IMPORTANT POINT
The deposit of tax, interest, and penalty must be voluntary and backed by the authority of law, and the prescribed procedure for recovery of taxes must be followed to ensure the voluntariness of the deposit.

JUDGMENT

Sanjeev Sachdeva, J. (Oral) - Petitioner seeks refund of an amount of Rs.35,00,000/- (Rupees Thirty Five Lakhs only) which was recovered from the Petitioner sans authority of law during the search proceedings carried out on 07.01.2023, by coercing him to reverse the Input Tax Credit done on 07.01.2023 through FORM GST DRC-03.

2. Petitioner was engaged in business of trading of health supplements.

3. On 06.01.2023, Petitioner was subjected to search based on GST INS-01 issued by the Respondents. The reasons mentioned in the form INS-01 are as under:

"i has suppressed transaction relating to supply of goods and/or services

ii has suppressed transaction relating to stock of goods in hand

iii has claimed input tax credit in excess of his entitlement under the Act

iv has indulged in contravention of the provisions of this act or rules made thereunder to evade tax under this Act"

4. The search operation commenced on dated 07.01.2023 at 03:15 PM and after some initial inspection, a notice under Rule 56(18) of the Delhi GST Rules, 2017 had been issued by the Respondents directing Petitioner to produce the records for the period of 2017-2018 on the same day i.e. 07.01.2023 by 5:00 PM itself.

5. As per the Petitioner, pre-typed statement were printed by the officers of the Respondents from the Petitioner's computer and Petitioner was coerced to sign the same. Thereafter Petitioner was made to deposit an amount of Rs.35,00,000/- (Rupees Thirty Five Lakhs only) by way of reversal of Input Tax Credit before the search team left the premises of the Petitioner. The said amount was paid vide FORM GST DRC-03.

6. Learned counsel for the petitioner relies upon the decision dated 20.12.2022 in W.P.(C) 9834/2022 titled `M/s Vallabh Textiles vs. Senior Intelligence Officer' wherein it was held that if the petitioner is coerced to make a deposit in an involuntary manner then the Petitioner is entitled to refund the said amount along with interest.

7. Learned counsel for petitioner submits that the deposit being made during course of search in the presence of the official, could not be termed a voluntarily deposit. He further submits that the petitioner was not given an opportunity to explain about the transactions and the stock position in question.

8. Per contra learned counsel for respondents submits that there was no coercion, and the amount was voluntarily deposited by the petitioner. He further submits that recovery proceedings under Section 73 of the Central Goods and Services Tax Act 2017 have been initiated by issuance of a Show Cause Notice and proceedings are underway.

9. It would be apposite herein to quote the decision in the case of Vallabh Textiles vs. Senior Intelligence Officer (supra). A Co-ordinate bench of this court held as under:

"51. The 2017 Act and the 2017 Rules made therein, do make provisions for enabling a person chargeable with tax to pay tax, along with interest, before being served with a notice for payment of tax, which either has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilized for any reason.

52. Thus, if the person chargeable with tax takes recourse to such a route, the proper officer is restrained from serving any notice qua tax or penalty under the provisions of the 2017 Act or the 2017 Rules framed thereunder, unless the amount which is self-ascertained by the person chargeable with tax falls short of the amount payable as per law.

53. This leeway is also available, where the person chargeable with tax is served with a show cause notice and pays the tax, along with interest, under Section 50 of the 2017 Act within thirty [30] days of the issue of the show-cause notice. In such eventuality, a penalty is not leviable, and all proceedings in respect of such notice are deemed to be concluded.

54. This regime is set out in Section 73 of the 2017 Act.

55. Broadly, this regime also applies, where a notice has been issued under sub-section (1) of Section 73, and t