Query – Refund of Excess Amount Deposited During GST Search

[Pankaj Singh]

Facts: During the search, the Company was compelled to deposit Rs. 100 through the cash ledger. Subsequently, the SCN has proposed a liability of only Rs. 10.

Issue: Whether the excess amount of Rs. 90 can be claimed as a refund under the category “Any Other”, and the refund application in Form RFD-01 is required to be filed online  ? or there is any other prescribed process?

[Shilpi Jain]

Amounts paid during search/investigations are not tax amounts but are amounts paid under protest. Refund can be claimed.

[KASTURI SETHI]

It is a matter of issue. On what ground GST was got deposited ? What is the real issue here ?  

[Pankaj Singh]

Sir, the GST amount was deposited under compulsion at the initial stage of the investigation. Certain preliminary issues were raised during the search, and in order to avoid any coercive action, the amount was paid on the spot. These issues were later clarified and sorted out during the investigation stage itself, much before the issuance of the SCN. The final SCN reflects only the issues that actually remained for adjudication.

[KASTURI SETHI]

Any amount of tax got deposited by the Department without issuance of SCN and without confirmation via adjudication is unconstitutional. Refund of such amount cannot be denied to you whatever may be the amount.

[KASTURI SETHI]

    In continuation of my reply at 3.1 above,  whether it is Government or the assessee  both are required to act within framework of law. Suppose  you give in writing that you have paid tax voluntarily during search or investigation, even then such deposit/recovery of tax shall not be in letter and spirit of GST laws. i.e. without authority of law.

[Pankaj Singh]

Fully Agreed Sir. Thank You 

AI Summary

Refund of compelled GST deposit: excess amount refundable when payment made under protest absent adjudicated liability.
Excess amounts paid during a GST search under compulsion are treated as amounts paid under protest and are refundable where adjudication does not establish a corresponding tax liability; the proper remedy is a refund application using the prescribed Form RFD-01 filed through the mandated online process, with preservation of evidence demonstrating compulsion during the search.