Coerced GST recovery during search was held refundable with statutory interest, subject to pending proceedings.

A payment made through FORM GST DRC-03 during search proceedings was treated as a coerced recovery, not a voluntary deposit, because it was made before the search ended and while officers were still present, with no independent basis shown for payment on that date. Applying the GST framework under Sections 73 and 74, Rule 142, and the administrative instruction against recovery during search, inspection or investigation, the court held the amount refundable with statutory interest. The refund was granted without prejudice to the pending proceedings under Section 73.

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Issues: Whether an amount paid through FORM GST DRC-03 during search proceedings was a voluntary deposit or a coerced recovery, and whether the amount was refundable with interest.

Analysis: The dispute turned on the legal framework governing pre-notice and post-notice payment of tax under the GST law, including the scheme of Sections 73 and 74 of the Central Goods and Services Tax Act, 2017, Rule 142 of the Central Goods and Services Tax Rules, 2017, and the administrative instruction clarifying that no recovery should be made during search, inspection or investigation. The Court also relied on the principle that recovery during search cannot be treated as lawful unless the payment is shown to be voluntary and made without coercion. On the facts, the deposit was made before the search ended and before the officers left the premises, and there was no material showing any independent basis for such payment on that date.

Conclusion: The deposit was not voluntary and was liable to be refunded with statutory interest. The refund, however, was made without prejudice to the pending proceedings under Section 73 of the Central Goods and Services Tax Act, 2017.

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