Cases where Payment made during search is not Voluntary, Taxpayer is required to be Refunded : Delhi HC [Read Order]
Delhi HC – Voluntary – Refund – Taxpayer – taxscan
Delhi HC – Voluntary – Refund – Taxpayer – taxscan
In a recent decision the Delhi High Court observed that the cases where payment made during search is not voluntary, taxpayer is required to be refunded.
The petitioner claimed that during the course of the search/inspection, he was compelled to reverse the Input Tax Credit (‘ITC’) amounting to ₹22,14,226/- on account of inadmissible ITC and shortage of cash.
According to the petitioner, he was compelled to deposit a sum of ₹22,14,226/- by reversing the ITC available in his Electronic Credit Ledger (‘the ECL’). The petitioner also claims that the statement to that effect as recorded on 18.10.2022, was also recorded under duress and coercion.
The counsel who appeared for the respondents countered the aforesaid submission on, essentially, two grounds. First, he submitted that the petitioner had not retracted the statement recorded on 18.10.2022, immediately after the search and therefore, he is precluded from disputing that he had voluntarily reversed the ITC amounting to ₹22,14,226/-.
Secondly, it was contended that on the date of the search, there was a balance of ₹84,19,466/- in the ECL of the petitioner. According to the respondents, the petitioner had availed of the inadmissible ITC to the extent of ₹2,39,40,871/-. Thus, if the petitioner was under any coercion, he would have been compelled to deposit the entire amount lying in his ECL.
A Division Bench comprising Justices Vibhu Bakhru and Amit Mahajan observed that “If the tax is not paid on self-ascertainment basis, the assessee cannot be extended the benefit of Section 73(6) of the DGST Act or Section 74(6) of the DGST Act. In the present case, the petitioner has stoutly disputed that the reversal of ITC was voluntary. In cases where the payment made during search is not voluntary, the taxpayer is required to be refunded the said deposit while reserving the right of the GST authorities to proceed against the said taxpayer to the full extent in accordance with law.”
To Read the full text of the Order CLICK HERE
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