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SGST High Court Cases

GST - Presence of excess stock at the time of survey of premises - Confiscation under Section 130 of the CGST Act, 2017 and levy of penalty under Section 122 of the Act - Whether mere presence of additional stock would result in confiscation and subsequent penalty - issue of show cause notice and passing of order of confiscation and penalty belatedly – HELD - The calculation of the stock by the Appellate Authority on the basis of an estimate is without any basis in law. When the Appellate Authority had come to the finding that the officers in the survey did not carry out the quantification of the stock in the correct manner, there was no reason for the Appellate Authority to uphold the confiscation and penalty - Further, the notice for confiscation was issued almost 10 months after the date of survey and the order of confiscation was passed by the Assessing Authority almost after 11 months of the date of survey. This inordinate delay in issuing show cause notice goes to the root of the matter and is a factor to be considered. Such delay leads to an inference that the authorities have acted in a callous manner - the entire procedure followed by the authorities indicates not only a lackadaisical approach but also showcases the incompetence and inefficiency of the authorities that had carried out the survey in a shoddy manner and thereafter issued the show cause notice and passed order of confiscation and penalty belatedly - It is trite law that the burden of proof for imposition of penalty and confiscation of goods is on the Department and the same cannot be done on estimates when it is clear that the Department could have carried out a physical verification based on counting and weighing of the goods - the entire finding with regard to excess stock, that is based on estimate, is liable to be rejected outrightly - As the said finding of excess stock is clearly without any basis in law and illegal, the initiation of proceedings under Section 74 of the Act cannot stand – the impugned orders are set aside and writ petitions are allowed
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