Alleged Coercion By GST Officers For Making 'Recovery' During Course Of Search: GST Investigation Wing Issues Instructions

During the course of a search, the taxpayers may choose to deposit a portion or all of their GST liability stemming from a problem identified by the department during the search by submitting DRC-03.

There have been reports of taxpayers alleging use of force and coercion by officials during the course of a search, examination, or inquiry after willingly settling their GST due via DRC-03. Some taxpayers have also petitioned the High Courts in this respect.

The Board decided it was necessary to explain the legal situation of voluntary tax payment in order to ensure proper implementation of the law and to defend the taxpayers' interests. According to the CGST Act, a taxpayer has the option to deposit the tax voluntarily by filing DRC-03 on the GST portal. Only the taxpayer can begin such voluntary contributions by entering into the GST system with his or her login id and password. Voluntary payment of tax prior to the issuing of a show cause notice is permitted under Sections 73 (5) and 74 (5) of the CGST Act, 2017.

The GST investigation wing instructed that recovery of taxes not paid or short paid can be made under the provisions of Section 79 of the CGST Act, 2017 only after following the due legal process of issuance of notice and subsequent confirmation of demand by issuance of an adjudication order.

"No recovery can be made unless the amount becomes payable in pursuance of an order passed by the adjudicating authority or otherwise becomes payable under the provisions of the CGST Act and rules made therein. Therefore, there may not arise any situation where "recovery" of the tax dues has to be made by the tax officer from the taxpayer during the course of search, inspection, or investigation on account of any issue detected during such proceedings. However, the law does not bar the taxpayer from voluntarily making payment of any tax liability ascertained by him or the tax officer in respect of such issues, either during the course of such proceedings or subsequently," the instructions read.

The instructions made it clear that there may be no circumstances that require "recovery" of tax dues during the course of search, inspection, or inquiry processes. However, there is no prohibition on taxpayers making voluntary contributions based on the determination of their obligation for non-payment or short payment of taxes prior to or at any stage of such proceedings. However, the tax officer must tell taxpayers about the provisions for voluntary tax payments via DRC-03.

"Pr. Chief Commissioners/Chief Commissioners, CGST Zones and Pr. Director General, DGGI are advised that in case any complaint is received from a taxpayer regarding use of force or coercion by any of their officers for getting the amount deposited during search or inspection or investigation, the same may be enquired into at the earliest and in case of any wrongdoing on the part of any tax officer, strict disciplinary action as per law may be taken against the defaulting officers," the instructions added.

Instruction No. 01/2022-23

Dated: 25.05.2022

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