Modern Traders Vs Deputy Commissioner/Joint Commissioner (Bombay High Court)
The Bombay High Court heard a matter concerning alleged voluntary payment of tax and penalty during GST search proceedings. The respondents filed an additional affidavit stating that the petitioner had voluntarily deposited the tax and penalty and later described the payment as coercive only as an afterthought. The respondents relied on an Office Memorandum dated October 9, 2024 issued by the Department of Personnel and Training regarding handling of complaints containing non-specific or unverifiable allegations.
The Court referred to a Division Bench judgment in M/s. Shiva Structures Pvt. Ltd. vs. Union of India and others, where it was observed that payments made before adjudication of tax liability, especially on the same day as a search by revenue officials, cannot ordinarily be treated as voluntary payments. The Court noted that in the present matter, the petitioner’s premises were searched from November 1, 2023 to the early hours of November 2, 2023, and during the pendency of the search proceedings the petitioner deposited approximately ₹16 lakhs towards tax and an equal amount towards penalty.
The Court also relied upon directions issued by the Gujarat High Court in M/s. Bhumi Associate vs. Union of India through the Secretary. The Gujarat High Court had directed that no recovery should be made during search or inspection proceedings under Section 67 of the GST Acts. It further directed that even if an assessee voluntarily wishes to make payment through Form DRC-03, such payment should be made only on the next day after conclusion of the search proceedings and after the visiting officers have left the premises. The Gujarat High Court also directed that a grievance mechanism be made available if payment was forced during search proceedings and that disciplinary action should be initiated against officers violating such directions.
