Voluntary GST payment under Section 74(5) requires self-ascertainment; DRC-03 deposit during search warranted refund.

Payment through Form GST DRC-03 during search proceedings was held not to be voluntary under Section 74(5) because the deposit was made amid departmental enquiry, no notice under Section 74(1) had been issued, no prior independent ascertainment of liability was shown, and the taxpayer promptly disputed coercion. The absence of Form GST DRC-04 was not conclusive, but it supported the factual inference that the payment was not a true self-ascertained discharge. The retained amount could not therefore be sustained, and refund was warranted. Interest on the refunded amount was not granted at this stage.

---

---

Issues: Whether the amount of Rs.2,35,23,506/- deposited through Form GST DRC-03 during search and seizure proceedings was a voluntary payment under Section 74(5) of the Central Goods and Services Tax Act, 2017, or was obtained under coercion so as to warrant refund; and whether interest on the refunded amount was payable at this stage.

Analysis: The statutory scheme under Section 74(5), Section 74(6) and Rule 142(2) permits a taxpayer to discharge tax, interest and reduced penalty before issuance of notice, but the payment must be based on the taxpayer's own ascertainment or the liability ascertained by the proper officer. The surrounding circumstances were material: the amount was deposited during ongoing search proceedings, no notice under Section 74(1) had been issued, no prior independent ascertainment of liability was shown, the records and electronic devices were under departmental control, and the petitioner promptly disputed the voluntariness of the deposit. The absence of Form GST DRC-04 was not conclusive by itself, but it assumed significance in the factual matrix. The declaration in Form GST DRC-03 did not establish true self-ascertainment because it reflected payment after initiation of departmental enquiry. In these circumstances, the Court held that the deposit could not be treated as voluntary under Section 74(5).

Conclusion: The amount deposited through Form GST DRC-03 was not voluntary and its retention could not be sustained, so refund was warranted. The prayer for interest was not granted at this stage.

Ratio Decidendi: A payment made through Form GST DRC-03 during search proceedings is not presumed voluntary merely because it is made before notice; voluntariness under Section 74(5) must be supported by contemporaneous material showing independent self-ascertainment and compliance with the statutory procedure.

---