Question1: What if during a search some unaccounted clandestine purchases were found and on enquiry, the party said these purchases were made on cash basis without any bill/invoice from xxx based supplier. Further they have not maintained any records of such purchases and they were going to sale the same without any GST.

Please guide in this regard.

1. Is any tax demand can be raised.

2.Are unaccounted purchases can be treated as purchase from unregistered person and reverse charge mechanism is applicable on such unaccounted purchases under Section 9(4) of CGST Act.

3. Is there any other tax liability on such purchase'

4. Since purchased goods are unaccounted under which section, penalty is imposable.

5. Can be concluded on voluntary payment of tax and penalty if any.

6. Any other opinion.

Answer: Section 74 read with Rule 142 will apply in this case and following may be proceedings and result The preventive will pressure the person and detain him even put him behind bar for not providing source of purchase this will depend upon the size of demand for detail see section 74 The preventive team may raid the source of supply as well as other location of that person or related person May issue summon for investigation and recording of statement Penalty may be imposed on directors ,officers and other concerned GST rating may be reduced Registration may be cancelled All the above action may be taken together or may be some of them depending upon the size and nature of demand and previous history of the person etc You may go through section 74 ,Section 29 and section 74 to 94 with relevant rules From the wording of Law it seems to be very hard on the assesee as well as consultants for the cases of fraud and evasion (Reply dt. 22/11/2017)