ORDER

This appeal has been filed under Section 107 of the Central Goods and Service Tax Act, 2017 by The Assistant  Commissioner(Review), CGST, Commissionerate, Alwar (hereinafter also referred to as “the appellant or department” also) in view of Order-in-Review No.95/Review/2020-21 dated 28.08.2020 passed by the Commissioner, Central Goods and Service Tax Commissionerate, Alwar under Section 107(2) of the Central Goods and Service Tax Act, 2017 against the Order in Original No.01/GST/Demand/2020 dated  27.01.2020 (hereinafter also referred to as “the impugned order”) passed by The Assistant  Commissioner, CGST, Division-G, Sikar (hereinafter also referred to as “the adjudicating authority”) in the case of M/s Swastik Udyog, E-17 & 18, SKS Industrial Area, Reengus, Distt-Sikar-332 404 (Raj) (hereinafter referred to as the respondent).

2. Brief Facts of the case:-

2.1 The officers of the Directorate General of GST intelligence, Jaipur Zonal Unit, C-62, Sarojani Marg, C-Scheme, Jaipur-302001 (hereinafter referred as “DGGI‖) under the authority of Search Warrant dated 27.06.2019, issued by the competent authority conducted the search at M/s Swastik Udyog, E-17 & 18, SKS Industrial Area, Reengus, DisttSikar (Raj) on 27/28.06.2019 in presence of two independent witnesses, namely Sh. Rajesh Kumar Verma and Sh. Banshidhar and Sh. Banwari Lal Sharma, Supervisor of M/s Swastik Udyog, Jaipur. During the course of search the officers, inter alia, carried out the physical stock verification of finished goods i.e. Ply, and against stock of finished goods, valued for ₹ 96,86,453/- found in the premises in excess of the recorded stock in violation of Section 35 of the CGST Act, 2017 read with Rule 56 of CGST Rules, 2017 and seized the same under Section 67(2) of the Act read with Rule 139 of the CGST Rules, 2017 and recorded in Annexure ‘A’ to the Panchnama dated 27/28.06.2019. Sh.Parveen Goyal, Authorized Signatory of the assessee in his statement dated 19.12.2019 admitted the correctness of contents of the said Panchnama dated 27/28.06.2019, except the value of seized goods.  

2.2 During the Panchnama proceedings conducted on 27/28.06.2019, Shri Banwari Lal Sharma, Supervisor of M/s SU in his voluntarily tendered statement dated 27.06.2019 recorded under Section 70/174 of the CGST Act,2017 has stated that they did not maintain stock register; also did not prepare Daily Production Slips; and the  works relating to GST are being looked after by their Accountant Sh. Makhan Lal Paonia and Sh. Lalit Goyal partner of the firm.

2.3 The value of seized good, as per annexure “A” to Panchanama dated 27/28.06.2019 have been taken by the DGGI by multiplying the sale price mentioned in the sale invoice by 2.5 times. 

2.4 Since, Sh. Banwari Lal. Sharma, Supervisor of M/s SU could not produce any documents or records related to the finished goods found in the premises, therefore, the visiting officers, on a reasonable belief, that the finished goods namely ‘Ply’ of quantity 19,121.79 Sq. Mtr. valued at ₹ 96,86,453.00, which were liable to tax under the CGST Act,2017, and kept unaccounted, with intent to supply the same clandestinely and without payment of tax, to evade payment of CGST/SGST, and hence, liable to confiscation under Section 130 of the Central Goods and Services Tax (CGST) Act, 2017, seized the said goods under Section 67 of the CGST Aet,2017 vide GST INS-02. The seized goods were given under the order of prohibition to Sh. Parveen Goyal, Partner of M/s TPI under vide GST INS-03 dated 28.06.2019.

2.5 It has also been alleged in the notice that Shri Lalit Goyal, Partner of M/s SU, who also looks after day-to-day affairs of the firm, had consciously and deliberately indulged in activities of clandestine clearance/supply of taxable goods as he was found involved in acquiring, possession, removing, depositing, keeping, concealing, and dealing in goods, which he knew were liable to confiscation, and hence he rendered himself liable to penalty under Section 122(3) of the Act ibid.

2.6 The contention of Shri Lalit Goyal, Partner of the assessee tendered vide his letter dated 11.07.2019, made a request for release of the goods and submitted that their books of accounts were not complete at the time of search which have been completed now according to which the stock position broadly matches with their stock as per their books. This contention of the assessee appeared to an after thought and unacceptable.

3. In view of above, the impugned notice dated 20/23.12.2019, was served with the assessee and Sh. Lalit Goyal, Partner, calling upon them to show cause to the Deputy/Assistant Commissioner, Central Goods & Service Tax Division-G, Sector-C, Todi Nagar, Sanwali Road,Sikar-332001 as to why:-

(i) the excess found goods valued at ₹ 96,86,453.00, as shown in Annexure A to the Notice, seized under Section 67(2) of the CGST Act,2017 read with Rule 139 of the CGST Rule, 2017 as detailed in GST INS-02 to Panchnama dated 27/28.06.2019 should not be confiscated under the provisions of Section 130 of the CGST Act,2017 read with Rule 139 of the CGST Rules,2017,

(ii) penalty should not be imposed upon M/s Swastik Udyog, E-17 & 18, SKS Industrial Area, Reengus, Sikar, Rajasthan -332404, in terms of Section 122 (1) (xvi) and (xviii) of the CGST Act,2017 for contravention of the provisions of the CGST Act,2017 and the Rules made there under with an intent to evade payment of CGST/SGST.

(iii) penalty should not be imposed upon Shri Lalit Goyal, Partner of M/s SU, under Section 122(3) of the CGST Act, 2017 for his act of omissions and commissions as discussed in the notice.

4. Further, the adjudicating authority vide the impugned Order in Original No.01/GST/Demand/2020 dated 27.01.2020  has passed an order as under:-

(i) Ordered to release the goods i.e. “PLY” valued ₹ 96,86,453.00 seized under vide GST INS-02 dated 28.06.2019, under GST INS-05;

(ii) Confirmed the demand of ₹ 1,43,436.00 (CGST- ₹ 71718.00 + SGST- ₹ 71718.00) under section 73 of the CGST Act 2017, and ordered to recover from M/s Swastik Udyog, E-17 & E-18, SKS Industrial Area, Reengus, Sikar, Rajasthan -332404;

(iii) Ordered for recovery of interest on the tax ₹ 1,43,436.00 (CGST- ₹ 71718.00 + SGST ₹ 71718.00) under section 50 of the CGST Act 2017;

(iv) Imposed penalty of ₹ 1,43,436.00 (CGST- ₹ 71718.00 + SGST- ₹ 71718.00) i.e. equal to the amount of tax evaded under section 74(1) of the CGST Act 2017 on M/s Swastik Udyog, E-17 & E-18, SKS Industrial Area, Reengus, Sikar, Rajasthan 332404. However, given an option to the assessee to pay the penalty fifty percent of the tax determined, under Section 74(11) of CGST Act 2017, if the tax and interest payable thereon alongwith reduced penalty are paid within stipulated time of 30 days from the date of communication of this order.

(v) Do not imposed penalty upon Sh. Lalit Goyal, partner of M/s Swastik Udyog, E-17 & E-18, SKS Industrial Area, Reengus, Sikar, Rajasthan -332404;, under Section 122(3) of the CGST Act, 2017.

(vi) Since the goods seized were not liable to confiscation,  do not imposed penalty upon M/s Swastik Udyog, E-17 & E-18, SKS Industrial Area, Reengus, Sikar, Rajasthan -332404 under Section 122(1)((xvi) & (xviii) of the CGST Act.

5. The competent authority i.e. Commissioner, Central Goods and Service Tax Commissionerate, Alwar vide their Order-in-Review No.95/Review/2020-21 dated 28.08.2020 has reviewed the impugned Order in Original No.01/GST/Demand/2020  dated 27.01.2020 and found not proper and legal to the extent of not passing the order under Section 35 of the CGST Act, 2017 read with Rule 56(2) of CGST Rules, 2017 and directed the Assistant Commissioner(Review), CGST Commissionerate, Alwar to file Appeal before the Additional Commissioner (Appeals), CGST, Jaipur within the stipulated period for determination of the correctness of the impugned order. The appellant also stated that application is being submitted in accordance with Notification No.55/2020- Central Tax dated 27.06.2020 amending Notification No.35/2020-Central Tax dated 03.04.2020 Accordingly, the appellant department filed this appeal on the following grounds:- 

[A] The adjudicating authority has erred in holding that the unaccounted/ excess goods which were seized were not deliberately kept unaccounted to supply the same clandestinely and without payment of tax. Whereas as per Section 35(1) of the CGST Act,2017, 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. Further, as per Rule 56 (2) of the CGST Rules, 2017 ‘Every registered person, other than a person paying tax under section 10, shall maintain the accounts of stock in respect of goods received and supplied by him, and such accounts shall contain particulars of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample and the balance of stock including raw materials, finished goods, scrap and wastage thereof.” However, the taxpayer has failed to maintain the account of stock in respect of goods received and supplied by him for the long time i.e. period of more than one month. Further, during the Panchnama proceeding Shri Banwari Lal Sharma, Supervisor of the firm, disclosed the facts in his statement dated 27.06.2019 that they did not maintain any stock register and no actual production entered in their records. Further, Shri Praveen Goyal, Authorised Signatory and brother of Shri Lalit Goyal, Partner of the firm in his voluntary statement dated 19.12.2019 admitted the facts recorded in panchnama dated 27/28.06.2019. From the above statement dated 27.06.2019 of Shri Banwari Lal Sharma, Supervisor, it is very clear that the action of non maintenance of record was modus-operandi of the taxpayer for manipulating the accounts/records to evade the GST which itself indicate assessee’s mens-rea.

[B] The adjudicating authority has erred in holding that the DGGI did not ask any question from Shri Lalit Goyal, Partner, to find out the pricing pattern of the seized goods. In this regard, Shri Praveen Goyal, Authorised Signatory of the assessee firm who is also partner of M/s Tirupati Plywood Industries (“TPI”), in his voluntary statement dated 28.06.2019 has accepted the facts disclosed by Shri Shankar Lal Choudhary, Manager of TPI and Shri Makkhan Lal, Accountant of M/s SU both dated 27.06.2019 where it was admitted that he value of goods to 40% for issuing of invoices and receiving of remaining 60% in cash through “kaccha System” in respect of supplies made from the factory premise. Since Shri Praveen Goyal is the key person in the both firms i.e. M/ s Swastik Udyog, Reengus & M/s TPI, it appears that it was their set procedure to evade GST by not maintaining the stock register/ daily production records and cleared the goods clandestinely without payment of GST. These evidences were sufficient for the revenue to achieve reasonable belief that the subject goods were liable to confiscation hence deserve for seizure at that moment, hence the same was effected by the department.

[C] The adjudicating authority has also erred by non recording of major facts of the case related to the search at residential premise of Shri Lalit Goyal, wherein the visiting officers found unaccounted Indian currency amounting to ₹ 11,10,000/- for which Smt. Usha Goyal could not produce any plausible reply in respect of said Indian currency in the said premises, and accordingly on a reasonable belief, that the said Indian currency is sale proceed of the goods liable to GST which were removed clandestinely was seized by DGGI officers. This facts also corroborate the version of Sh. Makhan Lal, Accountant that M/s SU purchase 40% of raw material through Bill and remaining 60% in cash through “Kachha System” but the adjudicating authority din not mentioned these facts in the OIO.

[D] The adjudicating authority has also erred in holding in para 5.4 that seizure of entire goods treating it as excess/un-accounted stock is unjustified and invalid as in para 5.5 of the OIO the adjudicating authority accepted the facts that record of production of their finished was not found complete/updated at the time of visit of DGGI officers. From the statements of Shri Banwari Lal Sharma, Supervisor, it is clear that they do not maintain stock register / daily production records. If the DGGI had not conducted search at the premise of the taxpayer and resumed the documents, the taxpayer could manipulate the accounts in accordance with their mala-fide intention to evade GST by removing the goods clandestinely without paying GST. However, the contention of assessee regarding completion / updation of their records, tendered vide his letter dated 11.07.2019 i.e. after 14 days of search, was afterthought and not acceptable at later stage being made without documentary evidences and legal footings.

[E] The adjudicating authority has also erred in holding that seizure of goods was unwarranted, on the preponderance of presumption/ probabilities. In this regard, at the time of Search on 27/28.06.2019, the goods so were seized found in excess on the basis of facts disclosed by Shri Banwari Lal Sharma, Supervisor in his statement dated 27.06.2019 tendered under Section 70 & 174 of the CGST Act, 2017.

[F] In para 5.14 of the impugned OIO dated 27.01.2020, the  adjudicating Authority has erred in holding the goods deserved to release as the same is not liable to confiscation on the ground that statements of Shri Lalit Goyal were never recorded to find out the pricing pattern of the seized goods. As a matter of fact physical stock verification of the goods was conducted in presence of independent witnesses and Supervisor of the Firm. Statements of the Accountant, Shri Makkhan Lal and Shri Praveen Goyal, Authorised Signatory were also recorded on 27.06.2019 and 28.06.2019, respectively, wherein they all admitted the pricing pattern of the firm in their voluntarily tendered statement. The assessee have not submitted any evidence / documents regarding correct value of goods. Hence, conclusion drawn by the adjudicating authority that value worked out is unreasonable is not correct. Further, on the basis of valuation, it is incorrect to hold by the adjudicating authority in para 5.14 of the OIO that ‘PLY’ valued ₹ 96,86,453/- seized vide GST INS-2 dated 28.06.2019 is not liable to confiscation and deserved to be released. Only on the basis of valuation parameters, considering the seized goods not liable to confiscation by the adjudicating authority, appear improper.

[G] In para 5.15 of the OIO, the adjudicating authority ignoring the facts of unaccounted stock found during the search, had concluded contrary on the basis of submission dated 10.01.2020 that after completion of the record and after making inventory, goods was found short. Therefore, instead of order of confiscation of goods valued to ₹ 96,86,453/- found unaccounted the adjudicating authority improperly ordered for release of the same and imposed tax and penalty by treating that goods valued to ₹ 7,96,867/- was short. In other word, it is an admission on the part of noticee that goods valued to ₹ 1,04,83,320/-(goods valued to ₹ 96,86,453/- found unaccounted during the search + goods valued to ₹ 7,96,867/- unaccounted but already cleared clandestinely as admitted by the noticee vide their letter 10.01.2020) were unaccounted at the time of search by DGGI officers. Thus the version of adjudicating authority in para 5.12 is also incurred wherein adjudicating authority held that “I do not found any evidence which has been adduced in the notice to establish and arrive at a logical conclusion that the unaccounted/excess stock was deliberately kept unaccounted to supply the same clandestinely and without payment of tax”. It is evident from the above facts that in addition of unaccounted stock of ₹ 96,86,453/- found during search, a stock of ₹ 7,96,867/- already been cleared by them clandestinely.

[H] That despite of having examined panchnama, GST-INS-02, Statement of Supervisor and Authorised Signatory, the adjudicating authority, in the OIO repeatedly mentioned that Shri Lalit Goyal, Partner have not been examined by the intelligence unit. However, the authority never called officers of DGGI to examine them or to cross check the submission made by the noticee. Therefore, arbitrary findings of the adjudicating authority are bad in law. However, the adjudicating authority never called officers of DGGI to examine them or to cross check the submission made by the noticee. Therefore, arbitrary findings of the adjudicating authority, despite sufficient evidences narrated by the department in the subject show cause notice, are bad in law.

[I] That the seizure of goods were made on the basis of reasonable belief that the goods found unaccounted are liable for confiscation and these facts was admitted by the Supervisor, Accountant and Authorized Signatory (brother of partner) of the firm. Whereas, in para 5.4 of the OIO, the adjudicating authority, in contrary to the law has held that if the department had allowed the noticee to complete its books of accounts it could have been proved at that time only that there was no excess stock of goods as compared to stock as per books of accounts.

[J] That the adjudicating authority has erred in not imposing penalty upon Shri Lalit Goyal, Partner, who look after the day to day affairs of the firm and continuously and deliberately indulged in activities of clandestine clearance /supply of taxable goods as he was found involved in acquiring, possessing, removing, depositing, keeping, concealing and dealing in goods which he knew were liable to confiscation. Thus, he is liable to be panel under Section 122(3) of the CGST Act, 2017.

(K) That the adjudicating authority has grossly erred in finding made in para 5.14 of the impugned order regarding pricing of the goods which was duly adopted by the revenue on the facts disclosed by Shri Makkhan Lal accountant and accepted by Shri Praveen Goyal, Authorised Signatory & brother of the partner who were directly dealing with goods so seized and facts contained in their statement were sufficient to ascertain the actual value of the goods which was being suppressed by the assessee and this is a major allegation in this case that the assessee is evading tax by undervaluing their goods as evident from the statements of these persons, hence simply brushing aside this allegation of the department on the basis version of the partner of the assessee is not legal and proper within the purview of law.

(L) That the adjudicating authority has grossly erred in finding made in para 5.15 of the impugned order regarding adopting the price of the seized goods on the basis of the invoices issued by the assessee itself whereas the case of the revenue is also on the basis of evidences of undervaluation of the goods collected and accepted in the statements of Shri Makhan Lal Accountant of the firm and Shri Praveen Goyal, Authorised Signatory & brother of the partner who were quite aware of these facts, hence the findings of the adjudicating authority deserves to be set aside being it not legal and proper within the purview of law.

4. The appellant also stated that application is being submitted in accordance with Notification No.55/2020- Central Tax dated 27.06.2020 amending Notification No.35/2020-Central Tax dated 03.04.2020.  

5. The  respondent  vide  letter  No. APPL/JPR/CGST/AL/74/VIII/2020/3662  dated 28.12.2010 were called upon to file a memorandum of cross objection against the appeal, within 45 days of receipt of this notice, filed by the department. The respondent submitted their memorandum of cross objection on 15.02.2021 which is as under:-

1- The Partner of the Noticee Shri Lalit Goyal vide his letter dated 11.07.2019 submitted that at the time of search their books of accounts were incomplete as the entries of production was pending to be passed in the books for certain period. He further stated that now the entries in the books of accounts have been completed from the available information and submitted the details of stock of plywood as per the books of accounts. In the letter it was contended that the updated stock position broadly matches with the physical stock found during search and he has requested to release the goods seized on 28.06.2019. 

The main person and the partner Shri Lalit Goyal who looks after the sale and finalise the terms & conditions of sales with the parties was out of India at the time of search. After search Shri Lalit Goyal met several times with the officers of the Investigation unit and explained his version but his statement has also not been recorded by the Intelligence unit so far in the matter.   

The department has not considered the submission and the requests made by Shri Lalit Goyal, the partner of the assessee vide his letter dated 11.07.2019 and on the basis of finding of search issued the Show Cause Notice dated 23-12-2019 alleging that the assessee had excess stock of ₹ 96,86,453/- kept for clandestine supply. Accordingly, it is proposed in the SCN to seize the goods under section 67(2) of the Act read with Rule 139 of the Rules and to confiscate such goods under section 130 of the CGST Act, 2017 and to impose penalty u/s 122(1) (xvi) and (xviii) on the Appellant, and penalty u/s 1223) of the CGST Act on Shri Lalit Goyal the partner of the Appellant. 

In connection to the Show Cause Notice dated: 23.12.2019 the assessee has submitted a detailed reply on 10-01-2020 and additional submission dated: 17.01.2020 by countering and answering all the points raised in the show cause notice mentioned above.

The Adjudicating Authority vide Order-in-Original No. 0l/GST/Demand/2020dated 27-01-2020 has ordered to release the goods valued at ₹ 96,86,453/- seized on 28.06.2019 by stating:

That there is no doubt from the facts and records of the case that the notice has maintained the records of production of their finished goods, but at the time of visit the DGGI officers, it was not complete/updated and the verbal request made by the noticee to complete and update the production records was not acceded by the officers of DGGI.

That the admission made by Banwari Lal Sharma in his statement dated: 27.06.2019 recorded during search stated that he looks after the supervision of labour, loading of finished goods, unloading of raw material, quality checks of finished goods/raw material and supervision of daily production and quality control of the assessee and the firm does not maintains stock register and prepares daily Production Slips, and the work relating to GST is looked after by their accountant Sh. Makkhan Lal Poonia and Sh. Lalit Goyal Partner of assessee. But DGGI did, not ask any question either from Sh. Lalit Goyal, Partner or from Sh. Makhan Lal Paonia in this regard to endorse the version of Sh. Banwari Lal Sharma. Further, the DGGI also did not record the statement of Sh. Lalit Goyal in this regard so that the pricing pattern could have unequivocally been established. Thus, no definite conclusion can be arrived by corroborating the assertion made by Sh. Banwari Lal Sharma in his statement, for providing that keeping of incomplete records of finished goods was with mala fide intention to remove them clandestinely and without payment of tax.

That despite of availability of ample time from the date of visit till issuance of show cause notice dated: 23.12.2019, Sh. Lalit Goyal, Partner of the assessee and responsible for overall supervision of assessee has not been interrogated/questioned, as to the circumstances which lead to not updating the records of their finished products from 22.05.2019 to 26.06.2019. That it has not been established by DGGI, with any type of documentary evidence or otherwise, as to what has been stated by Sh. Banwari Lal Sharma, so that the same could have been corroborated.

That on examination of noticee’s letter dated: 17.01.2020 and its enclosures, stock of ‘Ply’ was maintained up to 21.05.2019 in the tally accounting system of the Noticee and stock position upto this period was very much available in Noticee’s records at the time of commencement of hearing proceedings on 27.06.2019. Therefore, what has been recorded in the panchnama dated 27/28.06.2019 and stated by Sh. Banwari Lal Sharma, in his statement dated: 27.06.2019, to the extent that the Noticee have not maintained the stock record/position of finished goods is factually found incorrect.

That no doubts, at the time of visit of DGGI officers on 27.06.2019, the production records of Ply was recorded in the stock registers upto 21.05.2019. Further do not found any evidence which has been adduced in by the Noticee to establish and arrive at a logical conclusion that the unrecorded/excess stock was deliberately kept unaccounted to supply the same clandestinely and without payment of tax. That the verbal request made to the officers of DGGI to complete and update the stock position before commencement of physical stock verification was also not accepted in the case of Noticee. That it is observed from the case records that except detections of incomplete /updated records of Ply, the Noticee does not brings out any evidence documentary or otherwise, that establishes/proves involvement of Noticee, in any manner, in clandestine supply of goods. Therefore, in the absence of essential ingredients required for seizure of goods, the mere fact that the records of the impugned finished goods were not complete/updated as on 27.06.2019, with an intent to evade tax, without any other corroborative evidence, cannot alone be, the sustainable grounds for seizure of these impugned goods. That the seizure was unwarranted, on the preponderance of presumption/probabilities.

That to conclude, the provisions of section 67(2) dealing inter alia with seizure of goods that the above provisions authorize the proper officer to seize the goods which are liable to confiscation. It is therefore imperative that the nexus of seizure of goods have been made directly relatable to confiscation. As such, it is equally important to peruse the provisions of Section 130 of the Act and Rule, 139 of the Rules, dealing with confiscation of goods which stipulates that if any person does not account for any goods on which he is liable to pay tax under this Act with intent to evade payment of tax then, all such goods or conveyance shall be liable to confiscation and the person shall be liable to penalty under Section 122. In this context it is found that the intention of the unaccounted goods is the prime condition to confiscation. But in this case, the goods which were found un-accounted were taken into account in the form of bills/vouchers which were also seized by the visiting team alongwith the goods found allegedly unaccounted. That out of said documents which were seized, documents relating to stock position of finished goods and raw material were subsequently made available to the Noticee. Thus, it is pertinent to note that the alleged unaccounted goods of production and sales during the period of 21.05.2019 till the 26/27.06.2019, were completed on the basis of the records seized by the visiting team of DGGI. It means that the goods found unaccounted were accounted at different stages of records of the factory of production and supplies, but they were merely not formally accounted for in the books of accounts.

That the visiting team in the SCN impressed that the goods found unaccounted alongwith the records of the Noticee were seized but it no where alleged that the sale invoices and the bill vouchers seized from the factory of productions were in any way cannot be relied upon. Further the unaccounted goods which were allegedly seized on the basis of the admission made by Sh. Banwari Lal Sharma on the reasonable belief that these goods were not taken into account just to make convenient to the Noticee to supply the goods clandestinely and subsequently to accommodate the accounts in accordance with their ease. But to corroborate this view, no affirmative, tangible and reliable documents were unearthed from the premises to endorse the belief of the visiting team that the goods found allegedly unaccounted were intended to supply clandestinely which is inevitable to initiate punitive action against the Noticee. That the entire SCN is based on the alleged unaccounted book of accounts and the statements of an employees of the Noticee. As such, in the absence of essential/concrete evidence, proving the unaccounted goods were with intent to evade payment of tax, the proposed penalty on the Noticee under section 122(1)(xvi) & (xviii) of the Act would not be justified.

That the statement of Sh. Lalit Goyal who is in charge of affair of the supply and pricing of the goods were never recorded to find out pricing pattern of the seized goods. Further, the basis of having taken the value as 2.5 times of sale invoice value, by DGGI have not at all been discussed/explained to arrive at the pricing of the goods the show cause notice is entirely based on the assumption and presumption. That to arrive at the correct price of the goods seized, there has to be cogent and conclusive methodology had to be adopted by the officers of the team, and cohesive evidence should have been put forth to establish that the noticee was indulged in under pricing of the goods and that the prices arrived at by team were more reasonable and in accordance to the prevailing market price of the goods. Thus in absence of any commensurate method of pricing, the value worked out is therefore unreasonable and therefore unacceptable. That the ‘Ply’ values ₹ 96,86,453 seized is not liable to confiscation and deserved to be released. Further the authority has confirmed demand of ₹ 1,43,436/- alongwith interest u/s 50 and penalty under Section 74(1) and 122(3) of the Act.

There is no excess unaccounted stock of the goods on the date of search and therefore seizure of goods is invalid.

A.1. The assessee is a manufacturer and supplier of Plywood, Veneered Panels and Flush Doors etc. At the time of search, books of accounts and other records were seized by the department. The Books of accounts were incomplete as the entries related to the production etc was pending to be made. As on the date of search the entries in books of accounts related to production was made upto the month of April and May 19 and that of sale was made upto the date of search. This fact was communicated to the search team and a request was made to allow to complete the books of accounts on the basis of bill vouchers and other documents found in search so that the position of book stock as on the date of search can be ascertained. The Intelligence Team did not acceded to the request of assessee to complete the entries in the books on the basis of bill/vouchers and other documents found in search. Due to non-adherence, the factual position was not taken by the visiting officers as the assessee could not update/complete the books and consequently could not tell the position of stock as on the date of search. Thus, the intelligence team without giving any opportunity to update/complete the books of accounts, seized the entire goods of finished stock treating it as uncounted stock kept for clandestine supply, whereas the same was not un-accounted.

The Department in its Appeal has contended that every registered person at his principal place of business shall keep and maintain a true and correct accounts of production of goods, inward and outward supplies of goods or services or both, stock of goods, input tax credit availed, output tax payable as per ection 3 5(1) of the CGST Act,2017 and Rule 56(2) of the CGST Rules,2017. However, the taxpayer has failed to maintain the account of stock in respect of goods received and supplied by him for the long time i.e. period of more than one month. That during the Panchnama proceedings Shri Banwari Lal Sharma, Supervisor of the firm, disclosed the facts that they did not maintain any stock register and no actual production entered in their records. Further Shri Parveen Goyal, Authorised Signatory and brother of Shri Lalit Goyal, Partner of the firm in his voluntary statement admitted the facts recorded in panchanama dated: 27/28.06.2019. From the statement of Shri Banwari Lal Sharma, Supervisor, it is very clear that the action of non-maintenance of records was modus-operandi of the taxpayer for manipulating the accounts/records to evade the GST which itself indicate assessee’s mens-rea.

In this connection it is submitted that as on the date of search the production entries in books of accounts was made upto the month of April and May ,2019 and that of sale was made upto the date of search. Further the goods found unaccounted during the search was accounted in the form of bills and vouchers but they were merely not formally accounted for in the books of accounts. This fact was communicated to the search team and a request was made to allow to complete the books of accounts on the basis of bill vouchers and other documents found in search so that the position of book stock as on the date of search can be ascertained. It is to be submitted further that the accounts and records was not incomplete for the entire period although the entries related to around one month was pending to be recorded/posted in the books of accounts by the accountant of the assessee. At the time of search also the assessee was having the bills and also having the details of the production during the period which was seized by the search team at the time of search also. If there has been the intention/ practise of the assessee to remove goods clandestinely, then the assessee would have riot even maintained books of accounts upto the month of April and May, 2019 and not have kept the bills and vouchers in relation to the production/purchase. Further the assessee has provided the above facts to the search team also but the Intelligence Team did not acceded to the request of assessee to complete the entries in the books on the basis of bill/vouchers and other documents found in search. Hence, the factual position was not taken by the visiting officers as the assessee could not update/complete the books and consequently could not tell the position of stock as on the date of search. Thus, the intelligence team without giving any opportunity to update/complete the books of accounts, seized the entire goods of finished stock treating it as uncounted stock kept for clandestine supply, whereas the same was not un-accounted.

Further the accountant and the supervisor were not aware about the factual position. Hence on the basis of the statement of the accountant and the supervisor of the assessee it cannot be alleged that there was modus operandi of the assessee in keeping the goods unaccounted for the clandestine removal of such goods. More particularly when the document related to production, purchase and sale were found during search and the assessee requested to allow them to complete the books of accounts on the basis of documents found. Further so far as the department’s contention that the facts disclosed by the accountant and supervisor of the assessee has been admitted by the authorised signatory Shri Parveen Goyal of the assessee is concerned, it is submitted that Shri Praveen Goyal could not understand the question in correct perspective. It is to be noted that the partner Sh. Lalit Goyal of the assessee after the search proceedings, vide his letter dated: 11.07.2019 has submitted that their books of accounts were incomplete as the entries of the production was pending to be passed in the books of accounts for certain period but now the entries in the books of accounts have been completed from the available information and also submitted the details of the stock as per the books of accounts which broadly matched with the physical stock found at the time of search on 28.06.2019. Hence the OIO releasing the goods is correct and same is to be sustained.

It is to be noted that on the same day i.e. 27.06.2019, the same agency i.e. DGGI, JZU searched the premises of M/s Premier Plylam Marketing Co. VKI Area, Jaipur who is the dealer of the goods manufactured by the assessee. As per panchnama prepared in case of M/s  Premier Plylam Marketing Co., copy provided by them it is mentioned that partner of the firm Shri Ashish Gupta could not provide the updated data of stock of goods meant for supply as he stated that he was out of station and could not enter the purchase and sale invoices in their books of accounts/stock register. He also stated that he would update the sale and purchase, stock register and intimate to the department and promised to comply the directive of the department in the matter. The search team on the basis of the statement /assertion ,of the partner of said firm has not seized the goods, though inventory was prepared after counting the physical stock lying at the premises. From the above it can be noted that the Intelligence unit allowed M/s Premier Plylam Marketing Co. to update/complete their books of accounts and submit the stock position as per completed books and did not seize their goods physically counted at the time of search; whereas in the case of assessee the same Intelligence unit has took different stand and seized the entire finished stock found during search without allowing to update/complete the books of accounts and to give the position of stock as per books. Thus, two different yardsticks was adopted by the Intelligence unit in search carried out on the same day which is unacceptable. Such differential treatment/approach of the intelligence team is uncalled for. This is violation of fundamental right of the assessee provided under Article 14 of the Constitution which provides principle of equality before law. This Principle has been grossly ignored by the Intelligence unit. Therefore, the seizure of goods of the assessee was illegal and therefore the 0I0 ordering the release of goods is correct.

Without prejudice to above, it is submitted that the assessee after the search has requested the Intelligence unit for providing the photocopies of the documents and records seized during search proceedings. After obtaining the photocopies of the documents and records seized, the assessee completed the entries in the books of accounts considering the opening stock, purchases, consumption of raw material during the period, production on the basis of production sheet and sales made of the finished goods during the period 01.04.2019 to 27.06.2019. After completing the books, the assessee submitted the details of the book stock vide letter dated 11-7-19 to the Intelligence unit and requested to release the goods. However, the Intelligence unit did not consider the request and asked to make request for provisional release of the seized goods with the Jurisdictional officer in CGST Commissionerate.

After search and after obtaining photocopies of the records seized during search, the assessee completed its books of accounts and supplied the details of the stock as per updated books to the Intelligence unit vide letter dated 11- 7-19.

On completion of the books of accounts from the bills, production records found in search, it is noticed that the stock of goods as per books of accounts on the date of search is slightly higher than the physical stock taken by the search team of Intelligence unit.

For verification of above the assessee produced the following documents before the ld. AC, CGST, Sikar with the reply:-

(i) Audited balance sheet for the year ended 31-3-2019 showing position of closing stock as on 31-3-2019.

(ii) Size wise ledger account of finished goods ‘Plywood’ showing details of opening stock, production made and sale made during the period 14-2019 to 27-6-2019.

(iii) Ledger account of purchase of raw material and consumption thereof with the Consumption-Production Statement of year 2018-19 and for the period 1-4-19 to 27-6-19, which is based on the standard norms.

(iv) Copy of purchase invoices of various items of raw material for the period 1-4-19 to 27-6-19 can be produced for verification.

(v) Copy of sale invoices of finished goods for the period 1-4-19 to 276-19 can be produced for verification.

(vi) Copy of ledger account of finished goods ‘Plywood’ and raw material i.e. Face veneer, Core veneer & Timber as per the books seized during search.

From the above, the book stock worked out by the assessee as on the date of search i.e. 27-6-19 is fully verifiable. You are requested to verify the above. The assessee will provide full cooperation in verification of above stock.

In view of above it is submitted that the stock found during search is not excess/unaccounted stock as alleged. Rather the stock found is slightly short than the book stock which is due to the reason of inaccurate stock taking / normal manufacturing process loss. The Intelligence team has not considered the updated position of books of accounts. The Ld. AC after verification of books satisfied the position of book stock and then released the goods. Therefore, the OIO is absolutely correct in releasing the goods.

The department in its Appeal has also contended that in the OIO, the adjudicating authority ignored the fact of unaccounted stock found during the search, concluded contrary on the basis of submission that after completion of the record and after making inventory, goods was found short. Therefore, instead of order of confiscation of goods the adjudicating authority improperly ordered for release of the same and further imposed tax and penalty on the goods found short which was valued at ₹ 7,96,867/-. The version of adjudicating authority is incorrect wherein adjudicating authority held that “I do not found any evidence which has been adduced in the notice to establish and arrive at a logical conclusion that the unaccounted/excess stock was deliberately kept unaccounted to supply the same clandestinely and without payment of tax”. It is evident from the above facts that in addition of unaccounted stock of ₹ 96,86,453/- found during search, a stock of ₹ 7,96,867/- already been cleared by them clandestinely.

In this connection it is submitted that due to incomplete books of accounts at the time of search which was, also stated during search and requested to allow to complete the same but not accepted by the intelligence team, the assessee could not submit the actual position of book stock. It does not mean that the assessee has not accounted for the production and stock of the goods with intention to evade payment of GST and for the purpose of clandestine removal of those goods. The assessee at the time of search itself was having all the sales invoices and purchase invoices of the raw material which was resumed during search. No evidence was found during search to prove that the assessee has made any clandestine removal of goods from its factory premises and supplied any goods without payment of tax. Further no evidence was found that any unaccounted purchases have been made by the assessee. Hence the contention of the department that the assessee has not accounted for the stock with intention to evade payment of GST and kept for clandestine removal is not sustainable.

The department in its appeal has taken a ground that Shri Parveen Goyal, Authorised Signatory of the assessee who is also partner of M/s Tirupati Plywood Industries (TPI) in his voluntary statement dated: 28.06.2019 has accepted the facts disclosed by the manager of TPI and accountant of assessee where it was admitted that the value of goods to 40% for issuing of invoices and receiving of remaining 60% in cash through “kaccha system” in respect of supplies made from factory premise. Since, Shri Praveen Goyal is the key person in the both firms i.e. M/s Swastik Udyog and M/s TPI. It appears that it was their set procedure to evade GST by not maintaining the stock register/ daily production records and cleared the goods clandestinely without payment of GST. These evidences were sufficient for the revenue to achieve reasonable belief that the subject goods were liable to confiscation hence deserve for seizure at that moment, hence the same was effected by the department.

The Department in its Appeal has also contended that the adjudicating authority has erred in finding made in para 5.14 of the impugned order regarding goods which was duly adopted by the revenue on the facts disclosed by Shri Makkhan Lal accountant and accepted by Shri Parveen Goyal, Authorised Signatory & brother of the partner who were directly dealing with goods so seized and facts contained in their statement were sufficient to ascertain the actual value of the goods which was being suppressed by the assessee and this is a major allegation in this case that the assessee is evading tax by undervaluing their goods as evident from the statements of these persons, hence simply brushing aside this allegation of the department on the basis version of the partner of the assessee is not legal and proper within the purview of law. That the adjudicating authority has grossly erred in finding made in para 5 .15 of the impugned order regarding adopting the price of the seized goods on the basis of the invoices issued by the assessee itself whereas the case of the revenue is also on the basis of evidences of undervaluation of the goods collected and accepted in the statements of Shri Makkhan Lal Accountant of the firm and Sh. Parveen Goyal, Authorised Signatory & brother of the partner who were quite aware of these facts, hence the findings of the adjudicating authority deserves to be set aside being it not legal and proper within the purview of law.

In this connection it is submitted that the intelligence unit has valued the stock of finished goods by multiplying the sale price mentioned in the sale invoice by 2.5 for the reason that in the statement given by the accountant Shri Makhan Lal of the assessee they has stated that sale invoice is issued at 40% price. This is not acceptable as the statement were taken under duress. Further the authorised signatory Shri Parveen Goyal in his voluntary statement dated: 19.12.2019 at the time of appending his signature on the panchnama and admitting the facts of Panchnama dated 27/28.06.2019 has not agreed with the valuation of the goods seized in the business premise of the assessee. Further the partner Shri Lalit Goyal is the person who finalise the sale price and other terms and conditions of the sale’ and that person was outside India at the time of search. Shri Banwari Lal Sharma who is the supervisor of the factory is responsible for daily production, quality control and supervises the loading of goods. He prepares the daily production chart and gives it to the accountant of the assessee. He supervises the loading of goods from the factory. After loading the goods, he prepares loading details. The sale price and terms & Conditions are finalised by Shri Lalit Goyal. The accountant Shri Makkhan Lal is responsible for accounting work and he enters the invoice in the books of accounts maintained in Tally software. Both these persons narrated these facts in their respective statements recorded at the time of search by the intelligence team. The sale price of the goods and the terms & conditions of sales is finalised by Shri Lalit Goyal who was out of India at the time of search. Therefore, neither the authorised signatory Shri Parveen Goyal nor the accountant Shri Makkhan Lal nor the Supervisor Shri Banwari Lal Sharma are the relevant person to give any statement in respect of sale price/billing price of the goods. Hence no cognizance be given to the statement given by these persons at the time of search in absence of the main person Shri Lalit Goyal who actually looks after the sale part. The responsibility and work entrusted to both the employees i.e. Shri Banwari Lal and Makhan Lal is recorded in their statements itself; this itself proves that they never dealt with the sale price of the goods and not aware of the sale price. Thus, there is no reason to give credence to their statement regarding sale price. More particularly when Shri Praveen Goyal has made clarification in respect of their statement that Shri Lalit Goyal looks after the sale price and deals with the parties. Further the statement of Shri Lalit Goyal who actually looks after the sale of goods has not been recorded so far by the Intelligence Unit. Hence simply on the basis of statement of two employees, that too at the back of partner, stock .was valued by multiplying the invoice price by 2.5. This is ab-initio void.

In view of above the valuation made by the Intelligence unit was not correct. The valuation should have been made on the basis of cost price of the goods. The Intelligence unit has valued the goods by multiplying the sale price by 2.5 by treating that the invoice price is 40% of the actual price, which is incorrect. There is no basis for treating the invoice price at 40% of the actual sale price. No evidence in this respect was found in search. Merely relying on the statement given during search of Supervisor Shri Banwari Lal Sharma and accountant Shri Makkhan Lal, who do not know about sale value of the goods and also not concerned with the sale value and more particularly the statement was taken at the back of the partner Shri Lalit Goyal, is incorrect and unjustified. No opportunity was given for the cross examination and no statement was recorded on Shri Lalit Goyal even after pointing out of the above fact. Further the intelligence team neither interrogated the main person Shri Lalit Goyal who looks after the sale nor made any independent enquiry in the market. The market rate of the goods manufactured by assessee can be enquired and actual sale price can be ascertained. If the Intelligence unit has made any such enquiry, it should have been mentioned and if no enquiry is made then they should first make such enquiry from the market of the trade. The assessee is ready to furnish the cost price of the goods manufactured by them based on the standard of the industry and comparative market price of such goods manufactured by similar type of manufacturers. However, in the present proceedings the valuation part may not be so relevant since the goods found during search is verifiable with the stock as per books and there is no excess stock.

Further the authorised signatory Shri Parveen Goyal in his voluntary statement dated: 19.12.2019 at the time of appending his signature on the panchnama and admitting the facts of Panchnama dated: 27/28.06.2019 has not agreed with the valuation of the goods seized in the business premise of the Assessee. Hence it cannot be said that Shri Parveen Goyal authorised signatory of the assessee has accepted the facts of Supervisor and Accountant of the assessee which they have stated in their statements.

In view of above, the release of goods vide OIO dated: 27.01.2020 by stating that statement of Shri Lalit Goyal who is incharge of the affair of the supply and pricing of the goods were never recorded to find out the pricing pattern of the seized goods is correct. Further the Ld. A.C. has verified the updated books of accounts and considered the position of book stock as on the date of search before passing the OIO. Therefore, the order in review holding that the OIO dated 27-1-2020 is not proper and legal is incorrect.

The department in its appeal has further contended that despite of having examined panchnama, GST-INS-02, statement of supervisor 

and

signatory, the adjudicating authority, in the OIO repeatedly mentioned  that another partner of assesse i.e. Shri Lalit Goyal have not been examined by the intelligence unit. The authority never called officers of DGGI to examine them or to cross check the submission made by the Noticee. Therefore, arbitrary findings of the adjudicating authority despite sufficient evidences narrated by the department in the subject show cause notice are bad in law.

In this connection it is submitted that onus to prove the facts of keeping the goods for clandestine removal without the payment of GST is upon the Intelligence team of DGGI who has searched the premise of the assesse. The allegation made by the Intelligence unit that the goods found unaccounted at the time of search was kept unaccounted for the purpose of clandestine removal is incorrect and baseless. It was their responsibility to properly examine and record the statement of all the persons which are related to the business of the assessee. The Intelligence unit should have allowed the opportunity to complete the books of accounts based on documents found during search as has been allowed in case of M/s Premier Plylam Marketing Co.. Further they should have recorded the statement of main partner of the assessee Shri Lalit Goyal in this regard when it was specifically pointed out that the work of sales and dealing with the parties is made by him only. Further it is also a fact on record that after the search proceedings, Shri Lalit Goyal has visited number of time to the office of intelligence unit and clarified the matter but the Intelligence unit chosen not to record his statement and issued the SCN solely based on the statement of supervisor of the assessee who are not aware about the actual facts. Hence the departmental appeal is not sustainable and liable to be quashed.

In view of above the OIO is correct in stating that despite of availability of ample time from the date of visit till issuance of show cause notice dated: 23.12.2019, sh. Lalit Goyal, Partner of the firm and responsible for overall supervision of M/s SU has not been interrogated/questioned, as to the circumstances which lead to not updating the records of their finished product (PLY) from 22.05.2019 to 26.06.2019. That it has not been established by DGGI, with any type of documentary evidence or otherwise, as to what has been stated by Sh. Banwari Lal Sharma, Supervisor of the assessee, so that the same could have been corroborated

In the Departmental Appeal it has also been contended that the adjudicating authority has also erred in holding in para 5.4. of the OIO that seizure of entire goods treating is as excess/un-accounted stock is unjustified and invalid as in para 5.5 of the OIO the adjudicating authority accepted the facts that record of production of their finished goods was not found complete/updated at the time of visit of DGGI officers. From the statement of’ Shri Banwari Lal Sharma, Supervisor, it is clear that they do not maintain stock register/ daily production records. If the DGGI had not conducted the search at the premise of the taxpayer and resumed the documents, the taxpayer could manipulate the accounts in accordance with their mala-fide intention to evade GST by removing the goods clandestinely without paying GST. However, the contention of assessee regarding completion/ updation of their records, tendered vide his letter dated 11.07.2019 i.e. after 14 days of search was afterthought and not acceptable at later stage being made without documentary evidences and legal footings.

In this connection it is submitted that the assessee during the search was having all the relevant documents of the purchases and details of the production for the period under consideration and has requested the search team to allow them to complete the records. The search team did not allow the request of the assesse. Therefore, after the search proceedings the assesse submitted the details of the updated stock on the basis of the photocopies of the documents seized by the Intelligence team at the time of search. As per the updated position, the stock was almost matched with the quantity found physically at the time of search.  

Considering the updated position of stock the adjudicating authority in its para 5.4 has mentioned that if the department had allowed the notice to complete/update it books of accounts it could have been proved at that time only that there was no excess stock of goods as compared to stock as per books of accounts. Hence the seizure of the goods is unjustified. Therefore, the findings of the adjudication authority is correct and the ground of appeal is incorrect and therefore the appeal is liable to be quashed.

The Department in its Appeal has further contended that the adjudicating authority has also erred by non recording of major facts of the case related to the search at residential premise of Shri Lalit Goyal, wherein the visiting officers found unaccounted Indian currency amounting to ₹ 11,10,000/- for which Smt. Usha Goyal could not produce any plausible reply in respect of said Indian Currency in the said premises, and accordingly on reasonable belief, that the said Indian currency is sale proceed of the goods liable to GST which were removed clandestinely was seized by DGGI officers. This fact also corroborate the version of Sh. Makhan Lal, Accountant That M/s Swastik Udyog purchase 40% of raw material through Bill and remaining 60% in cash through “Kaccha System” but the adjudicating authority did not mentioned these facts in the OIO.

In this connection it is submitted that the currency found during search was not unaccounted as the same was as per the cash book maintained by the assessee. The cash found during search can be partly verified with the cash balance as per the cash book as on the date of search i.e. 27.06.2019 and balance amount was household savings of the family members. Further as per the submission made in detail in earlier Paras it is clear that there was no uncounted excess stock of finished goods as on the date of search as per the completed books. Although the physical stock on the date of search was slightly short in comparison to books. Further at the time of search also the assessee has all the sale invoices for the sale of finished goods on which due GST has already been paid. Therefore, question of any clandestine removal does not arise. Further the Intelligence unit neither during the search has not found any proof that the currency found during search is related to any clandestine removal of goods nor has recorder statement of any person this issue. Hence the intelligence units does not have any basis to consider the seized currency as sale proceed of the goods removed clandestinely. Hence the cash found search at the residential premise of Shri Lalit Goyal the Partner of the assessee is not to be considered as sale proceed of the clandestine removal of goods. Therefore, the seizure of the cash is invalid and the same is to be released on this ground itself.

Hence the same should not be corroborated with the facts of the statement of Accountant/Supervisor of the assessee. Therefore, the OIO ordering for releasing the goods seized earlier by the Intelligence unit is correct and to be sustained.

In view of above, the grounds in the departmental appeal that the goods found during search was excess unaccounted goods, kept with malafide intention to, remove the same clandestinely is incorrect and contrary to above submissions. There was no excess or unaccounted goods found and therefore the seizure of goods at the time of search was invalid. Hence the goods were released correctly vide OIO dated: 27.01.2020. Hence the appeal of the department is therefore liable to be quashed.

B. Since there was no excess stock found, no penalty is leviable.

B.l. The department in its appeal has requested to quash the OIO dated: 27.01.2020 which drops the penalty stating that since the goods seized are not liable to confiscation, no penalty is to be imposed upon assessee under section 122(1) (xvi) and (xviii) of the CGST Act,2017.

B.2. In this connection it is submitted that the section in which penalty is proposed relates to failure to keep, maintain or retain books of accounts and other documents in accordance with the provisions of the Act and for supply, transport or the goods which are liable to be confiscated. The relevant provisions of the CGST Act are reproduced here in below for ready reference:

Section 122 of the CGST Act, 2017; Penalty for certain offences:

122.(1) Where a taxable person who-

(xvi) fails to keep, maintain or retain books of accounts 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;

As per the above provisions of the Section 122( 1) of the CGST Act, the penalty is leviable if the assessee fails to keep, maintain and retain books of accounts as per the provisions of the Act and supply, transport or store the goods which are liable to be confiscated. As per the facts and submissions made in detail in e preceding paras, it can be noted that the assessee has maintained the required books of accounts as per the provisions of the CGST Act which was found and seize during search proceedings. Further the stock records are duly maintained in the tally system where in the production entries were updated upto April and May,2019 and the sale entries were posted upto the date of search. Hence the allegation that the finished goods found were unaccounted which was kept with intent to remove clandestinely is incorrect and contrary to above facts. The only lapse was that books of accounts was incomplete for around one month in relation to production entries but the details of the production was found in search. This cannot be viewed as failure to keep, maintain or retain the books of accounts. Had the search team would have provided opportunity to update/complete books of accounts, there would not have been any seizure of goods as the stock found during search is as per books of accounts. The assessee at the time of search was having all the purchase files containing all the relevant purchase invoices of the Raw Material, sales file containing all the sales Invoices of the finished goods and all the GST return filed during the period from 01.04.2019 to 27.06.2019. The law nowhere provides that all the entries should be posted in the books of accounts on the same day. Mere delay in posting the entries related to production in the books of accounts when all the relevant bill/vouchers and production details· were available at the time of search, cannot be said to be failure to keep, maintain or retain books of accounts and other documents in accordance with provisions of the CGST Act. After the search the assessee has completed its books of accounts on the basis of documents/details found during search and available with them and submitted the detail of the book stock to the Intelligence unit vide letter dated: 11.07.2019. Had the assessee not maintained such details he could not have complete the books. Thus, there is no failure on the part of assessee in maintaining/keeping the books of accounts and other documents in accordance with the provisions of CGST Act. Therefore, the penalty proposed under Section 122 (1) (xvi) is not imposable on the assessee. Hence the OIO dated: 27.01.2020 dropping the penalty under section 122(1)(xvi) is to be sustained.

Further the penalty under clause (xviii) of section 122(1) is also not imposable on the assessee because the stock found during search is not excess as alleged in the Show Cause Notice/Departmental Appeal. Rather the stock found is slightly short than the book stock which is due to the reason of inaccurate stock taking / normal manufacturing loss. When there is no excess stock found in search no question of confiscation of goods arises. Even the seizure of the goods was not valid. Therefore, no penalty under clause (xviii) for supplying, transporting and storing goods liable to confiscation is imposable upon the assessee. Hence the OIO dated 27.01.2020 dropping the penalty under section 122(1)(xviii) is correct and to be sustained and consequently the departmental appeal is to be dismissed.

It is further submitted that section 122 provides levy of penalty in case of certain offences. In the case of assessee, no offence is proved/established. Mere delay in completing the books is not an offence liable for penalty. The assessee has not evaded any tax. There is no intention of tax evasion. The assessee has maintained the proper books of accounts required as per the CGST Act & Rules. The stock records are duly maintained in the tally system where in the production entries were updated upto the month of April and May,2019 and the sale entries were posted upto the date of search. The books of accounts was incomplete / not updated for around one month period only in relation to production entries. Further there was no excess or unaccounted goods stored at the premise of assessee liable for confiscation. In view of above the allegation that the penalty should be imposed for not retaining, maintaining books of accounts and other documents as per the CGST Act, and for transporting, supplying and storing the goods which are liable to confiscation is incorrect and contrary to the provisions of the Act. Therefore, the OIO dated: 27.01.2020 dropping the penalty is correct and the same be sustained.

Rule 61 of the CGST Rules, provides the form and manner of the monthly return to be filed by the registered person. As per this rule monthly return in form GSTR-3B which was brought by the legislature in lieu of GSTR-3 which is being filed regularly by the registered person. The details required as per the format of form GSTR-3B is being submitted regularly by the assessee. There is no requirement of form to submit the details of monthly production. The details of outward made by the assessee is regularly submitted in GSTR-3B. Thus, there is no violation of the provisions of Rule 61 of the CGST Rules.

No penalty is imposable on the partner Shri Lalit Goyal of the assessee firm under section 122(3)

C. l. The Department in its Departmental Appeal has contended that Shri Lalit Goyal, Partner who look after the day to day affairs of the firm and continuously and deliberately indulged in activities of clandestine clearance/supply of taxable goods as he was found involved in acquiring, possessing, removing, depositing, keeping, concealing and dealing in goods which he knew were liable to confiscation. Thus, he is liable to be panel under section 122(3) of the CGST Act,2017.

In this regard it is submitted that Shri Lalit Goyal is looking after the work related to accounting, sale of goods and deciding price and terms & conditions. Shri Lalit Goyal at the time of search was outside India and the department has not taken statement of Shri Lalit Goyal till date. The department on the basis of statement of Shri Banwari Lal Sharma supervisor of the assessee has alleged that the goods was unaccounted for the purpose of clandestine removal of goods and the partner Shri Lalit Goyal is liable to penalty. As submitted in detail in the earlier paras that the Supervisor Shri Banwari Lal Sharma has nothing to do with price and the stock of the goods. It is Shri Lalit Goyal who finalise all these things hence the allegation of omissions and commission on the basis of the statement of Supervisor Shri Banwari · Lal Sharma of the assessee is not sustainable. Without examining Shri Lalit Goyal who is partner in the firm and the main person looking after the business activity, cannot be made guilty of offence for which he can be penalised as per section 122(3). Therefore, no penalty is leviable on him under section 122(3) of the CGST Act.

Shri Lalit Goyal has not carried out any offence specified in section 122(3) and therefore no penalty can be levied on him. Though he looks after the day to day affairs of the firm but he was not deliberately indulged in activities of clandestine clearance/ supply of goods. No excess stock was found which was liable to confiscation and therefore no offence is proved on his part. Hence the charge of omission and commission on the Partner Shri Lalit Goyal of the assessee is not sustainable and therefore the departmental Appealing imposing penalty on the Partner of the assessee is liable to be set aside.

C.4.  Further as per the submissions made in the earlier paras it is clear that the assessee itself is not liable to penalty under section 122 of the CGST Act, as the assessee has maintained and retained the books of accounts and other relevant documents as per the provisions of the CGST Act and the stock records are duly maintained in the tally system where in the production entries were updated upto the month of April and May 19 and the sale entries were posted upto the date of search as evident from submission made above. Hence the charge of omission and commission on the Partner of the assessee Shri Lalit Goyal is also not sustainable.

Further Shri Lalit Goyal, Partner of the assessee who is charge de affair of the assessee had never been interrogated by the Intelligence team which has conducted the search despite the availability of ample time from the date of visit it till issuance of SCN. Hence in view of above the adjudicating authority is correct in stating in its OIO dated: 27.01.2020 that proposing penalty upon Sh. Lalit Goyal partner of assessee under section 122(3) of the Act, without according him opportunity to put forth his view pleading as to how he was personally involved and responsible in the clandestine removal of the goods, is wholly unjustifiable and against the spirit of law, and accordingly Sh. Lalit Goyal is liable for any penal action under section 122(3) of the COST Act. Considering the above submission, the Departmental Appeal imposing penalty under section 122(3) of the CGST Act on Sh. Lalit Goyal, Partner of the assessee is incorrect and the same is liable to be dismissed.

Statutory procedure prescribed for communication of Show-Cause Notice under Rule 142(1) of CGST Rules have not been followed.

D.1. Without prejudice to above, it is submitted that the foundational show cause notice dated 23.12.2019 proposing seizure of the goods and alleging that the goods have been kept un-accounted for the purpose of clandestine removal of goods without payment of GST, was never communicated to the petitioner as per the prescribed provisions of the COST Rules.

D.2. In this connection it is submitted that Rule 142(1) of the CGST Rules, provides that the show-cause notice to be communicated electronically on the portal. Rule 142(1) of the COST rules is reproduced here in below for ready reference:

142. Notice and order for demand of amounts payable under the Act.-

The proper officer shall serve, along with the

(a) notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130, a summary there of electronically in FORMGST DRC-01,

(b) statement under sub-section (3) of section 73 or sub-section (3) of section 74, a summary thereof electronically in FORM GST DRC-02, specifying therein the details of the amount payable.

In the present case the department has not uploaded the Show Cause Notice dated: 23.12.2019 on the electronic portal but communicated to the assessee via Post. Hence the prescribed procedure has not been followed. Therefore, the Show Cause Notice issued without following the provisions of Rule 142(1) of the COST Rules is void ab-initio and consequently the departmental appeal is liable to be quashed.

The respondent has cited case law in their defence:-

Hon’ble High Court of Madhya Pradesh dated: 19.11.2020 in writ petition No. 16117/2020  in case of Akash Garg Vs State of M.P.  

6. Personal hearing in the instant case in virtual mode through video conference was held on 22.03.2021  Sh.Virendra Porwal, Authorized Representative of the respondent appeared.  During personal hearing he reiterated the submission of cross objections and explained in details.  

7. From appellant/department side, none appeared for personal hearing and in this regard a letter dated 23.03.2021 has been received from Asstt Commissioner, CGST Division-Sikar therein it has been stated that due to technical reasons, this office was not able to attend the virtual hearing hosted on 22.03.2021 though link via Webex. It is further requested that the submission of this office may please be considered as submitted in appeal memo.

8. I have gone through the facts of the case as inscribed in the departmental appeal, the oral iteration offered by the department/ appellant in their appeal memo. Accordingly, I proceeded to decide the case envisioning the facts submitted by the appellant department as well as respondent.

On going through the appeal memo, submission of cross objections and relevant records of the case I find that the following issues to be decided in the instant case:-

1) Whether excess stock were found during the physical stocks verification against entries made in stock register and whether seized excess stocks are liable to confiscations in terms of Section 130 of CGST Act and Rules 139 of CGSGT Rules, 2017 or not ?

2) Whether penalty is imposable upon the Firm under Section 122(1) (xvi) and (xviii) of CGST Act, 2017or not ?

3) Whether penalty is imposable upon Partner of the Firm under Section 122(3) of CGST Act,2017 or not ?

Before embarking upon the issue it would be appropriate to reproduce the relevant provisions of Act and Rules made thereunder:-

SECTION 130. 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

(v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance,

then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122.

(2) Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit :

Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon :

Provided further that the aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under sub-section (1) of section 129 :

Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon.

(3) Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance.

(4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard.

(5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government.

SECTION 122. Penalty for certain offences. – (1) Where a taxable person who –

(i)……

(ii)….

(iii)…..

(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;

(2)……

(3) Any person who ––

(a) aids or abets any of the offences specified in clauses (i) to (xxi) of sub-section (1);

(b) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder;

(c) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which 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 123. Penalty for failure to furnish information return. – If a person who is required to furnish an information return under section 150 fails to do so within the period specified in the notice issued under sub-section (3) thereof, the proper officer may direct that such person shall be liable to pay a penalty of one hundred rupees for each day of the period during which the failure to furnish such return continues :

Provided that the penalty imposed under this section shall not exceed five thousand rupees

SECTION 35. Accounts and other records. -(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.

RULE 139. Inspection, search and seizure. – (1) Where the proper officer not below the rank of a 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 authorisation in FORM GST INS-01 authorising any other officer subordinate to him to conduct the inspection or search or, as the case may be, seizure of goods, documents, books or things liable 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 authorised officer shall make an order of seizure in FORM GST INS-02*.

 RULE 56. Maintenance of accounts by registered persons. –

(1) Every registered person shall keep and maintain, in addition to the particulars mentioned in sub-section (1) of section 35, a true and correct account of the goods or services imported or exported or of supplies attracting payment of tax on reverse charge along with the relevant documents, including invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers and refund vouchers.

(2) Every registered person, other than a person paying tax under section 10, shall maintain the accounts of stock in respect of goods received and supplied by him, and such accounts shall contain particulars of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample and the balance of stock including raw materials, finished goods, scrap and wastage thereof.

Now, I am taking up the issues one by one for discussion.

Point No.(1) – With regard to issue involved at Point No.1, appellant/department has contended that adjudicating authority has erred in holding the seized goods deserved to release as the same is not liable to confiscation. Further, submitted that the adjudicating authority has also erred in holding that the unaccounted excess goods which were seized were not deliberately kept unaccounted to supply the same clandestinely and without payment of tax. The appellant/department emphasized that the taxpayer/assessee has failed to maintain the accounts of stocks in respect of goods received and supplied by him for long time i.e.  period of more than one month and it is in violation of Section 35 of CGST and Rule 56 of CGST Rules, 2017. This facts has been supported by statement of Supervisor of the Firm wherein he disclosed that they did not maintain any stock register and no actual production entered in their records and further the same facts were admitted by the Authorized Signatory and brother of the Partner in his voluntary statement. Further added that the action of non maintenance of records were modus-operandi of the taxpayer/assessee for manipulating the accounts/records to evade the GST which indicate the mens-rea of the assessee.

Contrary  to  the  appellant  plea,  the  respondent (Assessee/Taxpayer) submitted the stocks found during search were not excess/unaccounted stock as alleged. Rather the stock found was slightly short than the books stock which was due to the reason of inaccurate stock taking/ manufacturing process loss. Further, the respondent submitted that at the time of search proceedings merely his books of account were incomplete. However, intelligence team neither allow him to complete the books of accounts nor considered updated position of books of accounts as submitted by him at later stage.

Whereas, he submitted that the adjudicating authority after verification of books of accounts and satisfied with the position of book stock he released the goods.

 On going through the both sides of submissions, I observed that respondent/assessee has no where raised any objection about the search proceedings as well as panchnama proceedings conducted by the investigating team. From which it may be inferred that the above said proceedings were conducted in transparent and fair manner. Further, I find that during the proceedings the physical stock was also verified and it was found excess against the entries of stock register. The whole proceedings were done in the presence of two independent witnesses and in presence of the employees of the respondent/assessee. Further, the statements of the Supervisor, Accountant and Authorized Signatory of the Firms were recorded under Section 70 of CGST Act, 2017 before the proper officer. The Supervisor of the Firm has stated in his voluntary statement that they did not maintain stock register and also did not prepare daily production slip and they used to note down the details in Kachhi Parchi. The same facts was admitted by Authorized Signatory of the Firms and brother of Partner of the Firms, in his statement.

 From the above facts, it is emerged that during the search proceedings the excess stock were found against the entry of stock register. Therefore, findings of the adjudicating authority that the unaccounted / excess stocks were not deliberately kept unaccounted is not tenable. Further, the respondent/assessee contended that the Supervisor were not aware about the fact position of stock and Authorized Signatory could not understand the question in correct prospective is also not acceptable. In this regard, I find that the Supervisor of the Firm clearly stated that they did not maintain the stock register and prepared Kachhi Parchi. From the statement of  Supervisor it is very much clear that there was no proper mechanism in place for maintenance of stock register at the part of the respondent/assessee instead they kept Kachhi Parchi this acts itself indicate the intention of the assessee.

 In view of this fact, it is obvious that the assessee have not followed the procedures with regard to maintenance of proper record as provided in Section 35 of CGST Act and 56 of CGST Rules made thereunder hence he contravened the said Act and Rules made thereunder. This act of omission and commission on the part of assessee is nothing but to keep the unaccounted goods for removal the same clandestinely with intent to evade the proper tax liability.

 Further on going through the submissions, I find that the respondent/assessee has emphasized that the excess stocks were found due to non updations of stock register and after obtaining photocopies of the seized records, the stock register was updated and accordingly it was found that there was no excess stocks rather it was slightly short. In this context, I find that the adjudicating authority highly rely on the submission of the respondent/assessee and concluded that the seizure of the excess stock was unwarranted. Accordingly he did not confiscate the seized goods rather ordered the release of goods and demanded the tax on short stock of the goods. However, I observed that the adjudicating authority did not examine the whole case records rather he heavily rely on the respondent/assessee submissions whereas he should have examined all the records related to the case i.e. Balance Sheet, purchase invoice, sales invoice and production register/stock register etc., and genuineness of records before arriving the said conclusion. Contrary to this,  I find that the assessee had not maintained the proper stock register and Kachha Parchi was in practice as stated by the Supervisor and Accountant of the assessee. Further, the adjudicating authority also mentioned in his findings that the statement of Partner Sh.Lalit Goyal was not recorded to find out the pricing pattern of the seized goods and raised the question on valuation of the goods the same contention has also been taken by the respondent. In this regard, I observed that the value was arrived on the basis of statement of the Accountant of the Firms who inter alia stated that as per his knowledge, the ratio of the value shown in the bill and amount charged in cash over and above the value declared in the Bill 40:60, receiving 40% through bill of the actual price while receiving 60% in cash through Kachha system the same systems was adopted for purchase as well as sale of the goods. In view of this fact I find that the value arrived by investigating authority by multiplying the sale price mentioned in the sale invoice by 2.5 times is justified and proper. Further, in view of the pattern of Kachha system, I find that the investigating authority has rightly arrived the value of the said excess goods as the sale invoice price can not be relied as it was undervalued upto the 60% of the actual price of the sale. Moreover in view of the above facts I am the opinion that the recording of statement of the Partner Sh.Lalit Goyal would have not served the purpose for arriving the value as it is very much clear that the ‘Kachha Systems’were in place rather the proper recording of accounting systems of purchase, sale, production and stocks of the goods.

 Further, it is settled law that the statement recorded before the tax authority is merely not a statement recorded before Police Officer but it is a piece of evidence. The relevant portion of the same Supreme Court judgment is as under:

In this regard, the Hon‘ble Supreme Court in case of Surjeet Singh Chhabra Vs. U.O.I. reported in 1997 (89) E.L.T. 646 (S.C.) held that evidence – confession statement made before Customs officer though retracted within six days is an admission and binding since Customs Officers are not Police Officers – Section 108 of the Customs Act and FERA.

 Further, the Hon‘ble Supreme Court in the case of Naresh J. Sukhawani v. Union of India reported in 1996 (83) E.L.T. 258 has also held that the statement recorded under Section 108 of the Customs Act, 1962 made before the Customs officials, is not a statement recorded under Section 161 of Cr.P.C. Therefore, it is a material piece of evidence collected by the Customs officials under Section 108 of the Customs Act, 1962 and it can be used as substantive evidence connecting the petitioners with the contravention of Customs Act.

Since similar provisions has been provided in Section 70 of CGST Act, 2017 hence in view of above judicial pronouncement it may be concluded that statement recorded under the said provisions constitute substantive piece of evidence and can be relied in adjudication proceedings – Even if such statement is retracted or diluted in subsequent statement, it can be appreciated in light of other circumstances and evidence.  

Further I also agree with the appellant/department plea that the adjudicating authority has not recorded the major fact that the unaccounted Indian Currency Amounting to ₹ 11,10,000/- were found on the residential premises of the Partner of the assessee which were seized by the investigating authority on reasonable belief that the said currency is also a part of sale proceed of the goods and seized the same. This facts are very well corroborate with the statement of Accountant that there was Kachha Systems in place and cash transaction was also in practice, therefore I do not find force in the contention of the respondent/assessee that the said cash could be verified with cash book and remaining amount was saving of household, as the huge cash kept in the residential premises is unwarranted looking into the threat aspect as well as restriction of possession of cash by the Govt.

In view of the foregoing discussions and findings, I find that the adjudicating authority has erred by holding that the seized goods is not liable for confiscation. Contrary to this view, I find that the respondent/ assessee has contravened the provisions of Section 35 of CGST Act read with Rule 56 of CGST Rules,2017.  Therefore, the seized goods is liable to confiscation in terms of Section 130 of CGST Act and Rules made thereunder. However, since the adjudicating authority has already been ordered to release the said seized goods in terms of Order in Original No.01/GST/Demand/2020 dated 27.01.2020 therefore, I have no option but to impose fine in lieu of the confiscation of the said released goods in terms of Section 130(2) of CGST Act,2017.

Point No.(2)- 

In respect of the issue mentioned at point No.2 the respondent submitted that since no excess stock found hence no penalty is leviable under Section 122(1) (xvi) and (xviii) of CGST Act, 2017. Further, he added that he has maintained the books of accounts as per provisions of the CGST Act. In this regard, I find that the detailed discussion on

the issue of excess stock has already been pointed out at point No.1. In view of above discussions and findings it has established that the assessee did not maintained the proper books of account at the time of search proceedings hence he violated the provisions of Section 35 of CGST Act and Rules made thereunder. Accordingly, I find that the penalty under Section 122(1) (xvi) and (xviii) of CGST Act, 2017 upon the assessee is very well attracted in the instant case.

Point No.(3)

In respect of point No.3 the respondent submitted that in respect of penalty imposed under Section 122(3) of CGST Act, 2017 he submitted that none of the clause of Section 122(3) are applicable in the instant case. Further he added that since penalty under Section 122(1) and Section 125 of CGST Act has been imposed on the firm thus imposing penalty on the partner of the Firm is not justified. In this context, on going through the section 122(3) of CGST Act it may be seen that this particular penalty is imposable on the person who aids or abets any of the offences specified in clause (i) to (xxi) of sub section 1 of Section 122 of CGST Act. From the above discussion and findings and perusal of records it has been established that the Partner of the firm is the key person who deals all the affairs of the Assessee firm. Therefore, he can not be escaped from any offence of the firm and it can not be imagined that without his involvement such kind of violations of the provisions of the act or rules made thereunder would be happened. Further, the Partner has himself admitted the said offence in his statement recorded under the provisions of law.

In view of the above findings and discussions, I set aside the order in original passed by the adjudicating authority and pass the following order accordingly:-

1- I order to confiscation the seized goods amounting to ₹ 96,86,453/- under Section 130(1) (ii) & (iv) of CGST Act read with Rule 139 of CGST Rules, 2017.  Since goods has already been released vide the OIO No.01/GST/Demand/2020 dated 27.01.2020 hence I impose a fine of ₹ 10,00,000/-(Rupees Ten Lakhs only) in lieu of confiscation of goods under Section 130(2) of CGST Act,2017.

2- I impose a penalty amounting to ₹ 17,43,562/- (Rs. Seventeen Lakhs Forty Three Thousand and Five Hundred Sixty Two only)  under Section 122(1) (xvi) and (xviii) of CGST Act upon M/s Swastik Udyog, E-17 & 18, SKS Industrial Area, Reengus, Distt-Sikar, Raj

3- I also impose a penalty of ₹ 10,000/- (Rs. Ten Thousand only) on partner of the firm i.e. Sh. Lalit Goyal under Section 122(3) of CGST Act, 2017.

9. The appeal is disposed off in above manner.