Taxpayers frequently make voluntary payments during investigations using Form GST DRC-03. However, these payments are not automatically adjusted against demand orders. When a demand order, such as DRC-07, is issued, a Demand ID is created in the Electronic Liability Register. Payments made under "Payment towards Demand" are automatically linked and adjusted against this Demand ID.
The GST system calculates the necessary payment for an appeal, which includes the admitted amount and pre-deposit, based solely on amounts linked to the Demand ID. If sufficient payment is already linked, no additional pre-deposit is required to file an appeal. Conversely, if the payment is insufficient or not linked, the system will prompt for the balance payment before permitting the appeal filing.
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Payments made using DRC-03 are not automatically linked and therefore are not considered for pre-deposit calculation. To address this issue, taxpayers must file Form GST DRC-03A to link previous DRC-03 payments to the relevant Demand ID. Once linked through DRC-03A, these payments are reflected in the liability register and are taken into account for pre-deposit requirements.
Order Date - 10 March 2026
Parties : Smurti Waghdhare Vs Joint Director Directorate General of GST Intelligence, Senior Intelligence Officer Directorate General of GST Intelligence, Intelligence Officer Directorate General of GST Intelligence
Facts -
- Smurti Waghdhare (Petitioner), a GST-registered trader, faced search operations where ₹1 crore cash was seized from her premises and her parents’ residence.
- Searches were conducted based on alleged links with a third party involved in fake ITC transactions, though no direct relation was established.
- The petitioner claimed the seized cash belonged to her/ her family and was kept for personal and medical needs.
- Despite seizure in June 2023, no proper notice was issued within the statutory period, and the cash was even transferred to the Income Tax Department.
Issue -
- Whether cash can be legally seized under Section 67 of the CGST Act without proper justification and compliance?
Order -
- The Court held that “reason to believe” is a mandatory condition, and absence of it makes the entire seizure invalid.
- Section 67 does not expressly permit seizure of cash, and authorities failed to justify how cash was relevant to proceedings.
- Non-compliance with procedural requirements (like issuing notice within 6 months) further made the seizure unlawful.
- The act of transferring seized cash to the Income Tax Department was beyond the authority of GST officers and legally unsustainable.
