹ 25,000/- under Section 122(3) and penalty of ₹ 25,000/- under Section 125 of the CGST Act, 2017 on Shri Ashok Agarwal, Director of M/s. Marie Products Pvt. Ltd., H-20A, RIICO Industrial Area, Kukas, Tehsil Amer, Jaipur-302028. 7. On going through the content of the show cause notice, statements recorded on 2-5-2018 under Section 14 of Central Excise Act, 1944 read with Section 70 174 of CGST Act, 2017 of Shri Ashok Agarwal, Director of the appellant as mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cceptable at this stage and it is an afterthought. 9. In view of the above, it is clear that the appellants have acted intentionally in order to avoid payment of CGST/SGST and did not maintain proper record of the stock of raw material perfume/compound found excess stored in their residence premises, as required under Rule 56 of the CGST Rules, 2017. Further, they did not file monthly/periodically return in respect of the said goods procured and stored in their factory premises as required under the law. They did not maintain stock details of the aforesaid goods in the stock register and did not file monthly GSTR-1 and GSTR-3B returns which also shows that these perfume/compound were procured without any valid documents and intended for manufacture of finished goods to be cleared without payment of tax and the finished goods were intended for clandestine removal without payment of Tax. 10. As per Section 35 of the CGST Act, 2017 and Rule 56 of the CGST Rules, 2017 that every assessee shall keep and maintain proper records, on a daily basis, in a legible manner indicating the particulars regarding description of goods procured, produced or manufactured, opening balance, quanti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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