TaxTMI 
TaxTMI 
2021 (6) TMI 40
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....tore, 25 Dudu Bagh, Near Mayank Cinema, Loha Mandi, S.C. Road Jaipur-302001 holding GST Registration No. 08ACWPK9035H1ZO are engaged in the trading and supply of M.S Angle, M.S. Channel, M.S. Shape, M.S. Section, M.S. Beam, M.S. Bar, M.S. Flat etc., falling under the Chapter of 72 of CGST Tariff. 2.2 Acting upon an intelligence, that M/s. Taj Iron Store, Jaipur were evading Tax by way of availing Input Tax Credit, fraudulently, merely on the strength of invoices, without actual receipt of goods, principal place of business premise of M/s. Taj, was searched on 13-9-2018 by the officers of Directorate General of Goods & Services Tax Intelligence (DGGI in short), Jaipur Zonal Unit, Jaipur under Panchnama proceedings, in presence of independent panch witnesses and Shri Mohammed Riyaz Khan, Proprietor of M/s. Taj Iron Store. 2.3 During the Panchnama proceedings, Shri Mohammed Riyaz Khan, Proprietor, M/s. Taj Iron Store informed that the said premise i.e. 25, Dudu Bagh, Near Mayank Cinema, Loha Mandi, S.C. Road Jaipur-302001 is their retail shop and mostly cash sales are performed from this place and their wholesale sales are undertaken from their godown situated at S.P. 636,....
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....8-9-2018, Shri Mohammed Riyaz Khan, Proprietor of M/s. Taj Iron Store submitted, while applying for release of aforementioned seized goods that the assessee himself informed about the said godown, where the impugned goods have been seized; that the assessee maintains regular books of account and he entered all its purchases and sales in their books of account; that the said premise was taken on rent from M/s. Taj Industries and the rent of the same was paid through cheque/NEFT; that the assessee issued invoices on which address of godown premise has been printed; that they have tried to upload amendments but could not do so due to some technical issues; that there was no mala fide intention of the assessee at any stage; that they have now added the godown premise as their additional place of business by amending their registration certificate and therefore, seized goods may be released, provisionally. 2.9 Subsequently, the impugned goods were provisionally released by the Additional Commissioner, Central Goods and Services Tax and Central Excise Commissionerate, Jaipur vide Provisional Release Order dated 20-9-2018, issued from File No. IV(6)207/AE/JPR/2018 against fulfilling....
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....of CGST/SGST did not add their additional place of business situated at S.P. 636, A3, Road No. 6, V.K.I Area, Jaipur in their GST Registration Certificate. 2.16 From the above, it appeared that M/s. Taj Iron Store, 25 Dudu Bagh, Near Mayank Cinema, Loha Mandi, S.C. Road Jaipur have contravened the provisions of Sections 22 (read with Rule 11 of CGST Rules, 2017), 35, 37, 38 & 39 of the CGST Act, 2017 and Rules 56 & 61 of the CGST Rules, 2017 by storing dutiable goods at an unregistered premise, without any authority and also by wrongly accounting for seized goods in their books of account and also not shown the same properly in periodical returns filed by them with the sole intent to evade payment of applicable GST, therefore, the said seized goods as detailed in GST INS 02 to Panchnama dated 13-9-2018, drawn at the premise of M/s. Taj Iron Store and which were lying at plot No. S.P 636, A3, Road No. 6, V.KI. Area, Jaipur and totally valued at Rs. 5,53,10,446/- were appeared to be liable for confiscation under Section 130 of the CGST Act, 2017 read with Rule 139 of the GST Rules, 2017. M/s. Taj Iron Store have thus appeared rendered themselves liable to penalty under Section ....
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....nety Nine Lacs Fifty five Thousand Eight Hundred and Eighty only) in terms of Section 122(1)(xvi) and Section 122(1)(xviii) of the CGST Act, 2017 and corresponding provision of SGST Act, upon M/s. Taj Iron Store, 25, Dudu Bagh, Near Mayank Cinema, Loha Mandi, Sansar Chandra Road, Jaipur. (iii) Imposed a Penalty of Rs. 25,000/- (Rupees Twenty Five Thousand only) under Section 125 or the CGST Act, 2017 upon M/s. Taj Iron Store, 25, Dagh, Near Mayank Cinema, Loha Mandi, Sansar Chandra Road, Jaipur. (iv) Imposed a Penalty Rs. 25,000/- (Rupees Twenty Five Thousand only) in terms of Section 122(3)(a) of the CGST Act, 2017 upon Shri Mohammed Riyaz Khan, Proprietor of M/s. Taj Iron Store. (v) Also imposed a Penalty Rs. 25,000/- (Rupees Twenty Five Thousand only) under Section 125 of the CGST Act, 2017 upon Shri Mohammed Riyaz Khan, Proprietor of M/s. Taj Iron Store. 4. Being aggrieved with the impugned Order in Original No. 1- 02/Dem/GST/AC/DIV-C/2020-21, dated 5-5-2020, passed by the Assistant Commissioner, Central Goods and Services Tax Division-C, Jaipur, the appellant has filed the appeal on the following grounds which may be summarized as under :- A. &nb....
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....s Jaipur'. A sample ledger is enclosed herewith to authenticate the contention of the applicant. This also affirms that the applicant never carried mala fide intent to evade tax. The seizure deserves to be vacated on this score as well. A.2.3 Purchase Invoices : The sample purchase invoices are also enclosed, which show the address of the Godown of the applicant as SP 636, Road No. VKI Area. Jaipur and all the invoices have been duly accounted for Had there been any mala fide intent of the appellant, the address of the godown would not have been there at the invoices. The fact affirms the contention of the applicant and it is merely a bona fide mistake. A.2.4 Address at Tax invoices : From the date 1-7-2017, the applicant have been issuing Tax Invoices and paying GST. The address at the Tax Invoices of the applicant appears as 'SP636 A3, Road No. 6, VKI Area, Jaipur. Had there been any mala fide intent of the appellant, they would not have shown this address on the tax invoice. Thus, the confiscation of stock lying at the godown is not judicious. A.2.5 Endorsement of the godown as additional place of business-Further, it shall be important ....
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....ant is again submitting the ledger of stock, which suggests that there was no difference in stock and provisions of Section 130 of the CGST Act, 2017 read with Rule 139 of CGST Rules, 2017 are not invokable. B.2 Without prejudice to matter contained above, it is also to mention that the investigation seized the stock in the 'godown', whereas there was no difference in stock. There was merely a procedural lapse as from the various facts, it was on the spot proved that the appellant never intended to evade tax. However, the department seized the entire goods without considering any plea of the appellant and this action of the department caused heavy financial losses to the appellant. Further, the adjudicating authority also ignored all the evidences submitted by the appellant and confirmed the allegations. This unjustifiable approach in deciding the matter and ignoring the plight of the appellant has extended huge losses to the appellant. B.3 From, the above it is explicitly clear that at the time of search the officers of DGGI could not point out any out any difference of stock. The appellant put forth the facts before ....
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.... the Act ibid and Rule 39 of the Rules ibid. C.1.1 Section 67(1) and 67(2) stipulates that - "67(1) Where the proper officer not below the rank of Joint Commissioner has reasons to believe that : (a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or the rules made thereunder to evade tax under this Act; or (b) any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such manner as is likely to cause evasion of tax payable under this Act, he may authorise in writing any other officer of central tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place. (2) Where the proper officer, not below the ....
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....conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122..." C.1.4 Rule 139 of the CGST Rules, 2017 stipulates that - "139. Inspection, search and seizure. - (1) where the proper officer not below the rank of Joint Commissioner has reasons to believe that a place of business or any other place is to be visited for the purposes of inspection or search or, as the case may be, seizure in accordance with the provisions of section 67, he shall issue an authorization in FORM GST INS-01 authorising any other officer subordinate to him to conduct the inspection or search as the case may be, seizure of goods, documents, books or things table to confiscation. (2) Where any goods, documents books or things are liable for seizure under sub-section (2) of section 67 the proper officer or an authorized officer shall make an order of seizure in FORM GSTINS-02. C.2 As per language of the Section 67(2) of the Act ibid, it is construed that the provisions stipulates that search can be carried out under Section 67(1) of the Act, if there is reason to believe that a taxable person has - (a)&nbs....
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.... the matter provisions of Section 130(1)(ii) & Section 130(1)(iv), have been wrongly invoked, thus provisions of Rule 130 are also redundant and superfluous. C.4 Further, in the SCN the goods have also been proposed to be confiscated under Rule 39 of the Rules, ibid. Rule 39 pertains to the Input Service Distribution, which is not applicable in the matter; thus have been invoked wrongly. C.5 From, the above analysis, it is absolutely clear that in the matter there was no suppression, no excess availment of credit, no any intent to evade tax, no any intent to escape tax and no any such documentation to evade tax. In SCN also no such allegation have been levelled against the appellant. There is merely one allegation that the appellant's godown was not registered as 'additional place of business'. Thus, in the matter the goods have been wrongly seized under Section 67(2) and goods are neither confiscable under section 130(1)(ii) & 130(1)(iv) of the Act ibid, nor confiscable under Rule 139 of the Rules, ibid. C.6 In light of the facts, it is explicitly clear that the Adjudicating Authority has not taken stork of the entire case and wrongly conf....
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....dorse that the panch witnesses arranged by DGGI also offered their personal search. This vital fact has been ignored by the Adjudicating Authority while discussing the same at para 30 of the impugned Order in Original. D.2.2 Documents/equipments resumed on 13-9-2018 from the searched premises have not been relied upon in the SCN: In the panchnama dated 13-9-2018 resumed significant quantum of documents and electronic peripherals, (As per Annexure A to the Panchnama) which contained the complete business proceedings of the years of the appellant. However, in this Show Cause Notice, neither any document has been relied upon by the investigation nor the non relied upon documents have been returned to the appellant. The investigation could not make out any mala fide intent of the appellant from the documents/equipments resumed during the panchnama proceedings. This fact is enough to establish that the documents, equipments resumed from the premises did not carry anything unlawful and unaccounted. The DGGI Officers, wrongly seized the goods under Section 67(2), without communicating the reasons that the goods are confiscable under GST provisions. Further, the DGGI wrongly ....
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....r in Original deserves to be set aside. E. PENALTY UNDER SECTION 122(1)(xvi), 122(1)(xviii) AND SECTION 125, SECTION 122(3) OF THE CGST ACT, 2017 IS NOT IMPOSABLE IN THE MATTER. In the impugned SCN, it has been invoked that penalty should be imposed on the appellants in terms of Section 122(1)(xvi) and (xviii) and Section 125 of the CGST Act, 2017 for contravention of the provisions of CGST Act, 2017 and the Rules made thereunder with an intent to evade payment of appropriate CGST/SGST as discussed above. In this regard, it shall be imperative to peruse the provisions of these Sections to construe the intent of the statute - 122. (1) Where a taxable person who - ..... (xvi) fails to keep, maintain or retain books of account and other documents in accordance with 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; he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to th....
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....n of the provisions of the Central Goods & Services Tax Act, 2017 or the rules made thereunder with intent to evade payment of duty. The appellant were regularly filing periodical returns under the Act ibid & Rules made thereunder, which carried all the information in respect of purchase & sales of the appellants. This sufficiently proves that there has not been a mens rea on the part of the appellant. E.3 Further, without prejudice to submissions made above, it is submitted that penalty imposable under any clause of Section 122 is ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under Section 51 or short deducted or deducted but not paid to the Government or tax not collected under Section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher. Since, no tax was evaded by the appellant the maximum penalty imposable is Rs. 10,000/- Thus penalty above Rs. 10,000/- is arbitrary and accordingly liable to be set aside. E.4 It is also submitted that it is a well settled posi....
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....ammed Riyaz Khan, Proprietor of M/s. Taj Iron Store, Jaipur, it was stated by Shri Mohammed Riyaz Khan, Proprietor of M/s. Taj Iron Store that the current premise i.e. 25, Dudu Bagh, Near Mayank Cinema, Loha Mandi, S.C. Road Jaipur is their retail shop and mostly cash sales are performed from this place and their wholesale sales are undertaken from their godown situated at S.P. 636, A3 Road No. 6, V.K.I Area, Jaipur. Accordingly, on the same day i.e. 13-9-2018, officers, alongwith panchas and Shri Mohammed Riyaz Khan, Proprietor of M/s. Taj Iron Store, Jaipur went to the godown situated at S.P. 636, A3 Road No. 6, V.K.I Area, Jaipur for further proceedings and during' the course of proceedings, a GST Registration Certificate No. 08ACWPK9035 H1ZO of Mohd. Riyaz Khan, Proprietor of M/s. Taj Iron was obtained, which was showing their principal place of business at 25, Dudu Bagh, Near Mayank Cinema, Loha Mandi, S.C. Road Jaipur and no other additional place of business in the State. Physical verification of stock of goods was carried out by the DGGI officers in the presence of two independent panch witnesses and Shri Mohd. Riyaz Khan, Proprietor, of M/s. Taj Iron Store. During physical....
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....he 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. 9. As per Rule 11(1) of CGST Rules, 2017 : Any person having multiple business vertical within a State or a Union territory, requiring a separate registration for any such place of business under sub-section (2) of Section 25 shall be granted separate registration in respect of each such place of business subject to the following conditions, namely :- (a) such persons has more than one business vertical as defined in clause (18) of section 2; (b) the business vertical of a taxable person shall not be granted registration to pay tax under section 10 if any of the other business verticals of the same person is paying tax under section 9; (c) all separately registered business vertical of such person shall pay tax under the Act on supply of goods or services or both made to another registered place of business vertical of such person and issue a tax invoice, for such supply. 10. As per Rule 56(1) of the C....
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....arding additional place of business i.e. godown. They added the said godown only after seizure of the goods which clearly proves their mala fide intention and the contravention of Section 22(1) of CGST Act and Rule 11 of CGST Rules, 2017. Therefore, appellant's contention cannot be accepted at this stage. 13. On going through the content of the show cause notice, statements dated 18-9-2018 and 7-1-2019 recorded under Section 14 of Central Excise Act, 1944 read with Sections 70 & 174 of CGST Act, 2017 of Shri Mohd. Riyaz Khan, Prop. of M/s. Taj Iron Store as mentioned in the show cause notice as well as in the impugned order, I find that in statement dated 18-9-2018 Shri Mohd Riyaz Khan, Proprietor of M/s. Taj Iron Store, stated that their firm is a trading firm, since 1989, which deals in products i.e. Angle, Channel, Shape, Section, Beam, MS Bar, Flat, Gate Channel, MS Pipe etc., and that he has gone through the panchnama dated 13-9-2018, drawn during the search proceedings at M/s .Taj Iron Store 25, Dudu Bagh, Near Mayank Cinema, Loha Mandi, SC Road, Jaipur and their godown situated at S.P. 636, A3 Road No. 6, V.K.I Area, Jaipur, Shri Mohd. Riyaz Khan, Proprietor, of M/s. T....
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....ly accounting for seized goods in their books of account and also not shown the same properly in periodical returns filed by them with the sole intent to evade payment of CGST/SGST. Therefore, the impugned goods i.e. Angle, Channel, Shape, Section, Beam, MS Bar, Flat, Gate Channel, MS Pipe etc., valued at Rs. 5,53,10,466/- stored at the godown of M/s. Taj Iron Store, seized vide GST INS-02 under Panchnama dated 13-9-2018 under Section 67(2) of the CGST Act, 2017 were liable for confiscation under Section 130 of the CGST Act, 2017 read with Rule 139 of the CGST Rules, 2017 and M/s. Taj Iron Store is also liable for penalty under Section 122(1)(xvi) and 122(1)(xviii) of the CGST Act, 2017 and also under Section 125 of CGST Act, 2017. 15. Shri Mohd. Riyaz Khan, Proprietor of M/s. Taj Iron Store who was looking after the day to day affairs of the Firm and also personally supervised the daily activities, have consciously and deliberately indulged in activities of storing dutiable goods at unregistered premises, without any authority of law. He further accepted and satisfied with the content of Panchnama dated 13-9-2018 drawn at the principal place of business at 25, Dudu Bagh, Nea....