No Coercive GST Recovery During Search Proceedings: Gauhati High Court

Deepak Construction Co. Vs Union of India and 7 Ors (Gauhati High Court)

Summary: The Gauhati High Court granted interim protection to M/S Deepak Construction Co. against coercive recovery of GST liability during an ongoing inspection/search proceeding. The petitioner, an assessee under the Central Goods and Services Tax Act, 2017 and Assam Goods and Services Tax Act, 2017, had its principal place of business at Hijuguri, Tinsukia. Its premises were visited by a team of State Tax officials pursuant to an authorisation for search dated 15.09.2026 issued in Form GST INS-01 under Section 67 of the CGST Act, 2017/AGST Act, 2017. The inspection/search commenced on 15.09.2026 and, as recorded by the Court, was still continuing when the matter was heard.

The petitioner stated that the search had not resulted in either an order of seizure or an order of prohibition till that stage, but officials remained present at its principal place of business throughout the period, including business hours. It alleged continuous pressure from the authorities to discharge a liability which, according to the petitioner, had already been wrongfully availed during the period when its GST registration was under suspension.

Counsel for the petitioner contended that any endeavour by the Proper Officer or officials conducting the inspection/search to direct the petitioner to discharge liability during those proceedings was contrary to the guidelines framed through Instruction No. 01/2022-2023 [GST – Investigation] dated 25.05.2022. The Instruction concerns deposit of tax during search, inspection or investigation and clarifies the distinction between voluntary payment by a taxpayer and recovery of tax by departmental officers during such proceedings.