The Central Board of Indirect Taxes and Customs (CBIC) has said that GST officials cannot coerce anyone to deposit tax while making “recovery” during a search operation.
The CBIC has directed its field formations that recovery of tax dues should be made following the due legal process after issuance of adjudication order and not during searches, according to a report by ET.
The move comes in the backdrop of complaints of use of force and coercion by tax authorities for making ‘recovery’ during the course of search or inspection.
“In case of any wrongdoing on the part of any tax officers, strict disciplinary action as per law may be taken against the defaulting officers,” ET reported citing CBIC‘s internal department note addressed to principal commissioners/ commissioners of Central GST (all zones), the commissioner, GST Investigation, issued late evening on May 25.
The note said 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, it has to be enquired at the earliest.
As per the law no recovery can be made unless the amount becomes payable in pursuance of an order passed by the adjudicating authority.
“It is clarified that there may not be any circumstance necessitating recovery of tax dues during the course of search or inspection or investigation proceedings,” the CBIC instruction said, adding that, if a taxpayer voluntarily wants to deposit GST liability, it will be done via DRC 03 on the GST portal.
This assume significance as there were increasing instances of complaints against GST officers of coercive measures to get recovery of unpaid taxes during raids and searches.
The note shared that some of the taxpayers have also approached High Courts in this regard.
Recently Gujarat High Court has flagged their concerns in the judgement and had advised the GST officials against any such measures.
In March, Karnataka High court ruled that if tax is collected during investigation by coercion, such collection is in violation of article 265, and 300A of constitution and is liable for refund.
“The matter has been examined. Board has felt the necessity to clarify the legal position of voluntary payment of taxes for ensuring correct application of law and to protect the interest of the taxpayers,” the CBIC said.
