The instances of search, inspection and investigation has increased manifold, it is very important to keep in my mind, no officers can force any taxpayer to make the payment of any tax, interest, or penalty on the spot.
Delhi High Court in the case of Vallabh Textiles has reiterated deposit of tax in Form GST DRC 03 is voluntary by the taxpayer and since no acknowledgment in DRC 04 was issued by the department, the amount paid was directed t be refunded back to the taxpayer.
Further, HC refers to Gujarat HC directions in Bhumi Associate against which backdrop CBIC Instruction No. 01/2022-23 [GST – Investigation] dated May 25, 2022 was issued relating to ‘Deposit of tax during the course of search, inspection or investigation’ and pertinently mentions that, CBIC instruction falls short of Gujarat HC directions on two counts (i) not elaborating on various mode of collection of voluntary deposit made during search, inspection or investigation for example via cheque, cash, e-payment or even via adjustment of ITC, (ii) even if assessee comes forward to make voluntary payment, he/she should be advised to file the same the day after the search has ended and the concerned officers have left the premises; Thereby, directs CBIC to align Instruction No. 01/2022-2023 with Gujarat HC directions explaining that said direction of Gujarat HC being binding upon the Revenue, has been put in place to parry off unnecessary harassment “as otherwise the collection …..would give it a colour of coercion”; Further, HC adds that officers have been asked to have the amounts deposited the day after the search is concluded so as to also give space to concerned person “to seek legal advice, and only thereafter deposit tax, interest and penalty, wherever applicable, upon a proper self-ascertainment” while finding that no such elbowroom has been given in present case; In conclusion, surmising that “amounts which were deposited on behalf of the petitioner-concern, lacked an element of voluntariness”.