High Court Guidelines Prohibit Recovery During GST Search, Emphasize Compliance and Disciplinary Action

The High Court directed the issuance of guidelines prohibiting recovery during search/inspection proceedings under the GST Act. Assessees were instructed to make voluntary payments only after the conclusion of search proceedings and officers' departure. The judgment mandated a complaint/grievance filing facility post-search to address any unjust payments. Strict disciplinary action against officers acting against guidelines was emphasized, highlighting the importance of compliance and deterring misconduct. The matter was adjourned for further proceedings, with officers instructed to participate promptly in video conferences.

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Issues:
1. Issuance of guidelines regarding recovery during search/inspection proceedings under GST Act.
2. Timing of voluntary payment by assessee during search proceedings.
3. Availability of complaint/grievance filing facility for assessee.
4. Disciplinary action against officers acting against the issued directions.

Analysis:
1. The High Court directed the Central Board of Indirect Taxes and Customs and the Chief Commissioner of Central/State Tax of Gujarat to issue guidelines prohibiting any recovery during search/inspection proceedings under the Central/Gujarat Goods and Services Tax Act, 2017. The Court emphasized that no recovery should be made by any mode, including cheque, cash, e-payment, or adjustment of input tax credit under any circumstances.

2. The Court further directed that even if the assessee wishes to make a voluntary payment by filing Form DRC-03, they should do so on the day following the conclusion of the search proceedings and after the visiting team officers have left the premises. This timing restriction aims to ensure transparency and prevent undue influence during the search process.

3. Additionally, the judgment mandated the provision of a facility for filing complaints or grievances after the search proceedings if the assessee was compelled to make a payment during the search. This step aims to protect the rights of the assessee and provide a recourse for any unjust actions taken during the search operation.

4. The Court warned that if an assessee files a complaint and an officer is found to have disregarded the issued directions, strict disciplinary action should be initiated against the concerned officer. This provision underscores the importance of compliance with the guidelines and serves as a deterrent against any misconduct by the officers involved in the search operations.

The Court adjourned the matter to a later date for further proceedings and instructed all officers to participate in the video conference promptly.

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