Directed to refund the payment deposited during search proceedings without issuing acknowledgement being not voluntary

Last updated: 05 January 2023

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The Delhi High Court has ruled that any amount deposited by a taxpayer during search proceedings without a formal acknowledgement from the tax authorities, as required by GST rules, is considered involuntary. In the case of M/s. Vallabh Textiles, the court ordered the refund of over INR 1.8 crore, plus interest, because the deposit was made under duress and without proper procedure being followed. This judgement reinforces that tax payments must be voluntary and properly documented to be considered valid.

Court :
Delhi High Court

Brief :
The Hon'ble Delhi High Court in M/s. Vallabh Textiles v. Senior Intelligence Officer And Ors [W.P.(C) 9834/2022 dated December 20, 2022] has held that the amount deposited during search proceedings without an acknowledgement of acceptance issued in Form GST DRC-04 as mandated under Rule 142 of the Central Goods and Services Rules, 2017 (“the CGST Rules”) is involuntary thus, directed to be refunded.

Citation :
W.P.(C) 9834/2022 dated December 20, 2022

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