TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1325
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....e is a private limited company, registered under the provisions of the Companies Act, 2013 and is said to be duly registered under the Goods and Services Tax enactment. On 08-06-2023, officers from the Director General of GST Intelligence and the Anti-Evasion Unit conduct simultaneous inspection at the registered office premises of the petitioner-Company purportedly under Section 67(1) of the Central Goods and Services Tax Act, 2017 ('CGST Act'). During the course of the proceedings, it is the case of the petitioner that he was compelled to make immediate payment of Rs. 2,42,00,000/- in form DRC-03 as obtaining under Section 74(5) of the CGST Act, to avoid threat of adverse consequences. 2.2. After the inspection conducted on 08-06-2023, summons was issued on 24-11-2023 directing the authorized representative of the petitioner to appear in person for conduct of an enquiry. The petitioner claims to have appeared before the concerned Officers, and during the proceedings, it is said that they once again demanded payment of Rs. 22,46,400/- purportedly to cover the liability, without furnishing any determination or quantification of liability. The issuance of summons goes on this way....
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....ustification, amounts to colorable exercise of administrative power and would be in contravention of Section 54 of the CGST Act. The GST Intelligence ought to have issued an acknowledgement in terms of Rules 90(2) and Rule 92(1) of the of the Central Goods and Services Tax Rules, 2017 ('CGST Rules'). since the petitioner-assessee has duly submitted the refund applications. 4.2. The learned counsel would submit that a Division Bench of this Court in the case of INTELLIGENCE OFFICER, DIRECTORATE GENERAL OF GST INTELLIGENCE, BENGALURU v. KESAR COLOR CHEM INDUSTRIES, reported in 2025 SCC OnLine Kar 18697, has held that recovery made during investigation without adjudication was contrary to law and in violation of Article 265 of the Constitution. The learned counsel would also place reliance upon the judgment of the Division Bench of the High Court of Delhi in the case of AB ENTERPRISES v. COMMISSIONER OF DELHI GOODS AND SERVICES TAX, reported in 2023 SCC Online Del 7434, wherein the Division Bench holds that an application can be rejected only if the application is incomplete in terms of Rule 89 of CGST Rules. The withholding of funds by the respondent-Authorities is in violation of....
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.... the due date in accordance with the provisions of Section 39, except where such return is furnished after commencement of any proceedings under Section 73 or Section 74 or Section 74-A] in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger. (2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid. (3) Where the input tax credit has been wrongly availed and utilised, the registered person shall pay interest on such input tax credit wrongly availed and utilised, at such rate not exceeding twenty-four per cent. as may be notified by the Government, on the recommendations of the Council, and the interest shall be calculated, in such manner as may be prescribed. ... ... ... 54. Refund of tax.-(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed: Provided that a registered person, c....
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....nd other evidences but he may file a declaration, based on the documentary or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on to any other person. (5) If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund referred to in Section 57. (6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent. of the total amount so claimed, [* * *] in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under sub-section (5) for final settlement of the refund claim after due verification of documents furnished by the applicant. (7) The proper officer sh....
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....er giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine. (12) Where a refund is withheld under sub-section (11), the taxable person shall, notwithstanding anything contained in Section 56, be entitled to interest at such rate not exceeding six per cent. as may be notified on the recommendations of the Council, if as a result of the appeal or further proceedings he becomes entitled to refund. (13) Notwithstanding anything to the contrary contained in this section, the amount of advance tax deposited by a casual taxable person or a non-resident taxable person under sub-section (2) of Section 27, shall not be refunded unless such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the ....
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.... [or in Indian rupees wherever permitted by the Reserve Bank of India], where the supply of services had been completed prior to the receipt of such payment; or (ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice; (d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court, the date of communication of such judgment, decree, order or direction; (e) in the case of refund of unutilised input tax credit under clause (ii) of the first proviso to sub-section (3), the due date for furnishing of return under Section 39 for the period in which such claim for refund arises; (f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof; (g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and (h) in any other case, the date of payment of tax. ... ... ... 74. Determination of tax, pertaining....
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.... the provisions of this Act or the rules made thereunder. (7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable. (8) Where any person chargeable with tax under sub-section (1) pays the said tax along with interest payable under Section 50 and a penalty equivalent to twenty-five per cent. of such tax within thirty days of issue of the notice, all proceedings in respect of the said notice shall be deemed to be concluded. (9) The proper officer shall, after considering the representation, if any, made by the person chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an order. (10) The proper officer shall issue the order under sub-section (9) within a period of five years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within five years from the date of....
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....ed operations as endorsed by the specified officer of the Zone: Provided further that in respect of supplies regarded as deemed exports, the application may be filed by,- (a) the recipient of deemed export supplies; or (b) the supplier of deemed export supplies in cases where the recipient does not avail of input tax credit on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund: Provided also that refund of any amount, after adjusting the tax payable by the applicant out of the advance tax deposited by him under Section 27 at the time of registration, shall be claimed only after the last return required to be furnished by him has been so furnished. Explanation.-For the purposes of this sub-rule, "specified officer" means a "specified officer" or an "authorised officer" as defined under Rule 2 of the Special Economic Zone Rules, 2006. (1-A) Any person, claiming refund under Section 77 of the Act of any tax paid by him, in respect of a transaction considered by him to be an intra-State supply, which is subsequently held to be an inter-State supply, may, before the expiry of a period of t....
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....eneration Plants issued by the Regional Power Committee Secretariat as a part of the Regional Energy Account (REA) under clause (nnn) of sub-regulation 1 of Regulation 2 of the Central Electricity Regulatory Commission (Indian Electricity Grid Code) Regulations, 2010 and the copy of agreement detailing the tariff per unit, in case where refund is on account of export of electricity; (bb) a statement containing the number and date of export invoices along with copy of such invoices, the number and date of shipping bills or bills of export along with copy of such shipping bills or bills of export, the number and date of Bank Realisation Certificate or foreign inward remittance certificate in respect of such shipping bills or bills of export along with copy of such Bank Realisation Certificate or foreign inward remittance certificate issued by Authorised Dealer-I Bank, the details of refund already sanctioned under sub-rule (3) of rule 96, the number and date of relevant supplementary invoices or debit notes issued subsequent to the upward revision in prices along with copy of such supplementary invoices or debit notes, the details of payment of additional amount of integrate....
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....rom the Special Economic Zone unit or the Special Economic Zone developer, in a case where the refund is on account of supply of goods or services or both made to a Special Economic Zone unit or a Special Economic Zone developer; (g) a statement containing the number and date of invoices along with such other evidence as may be notified in this behalf, in a case where the refund is on account of deemed exports; (h) a statement containing the number and the date of the invoices received and issued during a tax period in a case where the claim pertains to refund of any unutilised input tax credit under sub-section (3) of Section 54 where the credit has accumulated on account of the rate of tax on the inputs being higher than the rate of tax on output supplies, other than nil-rated or fully exempt supplies; (i) the reference number of the final assessment order and a copy of the said order in a case where the refund arises on account of the finalisation of provisional assessment; (j) a statement showing the details of transactions considered as intra-State supply but which is subsequently held to be inter-State supply; (k) a statement showi....
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.... Provided further that a certificate is not required to be furnished in cases where refund is claimed by an unregistered person who has borne the incidence of tax. Explanation.- For the purposes of this rule- (i) in case of refunds referred to in clause (c) of sub-section (8) of Section 54, the expression "invoice" means invoice conforming to the provisions contained in Section 31; (ii) where the amount of tax has been recovered from the recipient, it shall be deemed that the incidence of tax has been passed on to the ultimate consumer. (3) Where the application relates to refund of input tax credit, the electronic credit ledger shall be debited by the applicant by an amount equal to the refund so claimed. (4) In the case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking in accordance with the provisions of sub-section (3) of Section 16 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), refund of input tax credit shall be granted as per the following formula- Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of s....
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....TC / ITC availed on inputs and input services)}]. Explanation:- For the purposes of this sub-rule, the expressions- (a) Net ITC shall mean input tax credit availed on inputs during the relevant period [* * *]; and (b) "Adjusted Total turnover" and "relevant period" shall have the same meaning as assigned to them in sub-rule (4). 90. Acknowledgement.- (1) Where the application relates to a claim for refund from the electronic cash ledger, an acknowledgement in Form GST RFD-02 shall be made available to the applicant through the common portal electronically, clearly indicating the date of filing of the claim for refund and the time period specified in sub-section (7) of Section 54 shall be counted from such date of filing. (2) The application for refund, other than claim for refund from electronic cash ledger, shall be forwarded to the proper officer who shall, within a period of fifteen days of filing of the said application, scrutinize the application for its completeness and where the application is found to be complete in terms of sub-rules (2), (3) and (4) of Rule 89, an acknowledgement in Form GST RFD-02 shall be made available to th....
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.... under the Act or under any existing law and the balance amount refundable. [* * *] (1-A) Where, upon examination of the application of refund of any amount paid as tax other than the refund of tax paid on zero-rated supplies or deemed export, the proper officer is satisfied that a refund under sub-section (5) of Section 54 of the Act is due and payable to the applicant, he shall make an order in Form RFD-06 sanctioning the amount of refund to be paid, in cash, proportionate to the amount debited in cash against the total amount paid for discharging tax liability for the relevant period, mentioning therein the amount adjusted against any outstanding demand under the Act or under any existing law and the balance amount refundable and for the remaining amount which has been debited from the electronic credit ledger for making payment of such tax, the proper officer shall issue Form GST PMT-03 re-crediting the said amount as Input Tax Credit in electronic credit ledger. (2) Where the proper officer or the Commissioner is of the opinion that the amount of refund is liable to be withheld under the provisions of sub-section (10) or, as the case may be, sub-sect....
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....all make an order in Form GST RFD-06 and issue a payment order in Form GST RFD-05, for the amount of refund to be credited to the Consumer Welfare Fund. ... ... ... 142. Notice and order for demand of amounts payable under the Act.- (1) The proper officer shall serve, along with the (a) notice issued under Section 52 or Section 73 or Section 74 [or Section 74-A] or Section 76 or Section 122 or Section 123 or Section 124 or Section 125 or Section 127 or Section 129 or Section 130, a summary thereof electronically in FORM GST DRC-01, (b) statement under sub-section (3) of Section 73 or sub-section (3) of Section 74 [or sub-section (3) of Section 74-A], a summary thereof electronically in FORM GST DRC-02, specifying therein the details of the amount payable. (1-A) The proper officer may, before service of notice to the person chargeable with tax, interest and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74 or sub-section (1) of Section 74-A, as the case may be, communicate the details of any tax, interest and penalty as ascertained by the said officer, in Part A of FORM GST DRC-01-A. (2) Where....
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....d by the said person in respect of the said payment. (3) Where the person chargeable with tax makes payment of tax and interest under sub-section (8) of Section 73 or under clause (ii) of sub-section (8) of Section 74-A, as the case may be, or tax, interest and penalty under sub-section (8) of Section 74 or under clause (ii) of sub-section (9) of Section 74-A, as the case may be, within the period specified therein, or where the person concerned makes payment of the amount referred to in sub-section (1) of Section 129 within seven days of the notice issued under sub-section (3) of that section but before the issuance of order under the said sub-section (3), he shall intimate the proper officer of such payment in FORM GST DRC-03 and the proper officer shall issue an intimation in FORM GST DRC-05 concluding the proceedings in respect of the said notice. (4) The representation referred to in sub-section (9) of Section 73 or sub-section (9) of Section 74 or sub-section (6) of Section 74-A or sub-section (3) of Section 76 or the reply to any notice issued under any section whose summary has been uploaded electronically in FORM GST DRC-01 under sub-rule (1) shall be fur....
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....GST Act, the proper officer shall issue refund in terms of form RFD-06. The said procedure has been considered as to how the refund application should be processed, by the High Court of Delhi in AB ENTERPRISES V. COMMISSIONER OF DELHI GOODS AND SERVICES TAX 2023 SCC Online Del 7434 wherein it is held as follows: ".... .... .... 8. It is important to note that the implication of the impugned communication is that the petitioner would be required to file a fresh application for refund in terms of Rule 90(3) of the CGST Rules. Indisputably, the petitioner's application for refund cannot be termed as deficient if it is in accordance with Rule 89(2) of the CGST Rules and is accompanied with the documents specified therein. Although, the concerned officer is at liberty to call for further documents to process the claim, the fact that such further documents are not annexed with the application does not render the same deficient. 9. Mr. Aggarwal, does not controvert that the documents referred to in the file noting and also reflected in the GST portal are not covered under Rule 89(2) of the CGST Rules. Concededly, the petitioner had filed all relevant documen....
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.... application GST RFD-01 filed by you at the common portal: Application Reference Number (ARN): AA290525020550H Date of Application: 09/05/2025 Time of Filing of Application: 12:35 PM GSTIN/ UIN/ Temporary ID: 29AAHCG3230C1ZZ Trade Name: GUNNAM INFRA PROJECTS PRIVATE LIMITED Legal Name: GUNNAM INFRA PROJECTS PRIVATE LIMITED Reason of Refund: Any other (specify) Center Jurisdiction: State-CBIC, Zone-BENGALURU, Commissionerate-BENGALURU EAST, Division - EAST DIVISION-8, Range-RANGE-BEDB (Jurisdictional Office) State Jurisdiction: State - Karnataka, Division - DGSTO-4, Bengaluru, LOCAL GST Office - LGSTO 015 -Bengaluru From Period: NA To Period: NA Refund Specification Registered person has paid taxes under duress through cash and credit ledger during inspection proceedings vide DRC 03 Amount of Refund Claimed (In INR) Particulars Tax Interest Penalty Fee Others Total Integrated Tax 0 0 0 0 0 0 Central Tax 12200000 0 0 0 0 12200000 State/UT Tax 12000000 0 0 0 0 12000000 Cess 0 0 0 0 0 0 Total ....
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.... Refund Specification Registered person has paid taxes under duress through credit ledger during inspection proceedings vide DRC 03 Amount of Refund Claimed (In INR) Particulars Tax Interest Penalty Fee Others Total Integrated Tax 1326070 0 0 0 0 1326070 Central Tax 0 0 0 0 0 0 State/UT Tax 0 0 0 0 0 0 Cess 0 0 0 0 0 0 Total 1326070 0 0 0 0 1326070 Note. It is a system generated application receipt and does not require any signature. The Acknowledgement (RFD-02) shall be issued after verification of the completeness of the application by the Refund Processing Officer. Refund ARN Receipt This is an application receipt for Refund application GST RFD-01 filed by you at the common portal: Application Reference Number (ARN): AA2905250413770 Date of Application: 16/05/2025 Time of Filing of Application: 01:53 PM GSTIN/ UIN/ Temporary ID: 29AAHCG3230C1ZZ Trade Name: GUNNAM INFRA PROJECTS PRIVATE LIMITED Legal Name: GUNNAM INFRA PROJECTS PRIVATE LIMITED Reason of Refund: Any other (s....
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.... Amount in Rupees Credit Ledger 29 May 2024 D12905240389940 13,26,070 Total 13,26,070 ... .... ... Certificate under Section 54 of the Central Goods and Services Tax Act, 2017 ["CGST Act") and Section 54 of the Karnataka Goods and Services Tax Act, 2017 ("KGST Act"), read along with Rule 89(2)(m) of the CGST and KGST Rules, 2017 This is to certify that in respect of the refund amounting to Rs. 22,46,400/- (Rupees Twenty-Two Lakhs Forty-Six Thousand Four Hundred) as provided in Annexure A, claimed by M/s. Gunnam Infra Projects Pvt. Ltd. GSTIN: 29AAHCG3230C1ZZ for the tax period FY: 2023-24, the incidence of tax, interest, and penalty has not been passed on to any other person. This certificate is based on the examination of the books of account and other relevant records and returns particulars maintained/furnished by the applicant. Note: The above payments are made from cash and credit ledger through DRC03 in the common online portal of the Registered Person and is not against any tax liability on any supply under forward or reverse charge basis and this is retained as 'Receivable' in the books of accounts/Balance Sheet ....
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....icate under Section 54 of the Central Goods and Services Tax Act, 2017 ("CGST Act") and Section 54 of the Karnataka Goods and Services Tax Act, 2017 ("KGST Act"), read along with Rule 89(2)(m) of the CGST and KGST Rules, 2017 This is to certify that in respect of the refund amounting to Rs. 2,42,00,000/- (Rupees Two Crore Forty-Two Lakhs) as provided in Annexure A, claimed by M/s. Gunnam Infra Projects Pvt. Ltd. GSTIN: 29AAHCG3230C1ZZ for the tax period FY: 2023-24, the incidence of tax, interest, and penalty has not been passed on to any other person. This certificate is based on the examination of the books of account and other relevant records and returns particulars maintained/furnished by the applicant Note: The above payments are made from cash and credit ledger through DRC03 in the common online portal of the Registered Person and is not against any tax liability on any supply under forward or reverse charge basis and this is retained as 'Receivable' in the books of accounts/Balance Sheet of the Registered Person. for JCSS & Co CHARTERED ACCOUNTANTS (FIRM REGISTRATION NO: 009178S) ICAI UDIN: 25205709BNFYGV8356 Pl....
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.... ...................................................... Shri. Sai Tejaswin Reddy G (Director) No 2/19/6, Near Mulberry Woods Apt, Carmelaram Station Road Doddakannelli, Bangalore 560 035 GSTIN: 29AAHCG3230C1ZZ ... .... ... Date: 30.04.2025 UNDERTAKING I Shri. Sai Tejaswin Reddy Gunnamreddy in my capacity as Director of M/s. Gunnam Infra Projects Pvt. Ltd do hereby undertake to return to the Government the amount of refund sanctioned along with interest in case it is found that the requirements of clause (c) of sub-section (2) of section 16 read with sub-section (2) of section 42 of the Central GST Act and Karnataka GST Act made applicable to the Integrated GST Act and Compensation Cess Act, have not been complied with in respect of the amount refunded for the payments made on 23 Jan 2024 through Cash and Credit ledger to the extent of Rs. 22,46,400/-. for M/s. Gunnam Infra Projects Pvt. Ltd. For GUNNAM INFRA PROJECTS PVT. Sd/- Director ...................................................... Shri. Sai Tejaswin Reddy G (Director) N....
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....xpayers depositing partial or full GST liability during the course of search, inspection or investigation. The relevant extracts of the circular read: "F. No. GST/INV/Instructions/2022-23 GST-Investigation Unit 25-5-2022 Instruction No. 01/2022-23 [GST - Investigation] Subject: Deposit of tax during the course of search, inspection or investigation - reg. *** 3. It is further observed that recovery of taxes not paid or short-paid, can be made under the provisions of Section 79 of the CGST Act, 2017 only after following due legal process of issuance of notice and subsequent confirmation of demand by issuance of adjudication order. No recovery can be made unless the amount becomes payable in pursuance of an order passed by the adjudicating authority or otherwise becomes payable under the provisions of the CGST Act and Rules made therein. Therefore, there may not arise any situation where "recovery" of the tax dues has to be made by the tax officer from the taxpayer during the course of search, inspection or investigation, on account of any issue detected during such proceedings. However, the law does not bar the taxpayer from voluntarily making paymen....
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....nd. It is desirable that the Central Board of Indirect Taxes and Customs promptly formulate clear guidelines to ensure that no taxpayer is threatened with the power of arrest for recovery of tax in the garb of self-payment. Way back in the year 1978, a three-Judge Bench of this Court in Nandini Satpathy v. P.L. Dani [Nandini Satpathy v. P.L. Dani, (1978) 2 SCC 424 : 1978 SCC (Cri) 236] had observed as under: (SCC p. 454, para 57) "57. ... We are disposed to read "compelled testimony" as evidence procured not merely by physical threats or violence but by psychic torture, atmospheric pressure, environmental coercion, tiring interrogative prolixity, overbearing and intimidatory methods and the like - not legal penalty for violation." 68. We called upon the Revenue to submit data in this regard. A chart has been filed before us and the same is reproduced below: Total Number of GST Offence Cases Period: July 2017 to March 2024 Period Formation No. of cases Detection Recovery No. of arrest (In Rs Cr) (In Rs Cr) 2017-18 w.e.f. July 2017 CGST Zones 273 384 224 3 DGGI 151 832 171 0 Total 424 1216 39....
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....is not being exercised. Further, the amount classified as the "detection" amount is not the amount ascertained through assessment/adjudication, but an amount quantified by the Department/authority conducting search and seizure.] However, it is to be noted that the figures with regard to the tax demand and the tax collected would, in fact, indicate some force in the petitioners' submission that the assessees are compelled to pay tax as a condition for not being arrested. Sub- section (5) to Section 74 of the CGST Act gives an option to the assessee and does not confer any right on the Tax Authorities to compel or extract tax by threatening arrest. This would be unacceptable and violative of the rule of law. 70. We would observe that in case there is a breach of law, and the assessees are put under threat, force or coercion, the assessees would be entitled to move the courts and seek a refund of tax deposited by them. The Department would also take appropriate action against the officers in such cases." (Emphasis supplied) 10.2. Long before the Apex Court rendering the said judgment, different High Courts have considered this issue. A Division Bench of the Hi....
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....ary 16, 2021, is binding on the official respondents/Revenue, which was not followed in the instant case. 39.2 The violation of the safeguards put in place by the Act, Rules and by the court, to ensure that unnecessary harassment is not caused to the assessee, required adherence by the official respondents/Revenue, as otherwise, the collection of such amounts towards tax, interest and penalty would give it a colour of coercion, which is not backed by the authority of law." (Emphasis supplied) 10.4. A Division Bench of this Court in UNION OF INDIA v. BUNDL TECHNOLOGIES PRIVATE LIMITED 2022 SCC OnLine Kar 565, has held as follows: ".... .... .... 15. In the obtaining factual matrix following issues arise for our consideration : (I) Whether the amount was voluntarily paid during the investigation by the company under section 74(5) of the CGST Act ? (II) Whether the amount was recovered from the company during investigation under the coercion and threat of arrest ? (III) Whether the DGGI officers conducted in a High handled and arbitrary manner during the course of investigation ? (IV) Whether writ petition file....
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....ent or adjustment of input-tax credit should be made at the time of search/inspection proceedings under section 67 of the Central/Gujarat Goods and services tax Act, 2017 under any circumstances. (2) Even if the assessee comes forward to make voluntary payment by filing Form DRC 03, the assessee should be asked/advised to file such form DRC 03 on the next day after the end of search proceedings and after the officers of the visiting team have left the premises of the assessee. (3) Facility of filing complaint/grievance after the end of search proceedings should be made available to the assessee if the assessee was forced to make payment in any mode during the pendency of the search proceedings. (4) If complaint/grievance is filed by assessee and officer is found to have acted in defiance of the afore stated directions, then strict disciplinary action should be initiated against the concerned officer. The guidelines issued by the division bench are intended to regulate the powers of officers carrying out search and seizure as well as to safeguard the interest of the assessee. 19. The issue which arises for consideration is whether amount ....
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....d 142(3)] Intimation of payment made voluntarily or made against the show- cause notice (SCN) or statement ARN : AD291219000080K Date : 2-12-2019 8. Reasons, if any : The above payment is made as an extension of our goodwill and bona fide. It is without prejudice to and with full reservation of our rights and contentions to seek necessary refund at the appropriate time and, therefore, should not he regarded as an admission of liability. 21. Thus it is evident that payments have not been made admitting the liability. On the other hand, the company reserved its right to seek refund and made it expressly clear that payment of the amount should not be treated as admission of its liability. Besides the aforesaid, there is no material on record to establish that guidelines issued by division bench of High Court of Gujarat were followed. Thus for the aforementioned reasons, the first issue is answered in the negative and it is held that the amount was not paid voluntarily under section 74(5) of the CGST Act. (II) Whether the amount was recovered from the company during investigation under the coercion and threat of arrest ? ....
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....elhi) ; (2016) 44 STR 481 (Delhi) and it was held that amount collected during investigation proceeding without any adjudication is liable to be refunded. In Century Knitters (India) Ltd. v. Union of India [2014] 24 GSTR 12 (P&H) ; (2013) 293 ELT 504 (P&H) it was held that any amount illegally collected cannot be retained without issuance of show- cause notice and adjudication of liability and such amount is liable to be refunded. Similar view was taken in Concepts Global Impex v. Union of India (2019) 365 ELT 32 (P&H). 24. In the instant case, an investigation was initiated by DGGI officers and they entered the premises of the company on November 28, 2019 at 10.30 a.m. in exercise of powers under section 67(1) of the CGST Act. On November 30, 2019 at about 4.00 a.m., a sum of Rs. 15 crores was deposited by the company under the GST cash ledger. Thereafter summons were issued to officers of company under section 70 of the Act. The officers of the company made a further deposit of Rs. 12,51,44,157 at about 1.00 a.m. The aforesaid amounts were not deposited under section 74(5) of the Act. The amounts were deposited by the company at odd hours, without admitting its liability....
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.... the authority of law. If tax is collected without any authority of law, the same would amount to depriving a person of his property without any authority of law and would infringe his right under article 300A of the Constitution of India as well. In the instant case, the only provision which permits deposit of an amount during pendency of an investigation is section 74(5) of the CGST Act, which is not attracted in the fact situation of the case. Therefore, it is evident that amount has been collected from company in violation of articles 265 and 300A of the Constitution. Therefore, the contention of the Department that amount under deposit be made subject to the outcome of the pending investigation can not be accepted. The Department, therefore, is liable to refund the amount to the company. (Emphasis supplied) 10.5. Another Division Bench of this Court in the case of INTELLIGENCE OFFICER, DIRECTORATE GENERAL OF GST INTELLIGENCE, BENGALURU v. KESAR COLOR CHEM INDUSTRIES 2025 SCC OnLine Kar 18697, has held as follows: ".... .... .... 27. Having heard the learned counsel for the parties and perused the record, the learned single judge [Kesar Colour Chem Indus....
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.... 30. Section 74(1) of the CGST Act contemplates that the assessee has an opportunity under section 74(5) to make his own ascertainment of tax and deposit the same. The appellants' case is that the respondent has deposited the amount upon self-ascertainment of tax, which stand is contested by the respondent by stating that the deposit was under threat and coercion, otherwise no amount is payable. So, the issue is whether any tax is payable at all ? So, pending decision on the issue, can the amount remain deposited with the appellants ? The answer has to be "NO", more so when it is concluded by the learned single judge [Kesar Colour Chem Industries v. Intelligence Officer, (2025) 145 GSTR 265 (Karn).] that the same was not voluntary, with which we agree. 31. Having said that, insofar as the affidavit dated August 10, 2021 is concerned, the plea of Sri. Kamath is, such an affidavit was not given to the authorities and it is for the first time filed along with the writ petition with an intention to resile out of the statements made to the appellants cannot be relied upon, is unsustainable. This we say so because, the only stand of the appellants in the appeal/affidavi....
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.... the search/inspection operations way beyond the normal business hours. Admittedly, the petitioner was called upon to provide copies of various books of account. The statement recorded on the said date-which is also relied upon by the respondents-clearly indicates that the petitioner had provided several documents to the concerned officers including the trading account for the period April 1, 2022 to October 7, 2022; cash book for the period October 1, 2022 to October 7, 2022; stock group summary as on October 7, 2022; copies of the last purchase and sale bills; profit and loss account for the period April 1, 2021 to March 31, 2022; and parties ledger.... 28. Given the scheme of permitting the taxpayers to voluntarily deposit tax prior to issuance of notices (either under section 73 or section 74 of the CGST Act) to avail of the benefit of absolving themselves from the liability to pay penalty either in entirety or in excess of 15 per cent. of tax payable as the case may be; in cases where the said tax is collected under coercion, the same is required to be returned. 29. It is not necessary to examine in detail any controversy whether such payments were made volun....
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....id, can be made under the provisions of section 79 of the CGST Act, 2017 only after following due legal process of issuance of notice and subsequent confirmation of demand by issuance of adjudication order. No recovery can be made unless the amount becomes payable in pursuance of an order passed by the adjudicating authority or otherwise becomes payable under the provisions of the CGST Act and rules made therein. Therefore, there may not arise any situation where "recovery" of the tax dues has to be made by the tax officer from the taxpayer during the course of search, inspection or investigation, on account of any issue detected during such proceedings. However, the law does not bar the taxpayer from voluntarily making payment of any tax liability ascertained by him or the tax officer in respect of such issues, either during the course of such proceedings or subsequently. 4. Therefore, it is clarified that there may not be any circumstance necessitating "recovery" of tax dues during the course of search or inspection or investigation proceedings...'." 32. The judgment was sought to be distinguished by Sri. Kamath by stating the statements which were recorded in t....
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....knowledgment in Form GST DRC-04 to the petitioner; undisputedly, respondents did not issue any such acknowledgment to the petitioner which is a circumstance to clearly indicate that the said amount was not a voluntary payment made by the petitioner. (iii) Prior to the search and inspection made by the respondents, there was no demand made by the respondents in relation to the amount paid by the petitioner under any of the provisions of the CGST Act, 2017, which is yet another circumstance to indicate that there was no warrant / reason for the petitioner to make voluntary payment during the course of search and inspection proceedings. (iv) The material on record also indicates that even at the time of payment by the petitioner, the details, material particulars, quantification etc., of the alleged self - ascertainment and voluntary payment by the petitioner are conspicuously absent except for filling up Form DRC-03 which merely contains the amount without additional details in this regard; interestingly, there are no other contemporaneous document in this regard, thereby establishing that the payment made by the petitioner cannot be construed or treated as voluntar....
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....o be rejected. (vii) A perusal of the material pertaining to search, inspection and seizure proceedings comprising of mahazar, seizure order etc., will indicate that on 23.03.2023 itself, the residence of the petitioner was inspected by the respondents who seized one laptop from the petitioner; on the very next day i.e., on 24.03.2023, the respondents seized various movable, articles comprising of account books, desktops, server disks, mobile phones, hard disks, laptop etc., from the business premises of the petitioner and all necessary data that was required for the purpose of self-ascertainment had been seized from the petitioner by the respondents; it follows therefrom that at the time of payment, there could not have been any material, accounts, etc., available with the petitioner that would enable him to proceed with self-ascertainment and accordingly, voluntarily make payment of Rs. 10 crores to the respondents; in other words, in the light of the undisputed fact that all necessary material, account etc., which was the basis for self- ascertainment having been seized by the respondents, it is highly improbable that the petitioner was in a position to carryout self-as....
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....nt made by the petitioner was clearly not voluntary and at the behest / instance of the respondents during the course of their proceedings. (x) A perusal of the payment made by the petitioner in Form GST DRC-03 will indicate that the same is made under Section 74(5) of the CGST Act which mandates that such voluntary payment of tax should have been made by the petitioner along with interest under Section 50 of the CGST Act and penalty; in this context, the said payment in Form GST DRC-03 will indicate that no payment is made by the petitioner towards interest or penalty and the relevant columns in this regard are shown as 'Nil' which is yet another circumstance to indicate that the payment was not made by the petitioner voluntarily in terms of Section 74(5) of the CGST Act, 2017, as contended by the respondents whose contentions are liable to be rejected. (xi) A perusal of the material on record will indicate that the payment of Rs. 10 crores by the petitioner during the course of search, inspection and seizure proceedings is contrary to the directions issued by the respondents themselves in Instruction No. 1/2022-23 dated 25.05.2022, in which the officials....