Voluntary tax reversal during search can bind only if made without coercion; involuntary reversal was ordered restored.

Search authorisation under section 67(1) was upheld because FORM GST INS-01 was sufficient to record the statutory ground and the record showed reasons to believe that input tax credit had been availed from suppliers whose registrations were cancelled. The challenge to the search therefore failed. By contrast, input tax credit reversed during the search was ordered to be restored because a self-ascertained payment concludes liability only when voluntary; the late-night reversal during ongoing search and questioning, without FORM GST DRC-04 or later adjudication, was treated as involuntary and under pressure. The revenue's power to take lawful protective measures remained open.

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Issues: (i) Whether the search and inspection conducted under section 67(1) of the Delhi Goods and Services Tax Act, 2017 was illegal for want of proper authorization and reasons to believe. (ii) Whether the amount of input tax credit reversed during the search was liable to be restored on the ground that the reversal was involuntary.

Issue (i): Whether the search and inspection conducted under section 67(1) of the Delhi Goods and Services Tax Act, 2017 was illegal for want of proper authorization and reasons to believe.

Analysis: The authorization in FORM GST INS-01 was held to be sufficient because the prescribed form only required the relevant statutory ground to be indicated and did not require disclosure of detailed reasons before the search. The record also showed that the search was undertaken on the basis that the petitioner had availed input tax credit from suppliers whose registrations had been cancelled. The existence of reasons to believe satisfying section 67(1)(a) was, therefore, not displaced.

Conclusion: The challenge to the legality of the search failed and was decided against the petitioner.

Issue (ii): Whether the amount of input tax credit reversed during the search was liable to be restored on the ground that the reversal was involuntary.

Analysis: The Court held that a payment made on self-ascertainment basis can conclude liability only when it is voluntary. On the facts, the reversal was made late at night during continuing search and questioning, without an acknowledgment in FORM GST DRC-04 and without subsequent adjudication. The Court did not accept that the reversal was voluntary and treated the surrounding circumstances as indicating pressure and coercion. At the same time, the Court preserved the revenue's ability to take lawful protective steps, including under section 83 of the Delhi Goods and Services Tax Act, 2017 and rule 86A of the Delhi Goods and Services Tax Rules, 2017, if conditions are satisfied.

Conclusion: The petitioner was entitled to restoration of the reversed input tax credit, and this issue was decided in favour of the petitioner.

Final Conclusion: The petition succeeded only to the extent of directing restoration of the reversed input tax credit, while the challenge to the search itself was rejected.

Ratio Decidendi: A reversal of tax or input tax credit during search concludes liability only if it is shown to be voluntary and on self-ascertainment basis; where the surrounding circumstances indicate coercion and the statutory post-payment procedure is not followed, the amount is liable to be restored, while lawful revenue-protective measures remain open.

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