Gujarat HC Grants Relief against Coercive Tax Recovery by GST Department

P.R. Trading Vs Commissioner of Central Goods And Services Tax & Anr. (Gujarat High Court)

Court grants interim relief where Revenue (GST) department made coercive recovery by under guise of Voluntary payment by Petitioner

In a significant ruling, the Gujarat High Court has provided interim relief to P.R. Trading v. Commissioner of Central Goods and Services Tax [R/Special Civil Application Nos. 8070 & 8090 of 2024 dated June 10, 2024], restraining the Revenue department from making coercive recoveries under the guise of voluntary payments rom the assessee until it resolve the matter, listed the matter for hearing on July 01, 2024.. This decision comes as a crucial intervention in the ongoing debate over the coercive recovery practices employed by tax authorities during search operations. The case, P.R. Trading Vs Commissioner of Central Goods And Services Tax & Anr., will be heard further on July 1, 2024, offering a potential precedent for similar disputes.

Facts:

M/s. P.R. Trading (“the Petitioner”), was compelled to deposit the amount during search operation. The deposit was characterized as ‘Voluntary Deposit’, although the Petitioner claimed it was made under coercion.

Challenging the coercive recovery by Revenue department the Petitioner filed writ before the Hon’ble High court.

Issue:

Whether the coercive recovery made by Revenue under the guise of ‘Voluntary Deposit’ by Petitioner justified?

Held:

The Hon’ble Gujarat High Court in R/Special Civil Application Nos. 8070 8090 OF 2024 held as under:

• Noted that, the issue of coercive recovery made by the Revenue authorities during the course of search by forcing the assessee’s by compelling them to deposit the amount along with an undertaking that they are depositing such amount as a voluntary deposit are pending for consideration before the court.
• And directed that the Revenue department to not take any coercive action against the Petitioner until the matter is resolved.
• Listed the matter for hearing on July 01, 2024.

Conclusion: The Gujarat High Court’s interim relief in the P.R. Trading Vs Commissioner of Central Goods And Services Tax & Anr. case marks a crucial intervention in addressing coercive recovery practices by tax authorities. The case, set for a detailed hearing on July 1, 2024, will provide further clarity on the legality and fairness of such recovery methods. This ruling serves as a critical reminder of the importance of protecting taxpayer rights and ensuring that recovery processes are conducted transparently and without coercion.

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

Heard Mr. Ashutosh S. Dave, learned advocate for the petitioners.

Mr. Ashutosh S. Dave, learned advocate for the petitioner has submitted that the similar matters being Special Civil Application No. 783 of 2021 and other allied matters are pending before this Court where the issue of coercive recovery made by the respondents-authorities during the course of search as the petitioners were compelled to deposit the amount along with an undertaking that they are depositing such amount as a voluntary deposit are pending for consideration.

Considering the above submissions, issue Rule returnable on 1st July, 2024

By way of ad-interim relief, no coercive recovery shall be made by the respondents-authorities.

To be heard with Special Civil Application No. 783 of 2021 and other allied matters.

Direct service is permitted.

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