2021 (4) TMI 553 - Commissioner - GST

Clandestine removal - allegation that the goods kept unaccounted with intent to evade payment of CGST/SGST by supplying the same clandestinely - books of accounts/stock register maintained at the time of search or not - excess stock were found against the entries made in books of accounts/stock register at the time of search or not - value of seized goods are correct or not - Confiscation - penalty u/s 122(1)(xvi) and (xviii) of CGST Act, 2017. Whether books of accounts/stock register maintained at the time of search and whether excess stock were found against the entries made in books of accounts/stock register at the time of search and whether seized goods is liable for confiscation or not in terms of Section 130 (1) (ii) (iv) of CGST Act and rules made thereunder? - HELD THAT - There is no doubt that in fact the books of accounts of the assessee/respondent was not available in the premises of the assessee/respondent at the time of search in the respective premises and it was lying only in the 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 admission/acceptance of value of Proprietor and he incorrectly re-determined the value of seized goods. Therefore, the adjudicating authority has grossly erred in releasing the seized goods by taking value amounting to ₹ 2,74,767/- instead of ₹ 4,32,333/- whereas the entire seized goods (considering the value ₹ 4,32,333/-) should have been ordered to be confiscated as the said seized goods were unaccounted in violation of Section 35 of CGST Act read with Rule 56 of CGST Rules, 2017. Whether penalty is imposable upon the Firm/Assessee under Section 122(1)(xvi) and (xviii) of CGST Act, 2017 or not? - HELD THAT - It is 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, the penalty under Section 122(1) (xvi) and (xviii) of CGST Act, 2017 upon the assessee is very well attracted in the instant case. Confiscation of goods ordered - fine of ₹ 1,00,000/- imposed - penalty imposed under Section 122(1) (xvi) and (xviii) of CGST Act upon M/s Agarwal Sales, F1(a), Shri Khatu Shyamji Industrial Area, Reengus, Distt-Sikar. However, since the adjudicating authority has imposed penalty amounting to ₹ 13,730/- in the said section hence if it has been deposited by the assessee, the same may be appropriated. Appeal disposed off.

Issues Involved:
1. Whether books of accounts/stock register were maintained at the time of search and whether excess stock was found against the entries made in books of accounts/stock register at the time of search, and whether seized goods are liable for confiscation under Section 130(1)(ii)(iv) of CGST Act and rules made thereunder?
2. Whether the value of seized goods is correct or not?
3. Whether penalty is imposable upon the Firm/Assessee under Section 122(1)(xvi) and (xviii) of CGST Act, 2017 or not?

Issue-wise Detailed Analysis:

1. Maintenance of Books of Accounts and Confiscation of Goods:
The appellant/department argued that the taxpayer failed to produce any records related to the goods lying in the premises on the date of search, which is a violation of Section 35 of the CGST Act and Rule 56 of the CGST Rules, 2017. The respondent/assessee contended that the books of accounts were maintained in tally software in the premises of M/s Tirupati Plywood Industries and informed the search team accordingly. However, the search team overlooked this and seized the entire stock found during the search.

The adjudicating authority found that the books of accounts were not available at the premises of the assessee/respondent at the time of search, which justified the seizure of goods. The respondent admitted that some goods were found in excess of the recorded stock, attributing the discrepancy to inaccurate stock-taking or normal handling loss. The adjudicating authority concluded that the records were not properly maintained, and the excess goods found during the search were rightly seized and liable for confiscation under Section 130(1)(ii) and (iv) of the CGST Act, 2017.

2. Valuation of Seized Goods:
The appellant/department contended that the adjudicating authority erred in releasing seized goods valued at ?2,74,767/- while the respondent had admitted the value of seized goods as ?4,32,333/-. The respondent argued that the correct valuation of certain goods was communicated based on quantity and type of measurement, and the adjudicating authority had rightly taken the value of Mica Sheet at ?180/- per piece based on purchase invoices.

The adjudicating authority found that the respondent had largely accepted the valuation of the seized goods but contested the valuation of Mica Sheet. The adjudicating authority determined the value of Mica Sheet based on a few purchase invoices, which were not contemporaneous with the date of the search. The adjudicating authority concluded that the correct value of the seized goods was ?4,32,333/-, and the adjudicating authority had erred in releasing the goods valued at ?2,74,767/-.

3. Imposition of Penalty:
The respondent argued that no excess stock was found, and therefore, no penalty was leviable under Section 122(1)(xvi) and (xviii) of the CGST Act, 2017. The adjudicating authority found that the respondent did not maintain proper books of accounts at the time of the search, violating Section 35 of the CGST Act and the rules made thereunder. Consequently, the penalty under Section 122(1)(xvi) and (xviii) of the CGST Act, 2017, was applicable.

Conclusion:
The adjudicating authority set aside the order in original and passed the following orders:
1. Ordered the confiscation of seized goods amounting to ?4,32,333/- under Section 130(1)(ii) and (iv) of the CGST Act read with Rule 139 of the CGST Rules, 2017. Imposed a fine of ?1,00,000/- in lieu of confiscation of goods under Section 130(2) of the CGST Act, 2017, with an appropriation of ?25,000/- if already paid by the assessee.
2. Imposed a penalty amounting to ?77,820/- under Section 122(1)(xvi) and (xviii) of the CGST Act upon M/s Agarwal Sales, with an appropriation of ?13,730/- if already deposited by the assessee.

The appeal was disposed of in the above manner.

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