NON PRODUCTION OF BOOKS OF ACCOUNTS IN WAREHOUSE

[Sadanand Bulbule]

Dear experts

The inspecting authority authorised under Section 67[1] of the GST Act inspects the declared warehouse wherein he finds some quantity of taxable goods not covered by valid documents. However in respect of such goods, the relevant documents like E-way bill and Tax invoices are kept in the main office of the taxpayer which precisely match the description of goods found in the warehouse and they are duly accounted for in the books of account both by the supplier and the recipient.

But the inspecting authority is refusing to accept such documents saying that it is an attempt to evade tax and initiates proceedings under Section 74[5] of the Act proposing to levy tax, interest and penalty.

Is such proceeding under Section 74[5] of the Act tenable in the eye of law? Any supporting rulings on this ?

AI Summary

Deeming of unaccounted goods can trigger tax proceedings under assessment provisions, despite records held at the principal office.
The statutory deeming provision permits the officer to treat goods not accounted for at a place of business as supplied, enabling assessment under the tax demand provisions; however when tax invoices, e way bills and accounting entries at the principal office match the goods found in a declared warehouse, treating those goods as "not accounted for" is factually and legally contestable, making SCNs based on mere non production at the warehouse vulnerable, though departmental alternate positions may still lead to contested adjudication and appeals.