Amount Deposited Involuntarily during Search to Reverse ITC: Delhi HC directs Dept to Refund amount Along with Interest [Read Order]
The amount deposited on behalf of the petitioner lacked voluntariness as there is no material placed on record by the respondent to show why the petitioner would voluntarily deposit the said amount when there was no claim made against the petitioner as of the date of deposit
Delhi High Court – Delhi HC – Input Tax Credit – Delhi HC ITC Refund Ruling – Involuntary Deposit Refund with Interest – Taxscan
Delhi High Court – Delhi HC – Input Tax Credit – Delhi HC ITC Refund Ruling – Involuntary Deposit Refund with Interest – Taxscan
The Delhi High Court directed the revenue department to refund the amount deposited involuntarily during the search to reverse Input Tax Credit ( ITC ) along with Interest. The amount deposited on behalf of the petitioner lacked voluntariness as there is no material placed on record by the respondent to show why the petitioner would voluntarily deposit the said amount when there was no claim made against the petitioner as of the date of deposit.
Mahavir Singh, the Petitioner seeks a refund of an amount of Rs. 35,00,000/- ( Rupees Thirty-Five Lakhs only ) which was recovered from the Petitioner sans authority of law during the search proceedings carried out on 07.01.2023, by coercing him to reverse the Input Tax Credit done on 07.01.2023 through FORM GST DRC-03.
The Petitioner was engaged in the business of trading health supplements. On 06.01.2023, Petitioner was subjected to a search based on GST INS-01 issued by the Respondents.
The search operation commenced on 07.01.2023 at 03:15 PM and after some initial inspection, a notice under Rule 56(18) of the Delhi GST Rules, 2017 had been issued by the Respondents directing Petitioner to produce the records for the period of 2017-2018 on the same day i.e. 07.01.2023 by 5:00 PM itself.
The petitioner stated that pre-typed statements were printed by the officers of the Respondents from the Petitioner’s computer and Petitioner was coerced to sign the same. Thereafter Petitioner was made to deposit an amount of Rs. 35,00,000/- ( Rupees Thirty-Five Lakhs only ) by way of reversal of Input Tax Credit before the search team left the premises of the Petitioner. The said amount was paid vide FORM GST DRC-03.
It was argued that the deposit being made during the search in the presence of the official, could not be termed a voluntary deposit. He further submits that the petitioner was not allowed to explain the transactions and the stock position in question.
Per contra counsel respondents submitted that there was no coercion, and the amount was voluntarily deposited by the petitioner. He further submitted that recovery proceedings under Section 73 of the Central Goods and Services Tax Act 2017 have been initiated by the issuance of a Show Cause Notice and proceedings are underway.
A division bench comprising of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja observed that the deposit made by the Petitioner before the search ended and the officers left, shows that the deposit was not voluntary and contrary to the CBIC Instruction No. 01/2022-2023 dated 25.05.2022.
There is no material placed on record by the respondent to show why the petitioner would voluntarily deposit the said amount when there was no claim made against the petitioner as of the date of deposit. Therefore, the amounts that were deposited on behalf of the petitioner lacked voluntariness.
The court directed the respondents to refund the amount to the petitioner along with statutory interest @6% p.a within four weeks.
To Read the full text of the Order CLICK HERE
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