2018 (6) TMI 176 - AT - Central Excise

Partner's Involvement in Issuing Bogus Invoices Results in Rs. 50,000 Penalty Upheld

The Tribunal upheld a penalty of Rs. 50,000 imposed on the appellant as a partner in a firm involved in issuing bogus invoices, despite the main firm ... Penalty on partner - bogus invoices without supply of the goods to 15 manufacturers/traders in NCR - whether penalty can be imposed on the partner when the main firm has been penalized? - Held that:- The appellant was fully and deeply involved in the fraud of issuing of bogus invoices by M/s Isha Enterprises. This is evident from the detailed statements of Sh. Gulshan Bhatia, the main partner, describing the modus operandi adopted by them to issue such bogus invoices without supply of any goods to 15 manufactures/traders in NCR and sending the goods to some other parties without any bills - the appellant has not only admitted his culpability in the statement dt. 15.02.2011, but also had knowledge of everything and owned up his responsibility in the statement and volunteered to deposit Rs. one crore to compensate revenue loss. The statements of appellant and other partners have not been retracted at any stage. Since the appellant had a crucial role in the offence with the assistance of the other partners and was actively involved in the fraud, imposition of penalty is justified in the facts and circumstances of the case - appeal dismissed - decided against appellant. Issues:- Whether penalty can be imposed on a partner when the main firm has been penalized.- Culpability of the appellant in issuing bogus invoices without supply of goods.Analysis:Issue 1: Penalty on PartnerThe appellant appealed against an order confirming a penalty of Rs. 50,000 imposed on him as a partner in a firm alleged to have issued bogus invoices. The appellant argued that since the main party had already been penalized, no penalty should be imposed on him. The appellant relied on various case laws to support his argument. However, the Revenue contended that the appellant had full knowledge of the fraudulent activities and voluntarily offered to compensate for the revenue loss. The Tribunal noted that the legal issue of imposing a penalty on a partner when the main firm is penalized was settled by the Hon'ble Bombay High Court, which upheld the imposition of a penalty on the partner even when the firm had been penalized. The Tribunal agreed with this proposition and upheld the penalty imposed on the appellant.Issue 2: Culpability of the AppellantThe Tribunal found that the appellant was deeply involved in the fraud of issuing bogus invoices without supplying goods. Statements from the main partner and another partner indicated the appellant's active role in the fraudulent activities. The appellant admitted his culpability, had knowledge of the offenses, and even volunteered to deposit a significant amount to compensate for the revenue loss. The Tribunal emphasized that the appellant's involvement was evident from various statements that were accepted as admissible evidence. Considering the appellant's crucial role in the offense and active participation in the fraud, the Tribunal concluded that the imposition of the penalty was justified based on the facts and circumstances of the case.Therefore, the Tribunal upheld the order of the Commissioner (Appeals) and dismissed the appeal filed by the appellant.