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"VALIDITY OF DEPOSIT DURING SEARCH"
Whether Voluntary or use of force or coercion by the officers?
INSTRUCTION NO. 1/2022-23 [GST - INVESTIGATION], dated 25-May-2022 was issued in this matter.
Let's see what's the view of the Courts.
1. Delhi High Court
1.1 Vallabh Textiles
Where payments made during search proceedings for which acknowledgement were not issued in Form DRC-04 were not voluntary, department was to be directed to refund same along with interest.
1.2 Sapphire Intrex Ltd.
Assessee cannot be forced to pay any amount during the course of investigation. If any amount is collected without any authority of law, the same amounts to depriving the person of its property and infringes its rights under Article 300A of Constitution
The deposit was made by the petitioner under duress and compelling circumstances and the search operations went way beyond the normal business hours - any voluntary deposit in DRC-03 is to be followed by an acknowledgement accepting the payment as being voluntarily in DRC-04.
The respondents have not issued Form GST DRC-04.
Since the deposit made by the petitioner has been held to be involuntary and the respondents are directed to forthwith process the petitioner’s claim for refund, not apposite to adjudicate other issues raised by the petitioner.
2. Gujarat High Court
2.1 Shree Ganesh Molasses Trading Co.
Coercing petitioner in reversing input tax credit at midnight during search and seizure operation could not be said to be voluntary payment; ITC so reversed was to be refunded.
3. Punjab and Haryana High Court
3.1 Modern Insecticides Ltd.
During the search operation at factory premises of petitioner, Rs. 39 lakh was deposited by the assessee, and in subsequent search, Director and CA of petitioner-company were detained and were released on deposit of
Rs. 2.15 crore, in view of fact that no summons under Section 74(1) were issued in two years time, total deposit of Rs. 2.54 crore was to be refunded to the petitioner.
Hope you will find this useful.
Thanks
Abhishek Raja Ram