GST – New Delhi High Court: No recovery of tax should be made during search, inspection or investigation unless it is voluntary, even if the assessee comes forward to make voluntary payment in the prescribed form i.e., GST DRC-03 – Revenue is directed to refund the amount along with interest - Appeal allowed [Order attached]
Order Date –20 December 2022
- The Petitioner, M/S. Vallabh Textiles concern, which is in the business of trading in Ready Made Garments (RMG) is also engaged in selling these very goods on behalf of third parties, albeit in the domestic market, on a commission basis.
- During an investigation by the Department, the petitioner deposited a cumulative sum of Rs.1,80,10,000/- between 01:28 A.M. and 07:03 A.M. on 17.02.2022. Whereas the search was commenced at about 03:30 PM on 16.02.2022 and ended at 09:30 AM on 17.02.2022.
- Whether the cumulative sum of Rs.1,80,10,000/- deposited during search proceedings was a voluntary act or not?
- The Hon’ble High Court held that no recovery of tax should be made during search, inspection or investigation unless it is voluntary, even if the assessee comes forward to make voluntary payment in the prescribed form i.e., GST DRC-03, he/she should be advised to file the same the day after the search has ended and the concerned officers have left the premises of the assessee.
- It was held that the aforementioned amounts which were deposited on behalf of the petitioner lacked an element of voluntariness. Given this position, the Court direct the official respondents/revenue to return Rs.1,80,10,000/- to the petitioner-concern, along with interest at the rate of 6% (simple) per annum from 17.02.2022 till the date of payment.