The Tax Publishers

GST--Recovery of Tax

Payments During Search and Investigations : Voluntary and Involuntary Scenarios

Adyasha Mohanty

The learned author seeks to examine the validity of recovery of tax during the course of inspection and/or search proceeding.

"Justice consists in doing no injury to men; decency, in giving them no offense."

- Marcus Tullius Cicero

1. Introduction

This quote underscores the ethical principle that fairness in transactions and interactions, including financial dealings, involves avoiding actions that harm or coerce others. Resonating the same, the taxpayers in our country are facing a similar plight. Taxpayers who face search, inspection, or investigation due to defaults or incorrect tax payments, can choose to deposit a portion of their tax liability voluntarily. However, there have been instances where these taxpayers have reported experiencing force or coercion from GST officers. These officers have allegedly pressured taxpayers to voluntarily pay their dues as a means of recovering taxes. As a result, some taxpayers have taken their grievances to the high courts.

To understand the legal conundrum revolving around the above mentioned issue, it is essential to understand the procedure of search and investigation.

2. A discussion on legal provisions on search and inspection, determination of tax to be recovered and recovery of tax

The Central Goods and Services Tax (hereinafter referred as 'CGST') Act, 2017, delineates the powers and procedures for search, inspection, and seizure in Chapter XIV, with Section 67 providing the specific legal framework. Section 67(1) of the CGST Act, 2017 envisages the power of inspection. It states that a proper officer, not below the rank of Joint Commissioner, can authorize an inspection if there are reasons to believe that: