Payment of Tax Made Before Completion of Search Could Not Be Retained by Revenue Without Proper Acknowledgment | HC

Case Details: ATR Malleable Casting (P.) Ltd. v. Inspector of Central Taxes - [2024] 164 taxmann.com 78 (Calcutta)

Judiciary and Counsel Details

• T.S. Sivagnanam, CJ. & Hiranmay Bhattacharyya, J.
• Pranit Bag, Ms Rita Mukherjee, Ghanshyam Jha & Rowsan Kumar Jha for the Petitioner.
• Ranjan Kumar Sinha, Shaunak Ghosh, K.K. Maiti, Tapan Bhanja & Saurov Mallick for the Respondent.

Facts of the Case

The assessee made a payment of tax during course of search but there was no intimation given to assessee regarding non-payment or short payment of taxes. The assessee submitted that it was compelled to pay a sum of Rs.30,00,000/- under threat of arrest, coercion and undue influence during the course of search. It filed writ petition for refund of amount paid during search but the petition was dismissed on ground that there was proper authorization in INS-01. It filed appeal against the order of dismissal of petition.

High Court Held

The Honorable High Court noted that as per instructions issued by Commissioner (GST-Inv.), CBIC, there may not be any circumstances necessitating recovery of tax dues during course of search or inspection or investigation proceedings. So far as voluntary payment by taxpayer is concerned, it should be against an ascertainment of their liability on non-payment/ short payment.

In the instant case, such ascertainment had not taken place and there was no intimation given to assessee regarding non-payment or short payment of taxes. Therefore, it was held that the payment of Rs.30,00,000/- during course of search could not have been stated to be voluntarily made and the same was required to be refunded as the amount could not be retained by revenue without proper acknowledgment.

List of Cases Reviewed

• W.P.A. 11167 of 2023(Para 25) reversed.
• Shree Ganesh Molasses Trading Co. v. Superintendent, Office of the Commissioner reported in [2023] 148 taxmann.com 36 (Gujarat)(Para 19) followed.
• Innovators Façade Systems Ltd. v. Assistant Additional Director General of GST Investigation, Zonal Unit, Mumbai reported in 2024 (84) G.S.T.L. 233 (Para 23) distinguished.

List of Cases Referred to

• • Vallabh Textiles v. Senior Intelligence Officer [2022] 145 taxmann.com 596/[2023] 95 GST 751/70 GSTL 3 (Delhi) (para 12).