No GST Recovery During Section 67 Search Proceedings: Gujarat HC

Bhumi Associate Vs Union of India Through the Secretary (Gujarat High Court)

Summary: Gujarat High Court, by an interim order in Bhumi Associate Vs Union of India Through the Secretary, proposed safeguards against recovery of GST during search and inspection proceedings under Section 67 of the Central/Gujarat Goods and Services Tax Act, 2017. The Court directed the Central Board of Indirect Taxes and Customs and the Chief Commissioner of Central/State Tax, Gujarat, to issue suitable circular/instructions providing that no recovery should be made during search or inspection proceedings by cheque, cash, e-payment or adjustment of input tax credit under any circumstances. Even where an assessee comes forward to make a voluntary payment through Form DRC-03, the Court directed that the assessee should be asked or advised to file the form on the next day after conclusion of the search and after the visiting officers have left the premises.

The proposed safeguards also required a facility for taxpayers to lodge complaints or grievances after completion of search proceedings where payment was allegedly obtained under compulsion. If, upon such complaint, an officer was found to have acted contrary to these directions, strict disciplinary action was contemplated against the concerned officer. The Court recorded that departmental officers who had been directed to participate in the video conference had joined at a late stage and had therefore missed the discussion between the Court and the Additional Solicitor General. The Additional Solicitor General was permitted to respond to the proposed directions, and the officers were directed to join the subsequent hearing in time. The matters were posted for further hearing on 18.02.2021.