Tax Recovered During Search Without Voluntary Consent Refundable

  • Blog|News|GST & Customs|
  • 3 Min Read
  • By Taxmann
  • |
  • Last Updated on 30 June, 2026

Latest from Taxmann

Tax Recovery During GST Search

Case Details: Baba Contractors and Engineers vs. Union of India - [2026] 187 taxmann.com 1019 (Rajasthan) 

Judiciary and Counsel Details

  • Arun Monga & Sunil Beniwal, JJ.
  • Hemant Kothari for the Petitioner.
  • Mahaveer Bishnoi, AAG, Harshvardhan Singh Chundawat, Rajvendra Saraswat & Rishabh Dadhich for the Respondent.

Facts of the Case

The petitioner, a partnership firm, was subjected to search and seizure proceedings at its business premises and the residences of its partners, during which summons were issued, a partner’s statement was recorded, and records and electronic devices were seized. During the search, the amount was recovered through reversal of ITC and cash payments, and Form GST DRC-03 was filed on the same day. The petitioner subsequently contended that the statement and payment were made under pressure and sought a refund of the amount. It was further submitted that no show-cause notice had been issued at the time of deposit, and no acknowledgement in Form GST DRC-04 was issued. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that Section 74 read with Section 54 of the CGST Act and the Rajasthan GST Act, Rule 142 of the GST Rules, and the Rajasthan GST Rules contemplate voluntary payment before issuance of a show cause notice, which was not established in the present case. As the payment was made during the search, without evidence of voluntary compliance or issuance of Form GST DRC-04, retention of the recovered amount was held unsustainable, and a refund was directed. However, the Court held that the claim for interest under Section 56 read with Section 54 of the CGST Act and the Rajasthan GST Act was premature as the investigation.

List of Cases Reviewed

List of Cases Referred to

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied

Leave a Reply

Your email address will not be published. Required fields are marked *

«
»

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied