TMI Blog2021 (4) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. - 73 (MAA )CGST/JPR/2021 - - - Dated:- 24-3-2021 - (MANZOOR ALI ANSARI) ADDITIONAL COMMISSIONER (APPEALS) ORDER This appeal has been filed under Section 107 of the Central Goods and Service Tax Act, 2017 by The Assistant Commissioner(Review), CGST, Commissionerate, Alwar (hereinafter also referred to as the appellant or department also) in view of Order-in-Review No.95/Review/2020-21 dated 28.08.2020 passed by the Commissioner, Central Goods and Service Tax Commissionerate, Alwar under Section 107(2) of the Central Goods and Service Tax Act, 2017 against the Order in Original No.01/GST/Demand/2020 dated 27.01.2020 (hereinafter also referred to as the impugned order ) passed by The Assistant Commissioner, CGST, Division-G, Sikar (hereinafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sq. Mtr. valued at ₹ 96,86,453.00, which were liable to tax under the CGST Act,2017, and kept unaccounted, with intent to supply the same clandestinely and without payment of tax, to evade payment of CGST/SGST, and hence, liable to confiscation under Section 130 of the Central Goods and Services Tax (CGST) Act, 2017, seized the said goods under Section 67 of the CGST Aet,2017 vide GST INS-02. The seized goods were given under the order of prohibition to Sh. Parveen Goyal, Partner of M/s TPI under vide GST INS-03 dated 28.06.2019. 2.5 It has also been alleged in the notice that Shri Lalit Goyal, Partner of M/s SU, who also looks after day-to-day affairs of the firm, had consciously and deliberately indulged in activities of clandestine clearance/supply of taxable goods as he was found involved in acquiring, possession, removing, depositing, keeping, concealing, and dealing in goods, which he knew were liable to confiscation, and hence he rendered himself liable to penalty under Section 122(3) of the Act ibid. 2.6 The contention of Shri Lalit Goyal, Partner of the assessee tendered vide his letter dated 11.07.2019, made a request for release of the goods and submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engus, Sikar, Rajasthan 332404. However, given an option to the assessee to pay the penalty fifty percent of the tax determined, under Section 74(11) of CGST Act 2017, if the tax and interest payable thereon alongwith reduced penalty are paid within stipulated time of 30 days from the date of communication of this order. (v) Do not imposed penalty upon Sh. Lalit Goyal, partner of M/s Swastik Udyog, E-17 E-18, SKS Industrial Area, Reengus, Sikar, Rajasthan -332404;, under Section 122(3) of the CGST Act, 2017. (vi) Since the goods seized were not liable to confiscation, do not imposed penalty upon M/s Swastik Udyog, E-17 E-18, SKS Industrial Area, Reengus, Sikar, Rajasthan -332404 under Section 122(1)((xvi) (xviii) of the CGST Act. 5. The competent authority i.e. Commissioner, Central Goods and Service Tax Commissionerate, Alwar vide their Order-in-Review No.95/Review/2020-21 dated 28.08.2020 has reviewed the impugned Order in Original No.01/GST/Demand/2020 dated 27.01.2020 and found not proper and legal to the extent of not passing the order under Section 35 of the CGST Act, 2017 read with Rule 56(2) of CGST Rules, 2017 and directed the Assistant Commissioner(Review ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the taxpayer for manipulating the accounts/records to evade the GST which itself indicate assessee's mens-rea. [B] The adjudicating authority has erred in holding that the DGGI did not ask any question from Shri Lalit Goyal, Partner, to find out the pricing pattern of the seized goods. In this regard, Shri Praveen Goyal, Authorised Signatory of the assessee firm who is also partner of M/s Tirupati Plywood Industries ( TPI ), in his voluntary statement dated 28.06.2019 has accepted the facts disclosed by Shri Shankar Lal Choudhary, Manager of TPI and Shri Makkhan Lal, Accountant of M/s SU both dated 27.06.2019 where it was admitted that he value of goods to 40% for issuing of invoices and receiving of remaining 60% in cash through kaccha System in respect of supplies made from the factory premise. Since Shri Praveen Goyal is the key person in the both firms i.e. M/ s Swastik Udyog, Reengus M/s TPI, it appears that it was their set procedure to evade GST by not maintaining the stock register/ daily production records and cleared the goods clandestinely without payment of GST. These evidences were sufficient for the revenue to achieve reasonable belief that the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2020, the adjudicating Authority has erred in holding the goods deserved to release as the same is not liable to confiscation on the ground that statements of Shri Lalit Goyal were never recorded to find out the pricing pattern of the seized goods. As a matter of fact physical stock verification of the goods was conducted in presence of independent witnesses and Supervisor of the Firm. Statements of the Accountant, Shri Makkhan Lal and Shri Praveen Goyal, Authorised Signatory were also recorded on 27.06.2019 and 28.06.2019, respectively, wherein they all admitted the pricing pattern of the firm in their voluntarily tendered statement. The assessee have not submitted any evidence / documents regarding correct value of goods. Hence, conclusion drawn by the adjudicating authority that value worked out is unreasonable is not correct. Further, on the basis of valuation, it is incorrect to hold by the adjudicating authority in para 5.14 of the OIO that 'PLY' valued ₹ 96,86,453/- seized vide GST INS-2 dated 28.06.2019 is not liable to confiscation and deserved to be released. Only on the basis of valuation parameters, considering the seized goods not liable to confiscation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d these facts was admitted by the Supervisor, Accountant and Authorized Signatory (brother of partner) of the firm. Whereas, in para 5.4 of the OIO, the adjudicating authority, in contrary to the law has held that if the department had allowed the noticee to complete its books of accounts it could have been proved at that time only that there was no excess stock of goods as compared to stock as per books of accounts. [J] That the adjudicating authority has erred in not imposing penalty upon Shri Lalit Goyal, Partner, who look after the day to day affairs of the firm and continuously and deliberately indulged in activities of clandestine clearance /supply of taxable goods as he was found involved in acquiring, possessing, removing, depositing, keeping, concealing and dealing in goods which he knew were liable to confiscation. Thus, he is liable to be panel under Section 122(3) of the CGST Act, 2017. (K) That the adjudicating authority has grossly erred in finding made in para 5.14 of the impugned order regarding pricing of the goods which was duly adopted by the revenue on the facts disclosed by Shri Makkhan Lal accountant and accepted by Shri Praveen Goyal, Authorised Signato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the sale and finalise the terms conditions of sales with the parties was out of India at the time of search. After search Shri Lalit Goyal met several times with the officers of the Investigation unit and explained his version but his statement has also not been recorded by the Intelligence unit so far in the matter. The department has not considered the submission and the requests made by Shri Lalit Goyal, the partner of the assessee vide his letter dated 11.07.2019 and on the basis of finding of search issued the Show Cause Notice dated 23-12-2019 alleging that the assessee had excess stock of ₹ 96,86,453/- kept for clandestine supply. Accordingly, it is proposed in the SCN to seize the goods under section 67(2) of the Act read with Rule 139 of the Rules and to confiscate such goods under section 130 of the CGST Act, 2017 and to impose penalty u/s 122(1) (xvi) and (xviii) on the Appellant, and penalty u/s 1223) of the CGST Act on Shri Lalit Goyal the partner of the Appellant. In connection to the Show Cause Notice dated: 23.12.2019 the assessee has submitted a detailed reply on 10-01-2020 and additional submission dated: 17.01.2020 by countering and answering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, stock of 'Ply' was maintained up to 21.05.2019 in the tally accounting system of the Noticee and stock position upto this period was very much available in Noticee's records at the time of commencement of hearing proceedings on 27.06.2019. Therefore, what has been recorded in the panchnama dated 27/28.06.2019 and stated by Sh. Banwari Lal Sharma, in his statement dated: 27.06.2019, to the extent that the Noticee have not maintained the stock record/position of finished goods is factually found incorrect. That no doubts, at the time of visit of DGGI officers on 27.06.2019, the production records of Ply was recorded in the stock registers upto 21.05.2019. Further do not found any evidence which has been adduced in by the Noticee to establish and arrive at a logical conclusion that the unrecorded/excess stock was deliberately kept unaccounted to supply the same clandestinely and without payment of tax. That the verbal request made to the officers of DGGI to complete and update the stock position before commencement of physical stock verification was also not accepted in the case of Noticee. That it is observed from the case records that except detections of incomplet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut it no where alleged that the sale invoices and the bill vouchers seized from the factory of productions were in any way cannot be relied upon. Further the unaccounted goods which were allegedly seized on the basis of the admission made by Sh. Banwari Lal Sharma on the reasonable belief that these goods were not taken into account just to make convenient to the Noticee to supply the goods clandestinely and subsequently to accommodate the accounts in accordance with their ease. But to corroborate this view, no affirmative, tangible and reliable documents were unearthed from the premises to endorse the belief of the visiting team that the goods found allegedly unaccounted were intended to supply clandestinely which is inevitable to initiate punitive action against the Noticee. That the entire SCN is based on the alleged unaccounted book of accounts and the statements of an employees of the Noticee. As such, in the absence of essential/concrete evidence, proving the unaccounted goods were with intent to evade payment of tax, the proposed penalty on the Noticee under section 122(1)(xvi) (xviii) of the Act would not be justified. That the statement of Sh. Lalit Goyal who is in ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elligence team without giving any opportunity to update/complete the books of accounts, seized the entire goods of finished stock treating it as uncounted stock kept for clandestine supply, whereas the same was not un-accounted. The Department in its Appeal has contended that every registered person at his principal place of business shall keep and maintain a true and correct accounts of production of goods, inward and outward supplies of goods or services or both, stock of goods, input tax credit availed, output tax payable as per ection 3 5(1) of the CGST Act,2017 and Rule 56(2) of the CGST Rules,2017. However, the taxpayer has failed to maintain the account of stock in respect of goods received and supplied by him for the long time i.e. period of more than one month. That during the Panchnama proceedings Shri Banwari Lal Sharma, Supervisor of the firm, disclosed the facts that they did not maintain any stock register and no actual production entered in their records. Further Shri Parveen Goyal, Authorised Signatory and brother of Shri Lalit Goyal, Partner of the firm in his voluntary statement admitted the facts recorded in panchanama dated: 27/28.06.2019. From the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the accountant and the supervisor of the assessee it cannot be alleged that there was modus operandi of the assessee in keeping the goods unaccounted for the clandestine removal of such goods. More particularly when the document related to production, purchase and sale were found during search and the assessee requested to allow them to complete the books of accounts on the basis of documents found. Further so far as the department's contention that the facts disclosed by the accountant and supervisor of the assessee has been admitted by the authorised signatory Shri Parveen Goyal of the assessee is concerned, it is submitted that Shri Praveen Goyal could not understand the question in correct perspective. It is to be noted that the partner Sh. Lalit Goyal of the assessee after the search proceedings, vide his letter dated: 11.07.2019 has submitted that their books of accounts were incomplete as the entries of the production was pending to be passed in the books of accounts for certain period but now the entries in the books of accounts have been completed from the available information and also submitted the details of the stock as per the books of accounts which broad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e photocopies of the documents and records seized, the assessee completed the entries in the books of accounts considering the opening stock, purchases, consumption of raw material during the period, production on the basis of production sheet and sales made of the finished goods during the period 01.04.2019 to 27.06.2019. After completing the books, the assessee submitted the details of the book stock vide letter dated 11-7-19 to the Intelligence unit and requested to release the goods. However, the Intelligence unit did not consider the request and asked to make request for provisional release of the seized goods with the Jurisdictional officer in CGST Commissionerate. After search and after obtaining photocopies of the records seized during search, the assessee completed its books of accounts and supplied the details of the stock as per updated books to the Intelligence unit vide letter dated 11- 7-19. On completion of the books of accounts from the bills, production records found in search, it is noticed that the stock of goods as per books of accounts on the date of search is slightly higher than the physical stock taken by the search team of Intelligence unit. For ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence which has been adduced in the notice to establish and arrive at a logical conclusion that the unaccounted/excess stock was deliberately kept unaccounted to supply the same clandestinely and without payment of tax . It is evident from the above facts that in addition of unaccounted stock of ₹ 96,86,453/- found during search, a stock of ₹ 7,96,867/- already been cleared by them clandestinely. In this connection it is submitted that due to incomplete books of accounts at the time of search which was, also stated during search and requested to allow to complete the same but not accepted by the intelligence team, the assessee could not submit the actual position of book stock. It does not mean that the assessee has not accounted for the production and stock of the goods with intention to evade payment of GST and for the purpose of clandestine removal of those goods. The assessee at the time of search itself was having all the sales invoices and purchase invoices of the raw material which was resumed during search. No evidence was found during search to prove that the assessee has made any clandestine removal of goods from its factory premises and supplied any goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of undervaluation of the goods collected and accepted in the statements of Shri Makkhan Lal Accountant of the firm and Sh. Parveen Goyal, Authorised Signatory brother of the partner who were quite aware of these facts, hence the findings of the adjudicating authority deserves to be set aside being it not legal and proper within the purview of law. In this connection it is submitted that the intelligence unit has valued the stock of finished goods by multiplying the sale price mentioned in the sale invoice by 2.5 for the reason that in the statement given by the accountant Shri Makhan Lal of the assessee they has stated that sale invoice is issued at 40% price. This is not acceptable as the statement were taken under duress. Further the authorised signatory Shri Parveen Goyal in his voluntary statement dated: 19.12.2019 at the time of appending his signature on the panchnama and admitting the facts of Panchnama dated 27/28.06.2019 has not agreed with the valuation of the goods seized in the business premise of the assessee. Further the partner Shri Lalit Goyal is the person who finalise the sale price and other terms and conditions of the sale' and that person was outside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is incorrect. There is no basis for treating the invoice price at 40% of the actual sale price. No evidence in this respect was found in search. Merely relying on the statement given during search of Supervisor Shri Banwari Lal Sharma and accountant Shri Makkhan Lal, who do not know about sale value of the goods and also not concerned with the sale value and more particularly the statement was taken at the back of the partner Shri Lalit Goyal, is incorrect and unjustified. No opportunity was given for the cross examination and no statement was recorded on Shri Lalit Goyal even after pointing out of the above fact. Further the intelligence team neither interrogated the main person Shri Lalit Goyal who looks after the sale nor made any independent enquiry in the market. The market rate of the goods manufactured by assessee can be enquired and actual sale price can be ascertained. If the Intelligence unit has made any such enquiry, it should have been mentioned and if no enquiry is made then they should first make such enquiry from the market of the trade. The assessee is ready to furnish the cost price of the goods manufactured by them based on the standard of the industry and comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which are related to the business of the assessee. The Intelligence unit should have allowed the opportunity to complete the books of accounts based on documents found during search as has been allowed in case of M/s Premier Plylam Marketing Co.. Further they should have recorded the statement of main partner of the assessee Shri Lalit Goyal in this regard when it was specifically pointed out that the work of sales and dealing with the parties is made by him only. Further it is also a fact on record that after the search proceedings, Shri Lalit Goyal has visited number of time to the office of intelligence unit and clarified the matter but the Intelligence unit chosen not to record his statement and issued the SCN solely based on the statement of supervisor of the assessee who are not aware about the actual facts. Hence the departmental appeal is not sustainable and liable to be quashed. In view of above the OIO is correct in stating that despite of availability of ample time from the date of visit till issuance of show cause notice dated: 23.12.2019, sh. Lalit Goyal, Partner of the firm and responsible for overall supervision of M/s SU has not been interrogated/questioned, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Hence the seizure of the goods is unjustified. Therefore, the findings of the adjudication authority is correct and the ground of appeal is incorrect and therefore the appeal is liable to be quashed. The Department in its Appeal has further contended that the adjudicating authority has also erred by non recording of major facts of the case related to the search at residential premise of Shri Lalit Goyal, wherein the visiting officers found unaccounted Indian currency amounting to ₹ 11,10,000/- for which Smt. Usha Goyal could not produce any plausible reply in respect of said Indian Currency in the said premises, and accordingly on reasonable belief, that the said Indian currency is sale proceed of the goods liable to GST which were removed clandestinely was seized by DGGI officers. This fact also corroborate the version of Sh. Makhan Lal, Accountant That M/s Swastik Udyog purchase 40% of raw material through Bill and remaining 60% in cash through Kaccha System but the adjudicating authority did not mentioned these facts in the OIO. In this connection it is submitted that the currency found during search was not unaccounted as the same was as per the cash book maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xviii) of the CGST Act,2017. B.2. In this connection it is submitted that the section in which penalty is proposed relates to failure to keep, maintain or retain books of accounts and other documents in accordance with the provisions of the Act and for supply, transport or the goods which are liable to be confiscated. The relevant provisions of the CGST Act are reproduced here in below for ready reference: Section 122 of the CGST Act, 2017; Penalty for certain offences: 122.(1) Where a taxable person who- (xvi) fails to keep, maintain or retain books of accounts and other documents in accordance with the provisions of this Act or the rules made thereunder; (xviii) supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act; As per the above provisions of the Section 122( 1) of the CGST Act, the penalty is leviable if the assessee fails to keep, maintain and retain books of accounts as per the provisions of the Act and supply, transport or store the goods which are liable to be confiscated. As per the facts and submissions made in detail in e preceding paras, it can be noted that the assessee has maintained the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee because the stock found during search is not excess as alleged in the Show Cause Notice/Departmental Appeal. Rather the stock found is slightly short than the book stock which is due to the reason of inaccurate stock taking / normal manufacturing loss. When there is no excess stock found in search no question of confiscation of goods arises. Even the seizure of the goods was not valid. Therefore, no penalty under clause (xviii) for supplying, transporting and storing goods liable to confiscation is imposable upon the assessee. Hence the OIO dated 27.01.2020 dropping the penalty under section 122(1)(xviii) is correct and to be sustained and consequently the departmental appeal is to be dismissed. It is further submitted that section 122 provides levy of penalty in case of certain offences. In the case of assessee, no offence is proved/established. Mere delay in completing the books is not an offence liable for penalty. The assessee has not evaded any tax. There is no intention of tax evasion. The assessee has maintained the proper books of accounts required as per the CGST Act Rules. The stock records are duly maintained in the tally system where in the production en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of goods and the partner Shri Lalit Goyal is liable to penalty. As submitted in detail in the earlier paras that the Supervisor Shri Banwari Lal Sharma has nothing to do with price and the stock of the goods. It is Shri Lalit Goyal who finalise all these things hence the allegation of omissions and commission on the basis of the statement of Supervisor Shri Banwari Lal Sharma of the assessee is not sustainable. Without examining Shri Lalit Goyal who is partner in the firm and the main person looking after the business activity, cannot be made guilty of offence for which he can be penalised as per section 122(3). Therefore, no penalty is leviable on him under section 122(3) of the CGST Act. Shri Lalit Goyal has not carried out any offence specified in section 122(3) and therefore no penalty can be levied on him. Though he looks after the day to day affairs of the firm but he was not deliberately indulged in activities of clandestine clearance/ supply of goods. No excess stock was found which was liable to confiscation and therefore no offence is proved on his part. Hence the charge of omission and commission on the Partner Shri Lalit Goyal of the assessee is not sustainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortal. Rule 142(1) of the COST rules is reproduced here in below for ready reference: 142. Notice and order for demand of amounts payable under the Act.- The proper officer shall serve, along with the (a) notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130, a summary there of electronically in FORMGST DRC-01, (b) statement under sub-section (3) of section 73 or sub-section (3) of section 74, a summary thereof electronically in FORM GST DRC-02, specifying therein the details of the amount payable. In the present case the department has not uploaded the Show Cause Notice dated: 23.12.2019 on the electronic portal but communicated to the assessee via Post. Hence the prescribed procedure has not been followed. Therefore, the Show Cause Notice issued without following the provisions of Rule 142(1) of the COST Rules is void ab-initio and consequently the departmental appeal is liable to be quashed. The respondent has cited case law in their defence:- Hon'ble High Court of Madhya Pradesh dated: 19.11.2020 in writ petition No. 16117/2020 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the rules made thereunder with intent to evade payment of tax; or (v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122. (2) Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer 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 conveya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period specified in the notice issued under sub-section (3) thereof, the proper officer may direct that such person shall be liable to pay a penalty of one hundred rupees for each day of the period during which the failure to furnish such return continues : Provided that the penalty imposed under this section shall not exceed five thousand rupees SECTION 35. Accounts and other records. -(1)Every registered person shall 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 : 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than one month and it is in violation of Section 35 of CGST and Rule 56 of CGST Rules, 2017. This facts has been supported by statement of Supervisor of the Firm wherein he disclosed that they did not maintain any stock register and no actual production entered in their records and further the same facts were admitted by the Authorized Signatory and brother of the Partner in his voluntary statement. Further added that the action of non maintenance of records were modus-operandi of the taxpayer/assessee for manipulating the accounts/records to evade the GST which indicate the mens-rea of the assessee. Contrary to the appellant plea, the respondent (Assessee/Taxpayer) submitted the stocks found during search were not excess/unaccounted stock as alleged. Rather the stock found was slightly short than the books stock which was due to the reason of inaccurate stock taking/ manufacturing process loss. Further, the respondent submitted that at the time of search proceedings merely his books of account were incomplete. However, intelligence team neither allow him to complete the books of accounts nor considered updated position of books of accounts as submitted by him at later st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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. Further on going through the submissions, I find that 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. In this context, I find that the adjudicating authority highly rely on the submission of the respondent/assessee and concluded that the seizure of the excess stock was unwarranted. Accordingly he did not confiscate the seized goods rather ordered the release of goods and demanded the tax on short stock of the goods. However, I observed that the adjudicating authority did not examine the whole case records rather he heavily rely on the respondent/assessee submissions whereas he should have examined all the records related to the case i.e. Balance Sheet, purchase invoice, sales invoice and production re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court in the case of Naresh J. Sukhawani v. Union of India reported in 1996 (83) E.L.T. 258 has also held that the statement recorded under Section 108 of the Customs Act, 1962 made before the Customs officials, is not a statement recorded under Section 161 of Cr.P.C. Therefore, it is a material piece of evidence collected by the Customs officials under Section 108 of the Customs Act, 1962 and it can be used as substantive evidence connecting the petitioners with the contravention of Customs Act. Since similar provisions has been provided in Section 70 of CGST Act, 2017 hence in view of above judicial pronouncement it may be concluded that statement recorded under the said provisions constitute substantive piece of evidence and can be relied in adjudication proceedings - Even if such statement is retracted or diluted in subsequent statement, it can be appreciated in light of other circumstances and evidence. Further I also agree with the appellant/department plea that the adjudicating authority has not recorded the major fact that the unaccounted Indian Currency Amounting to ₹ 11,10,000/- were found on the residential premises of the Partner of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... none of the clause of Section 122(3) are applicable in the instant case. Further he added that since penalty under Section 122(1) and Section 125 of CGST Act has been imposed on the firm thus imposing penalty on the partner of the Firm is not justified. In this context, 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 above discussion and findings and 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. In view of the above findings and discussions, I set aside the order in original passed by the adjudicating authority and pass the following order accordingly:- 1- I order to con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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