TMI Blog2021 (4) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of the other unit i.e. M/s Tirupati Plywood Industries, the same fact admitted by the assessee/respondent in his submission also. Therefore, it was enough reason to believe to the search team to seize the goods which were lying at the search premises as the related records/ documents were not available - the investigating team has rightly seized the goods which were lying without any records which are required as per CGST and Rules. The records/books of accounts were not properly maintained by the assessee/respondent. Hence excess goods found during the search proceedings was rightly been seized by the search team and the same is also liable to confiscation under Section 130 (1) (ii) and (iv) of the CGST Act, 2017 - seized goods valued to ₹ 4,32,333/- is liable to confiscation in terms of Section 130 of CGST Act and rules made thereunder. Since, the goods has already been released by the adjudicating authority therefore, there are no other option but to impose fine in lieu of confiscation of released goods under Section 130(2) of CGST Act, 2017. Whether value of seized goods are correct or not? - HELD THAT:- The adjudicating authority has ignored the admissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent). 2. Brief Facts of the case:- 2.1 The officers of the Directorate General of GST intelligence, Jaipur Zonal Unit, C-62, Sarojani Marg, C-Scheme, Jaipur-302001 (hereinafter referred as DGGI‖) under the authority of Search Warrant dated 27.06.2019, issued by the competent authority conducted the search at the premises of M/s Agarwal Sales, F1(a) Shree Khatu Shayamji Industrial Area, Reengus, Distt-Sikar-332 404 (Raj) holding GSTIN:08AMGPB3637G1ZA on 27.06.2019 in presence of two independent witnesses, namely Sh. Sultan Singh Meena and Sh. Jagdish, and Sh. Sunil Kumar Jha, Worker of M/s Agarwal Sales, F1(a) Shree Khatu Shayamji Industrial Area, Reengus, Distt-Sikar. During the course of search the officers, inter alia, carried out the physical stock verification of finished goods i.e. (Plywood, Veneered Panels, Flush Doors found), against stock of finished goods, valued for ₹ 4,32,333/-found in excess of the recorded stock in violation of Section 35 of the CGST Act,2017 read with Rule 56 of CGST Rules, 2017 and seized the same under Section 67(2) of the CGST Act,2017 read with Rule, 139 of the CGST Rules, 2017, vide Panchnama dated 27.06.2019and recorded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of the CGST Act,2017 and the Rules made there under with an intent to evade payment of CGST/SGST. (iii) penalty should not be imposed upon Shri Mohit Bansal Proprietor of M/ s AS, under Section 122(3) of the CGST Act,2017 for his act of omissions and commissions. 4. Further, the adjudicating authority vide the impugned Order in Original No.03/GST/Demand/2020 dated 27.01.2020 has passed an order as under:- (i) Ordered to release the goods seized under GST INS 02 valuing ₹ 2,74,767.00(revised value) under GST INS 05; (ii) Ordered to confiscate the goods under Section 130(1) of the Act, read with Rule 139 of the Rules, valuing ₹ 76,275.00, found unaccounted and seized under GSTINS 02. However given an option to release the same under GST INS 05, on payment of redemption fine ₹ 25000.00 under Section 130(2) of the CGST Act 2017; The goods so released should be taken into account and can be cleared only after payment of appropriate tax; (iii) Confirmed the demand of ₹ 25,624.00 (CGST ₹ 12812.00 + SGST ₹ 12812.00) under section 73 ofthe CGST Act 2017, and ordered to recover from M/s Agarwal Sales, F 1 (a) Shree Khatu Shyamj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of (a) production or manufacture of goods; (b) inward and outward supply of goods or services or both; (c) stock of goods; (d) input tax credit availed; (e) output tax payable and paid; and (f) such other particulars as may be prescribed. Further, as per Rule56 (2) of the CGST Rules, 201 7 '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. However, during the course of search, the taxpayer has failed to produce any records related to the goods lying in the premises on the date of visit by DGGI officers dated 27.06.2019. That Shri Mohit Bansal, Prop. of the firm during his voluntary statement dated 19.12.2019, has perused the panchnama dated 27.06.2019 and appended his signatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted for in their records until the same were write off from their accounts after reversal of Cenvat Credit so availed. It is therefore; very clear that the assessee did not have any records regarding the goods seized which were unaccounted and liable for seizure and confiscation. 6. The respondent vide letter No. APPL/JPR/CGST/AL/76/VIII/2020/ 3656 dated 28.12.2010 were called upon to file a memorandum of cross objection against the appeal, within 45 days of receipt of this notice, filed by the department. The respondent submitted their memorandum of cross objection on 15.02.2021 which is as under:- There is no excess unaccounted stock of the goods on the date of search and therefore seizure of goods is invalid. A. l. At the time of search at the premises of assessee a worker named Shri Sunil Kumar Jha was present. During search when the search team enquired about the books of accounts of the assessee he told to the search team that the books of accounts are maintained by the accountant Shri Makahan Lal. The books of accounts of the assessee which was being maintained in tally software by the accountant was seized from the computer system of M/s Tirupati Plywood Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnama dated: 27.06.2019 and appended his signature in token of its correctness. Therefore, the action of taxpayer of non production of records related to the goods lying in the premises clearly indicates that the assessee has not maintained any stock register/documents. It was modus-operandi of the taxpayer for manipulating the accounts/records to evade the GST which itself indicate assessee's mens-rea. In this connection it is submitted that in Panchnama dated: 27.06.2019 the Intelligence unit has asked Shri Sunil Kumar Jha, worker of the assessee for physical verification of stock. Shri Sunil Kumar Jha in the said panchanama has informed to the Intelligence team that he do not know about any purchase and sale invoice of the said stock and also do not know the value of stock. On the basis of such reply by Shri Sunil Kumar Jha the Intelligence unit has considered the entire stock as kept for clandestine supply and seized the said stock found at the time of search. It is to be submitted further that the intelligence unit has not found any evidence/proof from which it can be proved that the assessee has kept the said goods for clandestine supply. It is further submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 4,32,333/-. However, the adjudicating authority has ignored the admission and acceptance of the value by the proprietor redetermined the value of seized goods. Thus, the adjudicating authority has grossly erred in releasing goods valued to ₹ 2,74,767/- while the taxpayer has already admitted the value of seized goods as ₹ 4,32,333/ Further apart from the stock of goods mentioned above in paraA.3 there were certain items which was in damaged condition and was lying as scrap. The above goods are in damaged /scrap condition and is having negligible realizable value. Being damaged goods the same was not part of the book stock. Since the above goods was not saleable as such in the market, it was lying in the premises to be used as firewood/ sale as scrap. Therefore, the above goods was not kept for the purpose of clandestine removal as alleged in the Departmental Appeal. The Department in its Appeal has contended that on being asked about not keeping of records in respect of unaccounted goods, Shri Mohit Bansal, Prop. Of the firm in his voluntary statement dated: 19.12.2019, has stated that most of these goods was their dead stock and he will try to submit detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d both the firms are located in the same area at Reengus. However, the search team did not consider the fact told to them that the books of the assessee is maintained at the computer lying in the premises of M/s Tiruptai Plywood Industries as the accountant of both the firms is common. Further the documents related to sale purchase file and other documents of the assessee were also found and seized during search which was inventorised at serial no. 18,20,21,26,28,30,31 of annexure C of INS-02 of M/s Tirupati Plywood Industries. Thus, before seizure of the goods the search team should have considered the above documents and books found during search. However, they have not provided any opportunity to verify the stock as per books of the assessee even though the books and documents were found and seized during search itself. Such approach of the search team was unjustified and arbitrary and therefore the OIO dated:27.01.2020 is correct in releasing the goods. It is further submitted that on the same day i.e. 27.06.2019, the same agency i.e. DGGI,JZU searched the premises of M/s Premier Plylam Marketing Co. VKI Area, Jaipur who is the dealer of the goods supplied by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, it is submitted that the correct value of stock seized is ₹ 3,51,042/-as stated by the adjudicating authority in its OIO dated27.01.2020 and by the assessee in its reply dated: 10.01.2020. However the goods seized was valued at ₹ 4,32,333/- as per the SCN but the stock of Mica was valued excessively and therefore the adjudicating authority has correctly valued at ₹ 3,51,042/- after verification of purchase bills. The release was made for the value of ₹ 2,74,767/- by the ld. Adjudicating authority in its OIO dated:27.01.2020 and the balance goods valued at ₹ 76,275/- was confiscated. Here the question is not of value but in quantity the stock was found short as mentioned above. Only certain items which are of damaged and dead stock was in excess for the reason that the same is having no realisable value and therefore, removed from the books. Hence there is no infirmity in the OIO releasing the goods and therefore, the departmental appeal is to be quashed. Since there was no excess stock of the goods found during search and the proper records and documents have been maintained by the assessee, no penalty is leviable. B.1. The departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stries and the same are as per the provisions of the COST Act. Further the purchase and sale entries were posted upto the date of search in relation to the stock items as evident from Para A.3 above. Hence the charge of omission and commission on the Proprietor of the assessee Shri Mohit Bansal is also not sustainable. D. Statutory procedure prescribed for communication of Show-Cause Notice under Rule 142(1) of CGST Rules have not been followed. 6. Personal hearing in the instant case in virtual mode through video conference was held on 22.03.2021. Sh. Virendra Porwal, Authorized Representative of the respondent appeared. During personal hearing he reiterated the submission of cross objections and explained in details. 7. From appellant/department side, none appeared for personal hearing and in this regard a letter dated 23.03.2021 has been received from Asstt Commissioner, CGST Division-Sikar therein it has been stated that due to technical reasons, this office was not able to attend the virtual hearing hosted on 22.03.2021 though link via Webex. It is further requested that the submission of this office may please be considered as submitted in appeal memo. 8. I have g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thinks fit: Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon : Provided further that the aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under sub-section (1) of section 129 : Provided also that where any such conveyance is used for the carriage 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able and paid; and (f) such other particulars as may be prescribed : Provided that where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business : Provided further that the registered person may keep and maintain such accounts and other particulars in electronic form in such manner as may be prescribed. RULE 139. Inspection, search and seizure. - (1) Where the proper officer not below the rank of a Joint Commissioner has reasons to believe that a place of business or any other place is to be visited for the purposes of inspection or search or, as the case may be, seizure in accordance with the provisions of section 67, he shall issue an authorisation in FORM GST INS-01authorising any other officer subordinate to him to conduct the inspection or search or, as the case may be, seizure of goods, documents, books or things liable to confiscation. (2) Where any goods, documents, books or things are liable for seizure under sub-section (2) of section 67, the proper officer or an authorised officer shall make an order of seizure in FORM GST INS-02*. RULE 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search team to seize the goods which were lying at the search premises as the related records/ documents were not available. Whereas, as per Section 35 it is mandatory at the part of every registered person shall keep/ maintain the books of accounts and records at his principal place of business, as mentioned in the certificate of registration. However, from the above facts it is very much clear that the records were not available in the said premises. Therefore, it is clear violation of Section 35 of CGST Act with read Rule 56 of CGST Rules, 2017. Therefore, I do not find any force in the contention of the assessee/respondent that the records/books of accounts were maintained/kept by him. Contrary to this it is proved that assessee/respondent has failed to produce any records related to goods lying in the premises on the date of search. Further, I find that the investigating team has rightly seized the goods which were lying without any records which are required as per CGST and Rules. Further, I find that the assessee/respondent has contended that the position of physical stock taken by the investigating team at the time of search was duly matched with the books of accounts. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mohit Bansal has himself admitted the value of seized goods vide his letter dated 13.12.2019 and 23.12.2019 the content of letter are as under:- Kindly take reference of my letter dated 13.12.19 communicating there incorrect calculations regarding goods seized on 27. 06.19 in my business premises during search by your office. Sir I wish to submit that in the above letter, we have wrongly calculated the value of four panel door sheet and mica sheet by considering their unit in square meters whereas these two items are sold on per piece basis as such the contents of this letter 13.12. 19 are also incorrect and correct value has been communicated by me at the time of tendering my statement on 19.12. 19 before you according to which the value of seized goods comes to ₹ 4,32,333/-.‖ In this connection, the assessee/respondent has submitted categorically in his cross objection that the Proprietor Sh,Mohit Bansal had submitted the correct valuation of certain goods on the basis of quantity and type of measurement. However, in the later para he emphasized that the Proprietor of the firm Sh. Mohit Bansal had also submitted the copy of certain purchase invoices of Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that since no excess stock found hence no penalty is leviable under Section 122(1) (xvi) and (xviii) of CGST Act, 2017. Further, he added that he has maintained the books of accounts as per provisions of the CGST Act. In this regard, I find that the detailed discussion on the issue of unaccounted/excess stock has already been pointed out at point No.1. 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. Accordingly, I find that the penalty under Section 122(1) (xvi) and (xviii) of CGST Act, 2017 upon the assessee is very well attracted in the instant case. Further in response to this office letter No. APPL/JPR/CGST/AL/76/VIII/2020/5004 dated 24.03.2021 concerned officer of the division has intimated vide his letter C.No.V- 19(44)Off/03/SKR/2020/825 dated 26.03.2021 that the assessee has deposited the following amount with respect to OIO No.03/GST/Demand/2020 dated 27.01.2020 the details are as under:- i) Point No.(ii) (vii) of Order Portion: ₹ 50,000/- deposited und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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