GST - Amount deposited during search cannot be taken to be voluntary - Since no proceedings u/s 74(1) have been initiated, amount is to be refunded with interest: HC

2023-TIOL-502-HC-P&H-GST

Modern Insecticides Ltd Vs CCGST

GST - Petitioners are seeking a direction to the respondents to refund an amount of Rs.2.54 crores and supply copy of Panchnama dated 05.03.2020 and 15.01.2021 along with other electronic gadgets, including mobiles, resumed from the premises of the petitioner.

Held : In the present case, from the date when the search was conducted and amount was deposited, no summons under Section 74 (1) of the CGST Act have been issued till date - Though the respondents can initiate proceedings under Section 74 (1) by issuing notice within the period of limitation, they cannot retain the amount of Rs.2.54 crore deposited by the petitioner, which as per respondent-department was voluntary - The amount was deposited during search and as per judgment passed in Vallabh Textiles' case (2022-TIOL-1591-HC-DEL-GST ), this deposit cannot be taken to be voluntary - Since no proceedings under Section 74 (1) of the CGST Act have been initiated till date, as per Rule 142(1A) of CGST Rules, 2017 , the department cannot even issue Form GST DRC-01A to ask the petitioner to make payment of tax, interest and penalty due - The very fact that in two years' time, no notice has been issued, the deposit of tax during search cannot be retained by the department till the adjudication of notice, which can take more time in future - Respondent is directed to refund the amount to the petitioner(s) along with simple interest at the rate of 6% per annum from the date of deposit till the payment is made - Refund to be made within ten days - Petition allowed: High Court

- Petition allowed: PUNJAB AND HARYANA HIGH COURT