IMPORTANT POINT
Payments made under coercion during a search are not voluntary and must be refunded if proper acknowledgment is not provided.

JUDGMENT :

(Judgment of the Court was delivered by T.S. SIVAGNANAM, C.J.)

1. This intra-Court appeal by the unsuccessful writ petitioners is directed against the order dated 14th June, 2023 in W.P.A. 11167 of 2023. The main relief sought for in the writ petition was to refund a sum of Rs.30,00,000/-, which the appellants would allege was forced to be paid by them under the threat of arrest, coercion and undue influence on 22nd March, 2023. The writ petition was dismissed on the ground that the allegation made by the appellants that there was no proper authorization in INS-01 was a false statement since the revenue, during the course of argument, had produced a copy of the INS-01 dated 12th June, 2023. Therefore, the Court was not inclined to entertain the writ petition.

2. Aggrieved by such order, the appellants have filed the present appeal.

3. We have heard Mr. Pranit Bag, learned advocate appearing for the appellants, Mr. Ranjan Kumar Sinha, learned counsel appearing for the Union of India and Mr. K. K. Maiti, learned Senior Standing counsel for the CGST authority.

4. As indicated above, the main prayer in the writ petition is for directing the authorities to return a sum of Rs.30,00,000/-, which according to the appellants were compelled to be paid by them during the course of search.

5. The other aspect, which has been alleged is the validity of such search itself, which has been questioned by the appellants by filing an affidavit-in-reply to the affidavit-in-opposition filed by the respondent nos.1 to 5.

6. The appellants in the affidavit-in-reply have enclosed two affidavits shown by one, Tarun Bera and Ashim Kumar Modi, wherein they have alleged that the signatures found in the INS-01 in respect of the premises at Howrah Amta Road, Madhya Santoshpur, Howrah, West Bengal is not the signature of Mr. Bera. In our view, this issue cannot be adjudicated in a writ petition based on affidavits, more particularly, when the affidavit, which has been filed on behalf of the appellants has been placed before this Court, for the first time, alongwith the affidavit-in-reply filed by the appellants.

7. The explanation offered by the appellants is that they were unaware of the facts and they came to know of it only upon perusal of the annexure to the affidavit-in-opposition filed by the department. In any event, this being a question of fact, cannot be adjudicated in a writ petition.

8. Mr. Maiti, learned Senior Standing counsel for the department submitted that the investigation is complete and the department is in the final stages of issuance of a show-cause notice. Therefore, this issue as to the validity of the search as to whether there was proper authorization etc. can be agitated by the appellants in the reply to the show-cause notice, which is to be issued by the department.

9. The main prayer sought for in the writ petition was to refund a sum of Rs.30,00,000/-, which according to the department, has been voluntarily paid by the appellants. The issue would be as to how the Court will test as to whether the payment made by the appellants could be treated to be a voluntary payment. In this regard, first we take note of the instructions issued by the Commissioner (GST-Inv.), CBIC dated 25th May, 2022, wherein it was clarified that there may not be any circumstances necessitating recovery of tax dues during the course of search or inspection or investigation proceedings. However, there is also no bar on the taxpayers for voluntarily making the payments on the basis of ascertainment of their liability on non-payment/short payment of tax before or at any stage of such proceedings. The tax officer should however, inform the taxpayers regarding the provisions of voluntary tax payments through GST DRC –O3.

10. Further, the instruction states that Principal Chief Commissioners/Chief Commissioners, CGST Zones and Principal Director General, DGGI are advised that in case, any complaint is received from a taxpayer regarding use of force or coercion