Amount Deposited During Search Can’t be Retained by Department if Proceedings Were Not Initiated | HC

Case Details: Parsvnath Traders v. Principal Commissioner, CGST - [2023] 153 taxmann.com 361 (Punjab & Haryana)

Judiciary and Counsel Details

• • Ms Ritu Bahri & Mrs Manisha Batra, JJ.
  • Deepak Gupta, Adv. for the Petitioner.
  • Anshuman Chopra, Sr. Standing Counsel for the Respondent.

Facts of the Case

The petitioner was engaged in the business of trading of different types of chemicals. The officials of GST Department had searched the business premises of the petitioner and verbally informed during investigation that there were allegations that the petitioner had got issued bogus invoices. The petitioner was forced to deposit tax amount on the same day by the officials of GST Department. It filed writ petition seeking refund of amount deposited and contended that the department did not issue any show cause notice and no order determining its tax liability had been passed by them.

High Court Held

The Honorable High Court noted that the deposit of amount on day of search and shortly thereafter when proprietor of petitioner was naturally under stress of search/investigation did not amount to lead to ‘self-assessment’ or ‘self-ascertainment’. Further, it was noted that no crystalised liability was shown to be existing against petitioner and no show cause notice had been issued to it either at that time or even till date.

Therefore, any amount deposited during search can’t be retained by department if proceedings under section 74(1) of GST Act were not initiated. Thus, it was held that the department shall refund this amount along with interest at 6% p.a. from the date of deposit till its realisation.

List of Cases Reviewed

• • Bhumi Associate v. Union of India [2021] 124 taxmann.com 429/(2021) 46 GSTL 36/84 GST 634 (Guj.) (para 12)

List of Cases Referred to

• • Century Metal Recycling (P.) Ltd. v. Union of India 2009 (234) E.L.T. 234 (Punj. & Har.) (para 6)
  • Concepts Global Impex v. Union of India 2019 (365) E.L.T. 32 (Punj. & Har.) (para 6)
  • Century Knitters (India) Ltd. v. Union of India 2013 (293) E.L.T. 504 (Punj. & Har.) (para 6)
  • Bhumi Associate v. Union of India [2021] 124 taxmann.com 429/2021 (46) G.S.T.L. 36/84 GST 634 (Guj.) (para 6)
  • William E. Connor Associates & Sourcing (P.) Ltd. v. Union of India [2023] 152 taxmann.com 174 (Punj. & Har.) (para 15)
  • Diwakar Enterprises (P.) Ltd. v. Commissioner of CGST [2023] 149 taxmann.com 419/2023 (74) G.S.T.L. 202/98 GST 322 (Punj. & Har.) (para 15)
  • Modern Insecticides Ltd. v. Commissioner, CGST [C.W.P. No. 8035 of 2021, dated 19-4-2023] (para 15).