No Recovery should be made at the time of search through DRC-03 even if the assessee comes forward to pay on voluntary basis- Gujarat High Court

M/S Bhumi Associate Vs. Union of India through the Secretary

It has been observed in many cases that the assessee is required (allegedly obliged) to make payment of GST during the search/ inspection matters through filing of Form DRC-03. In many instances, the assessee have alleged that they were made to pay GST through DRC-03 in a coercive manner.  On this issue, Gujarat High Court came out with a crucial order on 16^th February, 2021. Honourable Gujarat High Court issued directions to the Central Board of Indirect Taxes and Customs as well as the Chief Commissioner of Central/ State Tax of the State of Gujarat in this regard.

The Bench of Justice J.B. Pardiwala and Justice I.J. Vora issued these interim directions following various complaints of coercive recovery by GST officials wherein it is directed to issue the following guidelines by way of suitable circular/ instructions: -

• No recovery in any mode by cheque, cash, e-payment or adjustment of input tax credit should be made at the time of search/ inspection proceedings under section 67 of the CGST/ Gujarat GST Act, 2017 under any circumstances.
• 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.
• 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.
• If complaint/ grievance is filed by the 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.