TaxTMI 
TaxTMI 
2020 (12) TMI 790
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....2020.Although the petitioner has filed written arguments, no written arguments have been filed by the respondents. 4. Facts, in brief, are that the petitioner is engaged in manufacture of lead ingots falling under GST Tariff Chapter Heading No. 7804. They are duly registered under the GST Act. On 6.1.2018 Anti Evasion Department of GST, Greater Noida visited the factory premises of the petitioner for verification of the records. 5. The petitioner claimed that petitioner had produced all the Returns of TRANS-1. It is alleged that on 10.1.2018 another team from the same department visited the factory premises and passed an order of detention detaining 12,979 metric tonnes of entire stock of the petitioner. It is alleged that the said stock included the stock manufactured prior to enforcement of GST. The petitioner claimed that it produced all the records, however, the records of GST were not available in the factory premises as the same were kept at head office of the petitioner situated at Ghazipur. It is further stated that subsequently the records were produced on various dates on 16.1.2018, 20.1.2018, 23.1.2018 and 31.1.2018. It is stated that despite production of th....
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....arty clearly violated Section 35(1) of the CGST Act 2017. (ii) There were huge stock of raw materials, work in progress and finished goods as detailed given above, in the factory premises. As the party could not produce any mandatory accounts and other records, the officers had all reasons to belief that the said goods have been stored by the party only to clear them without payment of GST as applicable." 8. The petitioner claimed to have filed its reply to the show cause notice denying the charges and that any verification of the stock was conducted. It was further submitted that no document showing unaccounted cash was found. The petitioner also denied its liability and requested for dropping of the show cause notice and proposed penalty. 9. It is also on record that aggrieved against the show cause notice dated 21.5.2018, the petitioner preferred a writ petition before this Court being Writ Petition(Tax) No. 334 of 2019, which was disposed of by this Court on 15.3.2019 directing the respondents to decide the issue within a period of three weeks in accordance with law. In pursuance to the direction issued by this Court, the Additional Commissioner, GST & Central Ex....
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....pt at the principal place of business, which is situated at Delhi and was also disclosed in the registration certificate issued under the GST. He further argues that even assuming without admitting the charges levelled against the petitioner the quantum of penalty that could have been imposed for violation of not keeping the documents at the manufacturing premises could not exceed Rs. 10,000/- inasmuch as no exercise for quantifying the "tax evaded" has ever been carried out nor is there any allegation with regard to evasion of tax even in the show cause notice.He argues that in terms of the provisions of GST, Section 12 clearly specifies that the liability to pay the tax on the goods arises only at the time of supply. He further stresses that Section 12 (2) clearly specifies that the time of supply of goods shall be the earlier of the following namely ; the date of issue of invoice by the supplier or the date on which the supplier receives the payment with respect to such supply and argues that there is neither any allegation with regards to issuance of invoices nor is there any allegation with regard to receiving of the payment. He further argues that even the confisc....
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....ead Office which located at Ghazipur, Delhi. (e) On being enquired about production, clearance, Cenvat and input credit related documents, he informed to the anti evasion officer that all the documents related to production and Cenvat are generally kept at their Head Office, located at Ghazipur, Delhi. They generally do not keep any production related document at their Dadri unit." 14. It is further recorded that Section 35 (1) of the CGST Act requires that "Every Registered person shall keep and maintain records as mentioned in Clause (a) to (f ) of Section 35 at the principal place of business as mentioned in the certificate of registration", and as the party could not produce the mandatory records, the officers have 'reason to believe' that the petitioner is engaged in continuous process of production and supply and thus, goods were liable to be confiscated under Section 130 (1) of the CGST Act. It was also recorded in the show cause notice that principal place of business, as disclosed in the registration certificate, was shown as F-1A, SDF NSEZ, NOIDA. 15. It is interesting to note that in Paragraph No. 11 of the show cause notice, it is recorded that pa....
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....her recorded that in terms of the provisions of Section 35 (6), the authority is empowered to determine the amount of tax payable on the goods of the services, which are not accounted for. It is however, a common ground that no such exercise as envisaged under Section 35 (6) read with Section 73 or Section 74 has ever been undertaken nor the adjudication with regard to the amount was ever being done. 18. Thus, the Adjudicating Authority, after recording that the party has failed to maintain the records as required under Section 35 (1) of the Act, held that the goods were liable to be confiscated and proceeded to pass order to the following effect: "(1) I order for confiscation of raw materials, Work in progress materials and finished goods [earlier seized on 04.04.2018 vide Form GST INS-02 (Order for Seizure) dated 04.04.2018] totally valued at Rs. 1,07,99,43,351/- and involving Central GST of Rs. 9,71,94,902/- & State GST of Rs. 9,71,94,902/- under Section 130 of the Central GST Act, 2017 &Section 130 of the Uttar Pradesh GST Act, 2017 read with Section 35(6) of the CGST Act, 2017 & Section 35(6) of the Uttar Pradesh GST Act, 2017 and Section 74(1) of the CGST Act; 201....
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....accordance with Section 122 of the CGST Act? Statutory provisions applicable to the facts of the case. 21. Section 35 (1) CGST Act, Rules 56 & 57 of the CGST Rules, 2017 as well as Section 122 and Section 130 of the CGST Act are being quoted for ready reference: Section 35 (1)of the CGST ACT, 2017 "(1) Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of- (a) production or manufacture of goods; (b) inward and outward supply of goods or services or both; (c) stock of goods; (d) input tax credit availed; (e) output tax payable and paid; and (f) such other particulars as may be prescribed: Provided that where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business: Provided further that the registered person may keep and maintain such accounts and other particulars in electronic form in such manner as may be prescribed." Section 35 (6) of the CGST ACT, 20....
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....here required under the provisions of this Chapter; (c) the complete address of the premises where goods are stored by him, including goods stored during transit along with the particulars of the stock stored therein. (6) If any taxable goods are found to be stored at any place(s) other than those declared under sub-rule (5) without the cover of any valid documents, the proper officer shall determine the amount of tax payable on such goods as if such goods have been supplied by the registered person. (7) Every registered person shall keep the books of account at the principal place of business and books of account relating to additional place of business mentioned in his certificate of registration and such books of account shall include any electronic form of data stored on any electronic device. (8) Any entry in registers, accounts and documents shall not be erased, effaced or overwritten, and all incorrect entries, otherwise than those of clerical nature, shall be scored out under attestation and thereafter, the correct entry shall be recorded and where the registers and other documents are maintained electronically, a log of every entry edite....
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....ay be maintained in electronic form and the record so maintained shall be authenticated by means of a digital signature. (16) Accounts maintained by the registered person together with all the invoices, bills of supply, credit and debit notes, and delivery challans relating to stocks, deliveries, inward supply and outward supply shall be preserved for the period as provided in section 36 and shall, where such accounts and documents are maintained manually, be kept at every related place of business mentioned in the certificate of registration and shall be accessible at every related place of business where such accounts and documents are maintained digitally. (17) Any person having custody over the goods in the capacity of a carrier or a clearing and forwarding agent for delivery or dispatch thereof to a recipient on behalf of any registered person shall maintain true and correct records in respect of such goods handled by him on behalf of such registered person and shall produce the details thereof as and when required by the proper officer. (18) Every registered person shall, on demand, produce the books of accounts which he is required to maintain unde....
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....nput tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder; (viii) fraudulently obtains refund of tax under this Act; (ix) takes or distributes input tax credit in contravention of section 20, or the rules made thereunder; (x) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act; (xi) is liable to be registered under this Act but fails to obtain registration; (xii) furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently; (xiii) obstructs or prevents any officer in discharge of his duties under this Act; (xiv) transports any taxable goods without the cover of documents as may be specified in this behalf; (xv) suppresses his turnover leading to evasion of tax under this Act; (xvi) fails to keep, maintain or retain books of account and other documents in accordance with the provisio....
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.... he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder; (d) fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an inquiry; (e) fails to issue invoice in accordance with the provisions of this Act or the rules made thereunder or fails to account for an invoice in his books of account, shall be liable to a penalty which may extend to twenty-five thousand rupees. Section 130 of CGST Act 2017: Confiscation of Goods or Conveyances and Levy of Penalty (1) Notwithstanding anything contained in this Act, if any person- (i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (ii) does not account for any goods on which he is liable to pay tax under this Act; or (iii) supplies any goods liable to tax under this Act without having applied for registration; or (iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or ....
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.... confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government. 22. From the perusal of the scheme of the Act and the statutory provisions what emerges is that Section 9 of the CGST is the charging section which provides for levy of tax on supplies of goods or services. Section 12 of the CGST Act provides for time on which the tax are to be paid and elaborates the "time of supply of goods" and Section 12 (2) clearly provides that the "time of supply of goods" is the date of issue of invoices or the date of receiving of the payment in respect to such supplies. 23. Section 35 (1) clearly provides that all the registered person are required to keep and maintain at the principal place of business a true and correct account of things specified in Clause (a) to (f). The Second proviso to Section 35 (1) ,Rule 56 and Rule 57 make it further necessary to keep the said documents as specified in Clause (a) to (f) in the electronic form. 24. Section 35 (6) of the said Act provides that in the event the person fails to keep their accounts for the goods or the services in accordance with the provisions of Sub-section 1of Section 35, the prop....
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....ondition that the grounds relied upon in the said statement, except the ground of fraud, or any wilful-misstatement or suppression of facts to evade tax, for periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice. (5) The person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. (6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder. (7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable. (8) Where any person char....
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....der Section(i) of Section 130 (1); Further,there is nothing on record to establish that the petitioner did not account for any goods on which he is liable to pay tax under the Act (as required to attract Section 130 (1)(ii); There is nothing on record to the effect that any supplies were made without having applied for registration (as required to attract Section 130 (1)(iii); It has not been established that there was any contravention of any provision or any Rules with an "intent to evade payment of tax"(as required to attract Section 130 (1)(iv). There is no averment of using any conveyance (as required to attract Section 130 (1)(v). 31. Thus, none of the ingredients which are required for confiscation existed in the present case and thus, the confiscation itself was wholly arbitrary and illegal. Search and Seizure. 32. Coming to the provisions of Section 67 which confers the powers of inspection, search and seizure. It is necessary to record the provisions of Section 67 of the CGST Act, 2017 33. A perusal of the said section makes it clear that proper officer should have "reasons to believe" that there is any suppression of any transaction relating to su....
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....ther documents in accordance with the provisions of this Act or the rules made thereunder; (vi) fails to collect tax in accordance with the provisions of sub-section (1) of section 52, or collects an amount which is less than the amount required to be collected under the said subsection or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52; (xvii) fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act; (vii) takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder; (xviii) supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act; (viii) fraudulently obtains refund of tax under this Act; (xix) issues any invoice or document by using the registration number of another registered person; (ix) takes or distributes input tax credit in contravention of section 2....