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TMI Blog2011 (7) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner, Mr. Dinesh Mehta, vehemently submitted that upon remand by the first appellate authority, learned CTO in the proceedings under section 77(8) of the Act in the impugned order dated September 9, 2002 found that excess stock of Rs. 3,23,364 was found in the category of sales tax paid goods on which tax cannot be levied on the present assessee, whereas, less stock was found on physical verification to the extent of Rs. 2,77,649 in the category of goods taxable at four per cent. He submitted that the difference in the stock found by the assessing authority is upon deduction of normal G. P. rate of 19.22 per cent from the total sale value of the goods found in the sales tax paid category of goods at the business place of the petitioner-as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not under sub-section (6), a penalty equal to the amount of the five times of the tax leviable on such goods or thirty per cent of the value of such goods, whichever is less ; and such authority or officer may release the goods, if seized, on payment of the penalty imposed or on furnishing such security for the payment thereof as it may consider necessary." Having heard the learned counsels, this court is of the opinion that the learned Tax Board has erred in upholding the penalty under section 77(8) of the Act on the stated reasons in the impugned penalty order of the assessing authority. The purpose of section 77(8) of the Act, as quoted above, which deals with inspection, search, seizure is obviously to check possible evasion of tax i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hands of the assessee, even if such excess stock was determined on the basis of sale value minus G. P. rate, it could have been a good case for the Revenue to impose such a penalty under section 77(8) of the Act. However, in view of there being no dispute that the alleged excess stock found at the time of survey was of sales tax paid category on which admittedly no further tax liability is attracted as goods are already tax paid, impugned penalty is not attracted. The theory that stock estimates can be arrived at by reducing general G. P. rate from the sale value has a caveat. The stocks in hand to be determined during surveys cannot be determined with precision with this method. Physical verification of stocks is the only reasonably pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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