Unaccounted stock

[Rajesh Kumar]

Sir/Madam

During the gst search, the department seized some goods for which party could not produce any invoices of purchase. Please inform how they can calculate tax on these goods as gst is applicable on the sale of goods when party will sale these goods he will pay .
Can department charge GST on the purchase made without bills ? If yes, Can they charge interest and penalty there on ?

[KASTURI SETHI]

Sh.Rajesh Kumar Ji,

After completion of investigation, the department will issue SCN to both supplier and the buyer. Statement of both will be recorded. Thereafter, line of action will be decided by the department. Tax to be paid will be mentioned in the SCN. The seller and the buyer both will get an opportunity to defend themselves.

Yes. The department can demand and recover GST payable on the purchase made without bills. Purchasing goods without bills is a very serious offence. Interest can be charged under Section 50 of CGST Act and penalty is imposable under Section 122 or 132 of CGST Act, if charges are established.

[Rajesh Kumar]

Sir , what if party ready to pay GST on the goods seized by the Department? What will be the method of calculation to quantify the GST payble?

[Amit Agrawal]

I agree with Shri Kasturi Sethis Ji!

Jus to add: Section 67 (6) of the CGST Act, 2017 states as follows: The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be.

With regards to calculation of tax-liability, various factual aspects needs to be looked at and also, depending upon the outcome of the investigation by Dept.

[KASTURI SETHI]

Tax will be paid on market value of the goods seized. I agree with the views of Sh.Amit Agrawal Ji.

[Rajesh Kumar]

Sir, on MRP products, calculation for GST amount should be in reverse method as MRP is inclusive of all taxes. Is any discount at any stage of sale is required to less from the the basic price ? Let's MRP is 100 then @18%GST , the basic value comes to ₹ 84.75 and GST is 15.25. Is this ₹ 15.25 is required to pay on the seized goods or any other method of calculation?

[KASTURI SETHI]

What are goods seized by the department ? It is necessary to know for correct reply.

[KASTURI SETHI]

In case the goods are under MRP, even after admissible abatement, the value is inclusive of GST.

[Shilpi Jain]

At the most there can be a penalty for purchasing goods without invoice. How can department demand tax from the recipient on that? He has not supplied it. Levy provisions are not attracted..

Instead if you can share details of the supplier department can take appropriate action . However if it's a transaction to defraud revenue the consequences can be unimaginable.

Suggest you consult a expert consultant in case you are genuine

[KASTURI SETHI]

The recipient and the supplier both are at fault. I agree with the reply of Madam Shilpi Jain.

AI Summary

GST liability on unaccounted goods may be demanded from buyer and seller, with interest and penalties possible.
Departmental seizure of goods without invoices can lead to show-cause notices against supplier and recipient, recovery of GST from the purchaser, charge of interest for delayed tax, and imposition of penalties where offences are established. Seized goods may be provisionally released on bond and security or on payment of tax, interest and penalty. Valuation for tax purposes is by market value; for MRP goods the MRP is treated as GST-inclusive and tax is calculated by reverse-working, subject to admissible abatement and factual investigation.