2021 (2) TMI 701 - HC - GST

Recovery of input tax credit at the time of search/inspection proceedings under Section 67 of the Central/Gujarat Goods and Services Tax Act, 2017 - HELD THAT - Mr. Devang Vyas, the learned Additional Solicitor General of India has taken the pains to address this Court from the hospital room. Mr. Vyas is not well and has been hospitalized. Mr. Vyas may respond day after tomorrow to the aforesaid directions, which we propose to issue. Post all the matters on 18/02/2021 on top of the board.

Summary

Issues:
1. Issuance of guidelines regarding recovery during search/inspection proceedings under GST Act.
2. Timing of voluntary payment by assessee during search proceedings.
3. Availability of complaint/grievance filing facility for assessee.
4. Disciplinary action against officers acting against the issued directions.

Analysis:
1. The High Court directed the Central Board of Indirect Taxes and Customs and the Chief Commissioner of Central/State Tax of Gujarat to issue guidelines prohibiting any recovery during search/inspection proceedings under the Central/Gujarat Goods and Services Tax Act, 2017. The Court emphasized that no recovery should be made by any mode, including cheque, cash, e-payment, or adjustment of input tax credit under any circumstances.

2. The Court further directed that even if the assessee wishes to make a voluntary payment by filing Form DRC-03, they should do so on the day following the conclusion of the search proceedings and after the visiting team officers have left the premises. This timing restriction aims to ensure transparency and prevent undue influence during the search process.

3. Additionally, the judgment mandated the provision of a facility for filing complaints or grievances after the search proceedings if the assessee was compelled to make a payment during the search. This step aims to protect the rights of the assessee and provide a recourse for any unjust actions taken during the search operation.

4. The Court warned that if an assessee files a complaint and an officer is found to have disregarded the issued directions, strict disciplinary action should be initiated against the concerned officer. This provision underscores the importance of compliance with the guidelines and serves as a deterrent against any misconduct by the officers involved in the search operations.

The Court adjourned the matter to a later date for further proceedings and instructed all officers to participate in the video conference promptly.