No GST recovery can be made Forcefully in Investigation

Arjuna (Fictional Character): Krishna, what is the recent Instruction brought by GST Investigation Wing in respect of recovery of tax during search and seizure?

Krishna (Fictional Character): Arjuna, GST Department vide Instruction no 01/2022-23[GST Investigation] dated 25^th May 2022, has instructed that during search, seizure and investigation no force and coercion shall be used by the officers for making recovery taxpayers i.e., recovery shall be done only after following the due legal process of issuance of notice and subsequent confirmation of demand by issuance of an adjudication order.

Arjuna (Fictional Character): Krishna, what is actual procedure for recovery of taxes not paid?

Krishna (Fictional Character): Arjuna, process for recovery of unpaid taxes is as follows:

• As per section 79 of CGST Act 2017 recovery can be made only after due legal process of issuance of notice and subsequent confirmation of demand by issuance of adjudication order.
• No Recovery can be made unless the amount becomes payable in pursuance of an order passed by the adjudicating authority or otherwise become payable under provisions of CGST Act.
• Therefore, there may not arise any situation where "recovery" of the tax has to be made by the tax officer from the taxpayer during search, inspection or investigation on account of any issue detected during course of such proceedings.

Arjuna (Fictional Character): Krishna, if a taxpayer wants to voluntary pay the taxes what is the option available to him?

Krishna (Fictional Character): Arjuna, a taxpayer has an option to deposit tax voluntarily by way of submitting DRC-03 on GST portal. Voluntary payment of tax before issuance of show cause notice is permissible in terms of provision of section 73(5) and section 74(5). This helps the taxpayers in discharging their admitted liability, self-ascertained or as ascertained by the tax officer, without having to bear the burden of interest under Section 50 of CGST Act 2017 and also saves him from higher penalty imposable on him subsequent to issuance if notice u/s Section 73 or Section 74 as the case may be.

Arjuna (Fictional Character): Krishna, what is the instruction brought by the GST department and what are effects of not following such instructions?

Krishna (Fictional Character): Arjun, the instructions made it clear that there may be no circumstances that require "recovery" of tax dues during search, inspection, or inquiry processes. However, the tax officer must tell taxpayers about the provisions for voluntary tax payments via DRC-03.

Pr. Chief Commissioners/Chief Commissioners, CGST Zones and Pr. Director-General, DGGI are advised 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, the same may be enquired into at the earliest and in case of any wrongdoing on the part of any tax officer, strict disciplinary action as per law may be taken against the defaulting officers," the instructions added.

Arjuna (Fictional Character): Krishna, what one should learn from this?

Krishna (Fictional Character): Arjuna, the above instructions aim at bringing clarity to tax officers regarding "recovery" of taxes during search, inspection or investigation and brings a relief to taxpayers against unnecessary force and coercion caused by some tax officers. The Instruction clearly states you either pay your taxes voluntarily or pay after legal issuance of notice. This is welcoming step by GST department as it prohibits forceful coercive "recovery" by some tax officers.