STOCK VARIATION DEFECT in audit by the department

[SK Krishna]

Hello sirs/madam,

The dealer is an iron and steel wholesaler & distributor with large turnover . During the audit, the department arrived at stock difference/ stock variation defect between physical stock and book stock maintained. Physical stock value was arrived barely on eye estimation only. Please discuss appropriate CASE LAWS to file detailed objections.

Thanks you.

[KASTURI SETHI]

An eye estimation cannot be basis for booking an offence case on account of shortage of stock. There are so many case laws in assessee's favour. A few are as under :-

2018 (4) TMI 363 - CESTAT NEW DELHI STAR ALLOYS & CHEMICALS PVT. LTD. Versus COMMR. OF C. EX. & S.T., RAIPUR

2017 (10) TMI 1022 - CESTAT ALLAHABAD COMMISSIONER OF C. EX., KANPUR Versus GOOD EARTH STEEL PVT. LTD.

2017 (7) TMI 982 - CESTAT KOLKATA COMMR. OF C. EX., HALDIA Versus SHRI BADRINARAYAN ALLOYS & STEELS LTD.

2021 (12) TMI 958 - CESTAT KOLKATA AMBICA IRON & STEEL PVT. LTD. Versus COMMR. OF C. EX., CUS. & S.T., ROURKELA

Pl. also go through relied upon case laws.

[SK Krishna]

Dear kasturi seti sir,

Thanks for your wonderful support . As usual you are replies are always timely as well as to the point. Thank you very much sir.

AI Summary

Stock variation defect: eye estimation cannot justify penal action; tribunal precedents support contesting audit-based shortages.
Mere eye estimation of physical stock during a GST audit does not constitute reliable evidence to establish a stock shortage or support offence proceedings; assessees may challenge audit conclusions that rest solely on such visual counts and should rely on tribunal precedents that discredit departmental findings lacking proper documentary and verifiable physical verification.