Nector Foods Private Limited Vs Union of India (Delhi High Court)
Summary: The Delhi High Court considered a writ petition filed by M/s Nector Foods Private Limited concerning payments made through Form GST DRC-03 during a search of the petitioner’s premises. The petitioner sought, among other reliefs, a declaration that two DRC-03 debits dated 30 July 2025 were coerced and involuntary and a direction for refund of Rs.28,34,294/- representing interest and penalty. The petitioner also sought interest on the amount and directions concerning CCTV and audio-video recording in interrogation areas, referring to Paramvir Singh Saini v. Baljit Singh, (2021) 1 SCC 184.
The petitioner’s case, as recorded by the Court, was that payments amounting to Rs.28,34,294/- together with interest had been compelled during the search and were made in violation of Instruction No.01/2022-23 (GST-Investigation) dated 25.05.2022 issued by the Commissioner (GST-Inv.), CBIC. The Instruction concerns deposit of tax during the course of search, inspection or investigation; a verified TaxGuru publication discussing the same instruction is Instruction No.01/2022-23 (GST-Investigation).
The writ petition disclosed three payments made during the search proceedings. The first payment, under ARN AD0707250242951 dated 29.07.2025 at 6:29 PM, involved Rs.67,20,000/- which was stated as “not claimed”, with no interest or penalty and no amount claimed under Section 73(5) of the CGST Act, 2017. The second payment, under ARN AD070725024398T dated 30.07.2025 at 4:19 AM, comprised interest of Rs.16,47,050/- and penalty of Rs.10,08,000/-, totalling Rs.26,55,050/-, under Section 74(5). The third payment, under ARN AD070725024402C dated 30.07.2025 at 4:29 AM, comprised Rs.4,53,628/- tax, Rs.1,11,200/- interest and Rs.68,044/- penalty, totalling Rs.1,79,244/-, also under Section 74(5).
The petitioner’s counsel expressly admitted that the payments of Rs.67,20,000/- and Rs.4,53,628/- were not being claimed because those payments were made voluntarily. The petitioner, however, maintained that the payment of Rs.26,55,050/- was made involuntarily.
The respondents disputed the allegation of coercion and submitted that all the payments were made voluntarily and that there was no coercion by members of the search team. It was further submitted that the investigation against the petitioner was pending and was likely to be concluded shortly.
The Court held that the question whether the payment of Rs.26,55,050/- was made voluntarily or under coercion involved a disputed question of fact. The Court considered this particularly significant because the petitioner did not dispute the voluntary nature of the other two payments made during the very same search proceedings.
On that basis, the Court declined to issue a writ directing refund of the amount claimed by the petitioner. Importantly, the Court did not conclusively determine whether the disputed payment was voluntary or coerced. Instead, it observed that the petitioner, if so advised, could avail such alternative remedy as may be available in law.
The writ petition was accordingly disposed of with those observations, and all pending applications were also closed.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Through this Writ Petition, the Petitioner prays for the following reliefs:
“(a) DECLARE that the two Form GST DRC-03 debits dated 30.07.2025 (ARN AD070725024398T and ARN AD070725024402C) were coerced and involuntary. Issue a Writ of Certiorari or any other appropriate writ, order or direction QUASHING the recovery and retention of the interest and penalty of Rs.28,34,294 effected thereby.
(b) Issue a Writ of Mandamus or any other appropriate writ, order or direction DIRECTING Respondent Nos. 1 to 3 to refund Rs. 28,34,294 to the Petitioner’s bank account (HDFC Bank, Account No. 50200077563997, IFSC HDFC0000090), and not by re-credit to any electronic ledger. The refund to be independent of, and not conditioned upon, any pending or future investigation or proceeding.
(c)DIRECT payment of interest on the said sum from 30.07.2025 till realisation, at not less than 6 percent per annum, rising to 12 percent per annum should payment not be made within the period this Hon’ble Court fixes.
(d)DIRECT the installation of CCTV and audio-video recording in the interrogation areas of the Respondent Commissionerate, in terms of Paramvir Singh Saini v Baljit Singh, (2021) 1 SCC 184, with night vision and audio as well as video capability, and preservation of recordings as therein directed. DIRECT that copies of such recordings be furnished to the assessee upon request, for use in any proceeding before a court of competent jurisdiction.
…”
2. In substance, the Petitioner claims that he was compelled to make payments amounting to Rs.28,34,294/- (together with interest) during the search of his premises and that such payments were made in violation of Instruction No.01/2022-23 (GST-Investigation) dated 25.05.2022 issued by the Commissioner (GST-Inv.), CBIC.
3. In Paragraph No.8 of the Writ Petition (Page No.21 of the paper book), the Petitioner has disclosed the following payments made during the search of his premises:
8. THE DAWN DEBITS. At 04:19 and 04:29 AM on 30.07.2025, while the officers remained present on the premises, two Forms GST DRC-03 were debited from the Petitioner’s Electronic Cash Ledger (Annexure P-4). Their composition is as follows:
| Form GST DRC-03 | Tax | Interest | Penalty | Amount claimed | Section |
|---|---|---|---|---|---|
| ARN AD0707250242951 (29.07.2025, 6:29 PM) |
67,20,000 (not claimed) |
Nil | Nil | Nil | 73(5) |
| ARN AD070725024398T (30.07.2025, 4:19 AM) |
Nil | 16,47,050 | 10,08,000 | 26,55,050 | 74(5) |
| ARN AD070725024402C (30.07.2025, 4:29 AM) |
4,53,628 (not claimed) |
1,11,200 | 68,044 | 1,79,244 | 74(5) |
| Total | 28,34,294 | ||||
4. Learned counsel representing the Petitioner admits that the payments of Rs.67,20,000/- and Rs.4,53,628/- are not being claimed, as these payments were made voluntarily. However, it is submitted that the payment of Rs.26,55,050/- was made involuntarily.
5. Learned counsel representing the Respondents submits that all the payments were made voluntarily and that there was no coercion on the part of the members of the search team.
6. It is further contended that the investigation against the Petitioner is pending and the matter is likely to be concluded shortly.
7. In the facts of the present case, whether the payment of Rs.26,55,050/- was made voluntarily or under coercion involves a disputed question of fact. This is particularly so when the Petitioner does not dispute the voluntary nature of the other two payments made during the very same search proceedings.
8. In these circumstances, this Court is not inclined to issue a writ directing refund of the amount claimed by the Petitioner. The Petitioner, if so advised, may avail such alternative remedy as may be available to him in law.
9. With these observations, the present Writ Petition is disposed of.
10. All the pending applications are also closed.
