Tax deposited during search not voluntary, to be returned with 6% simple interest: Punjab High Court.
The Punjab High Court, in Modern Insecticides Limited and another v/s Commissioner, Central Good and Service Tax and another (CWP No.8035 of 2021), held that till adjudication of notice, tax deposited during search cannot be retained by department. The judgement was presided by Honorable Ms. Justice Ritu Bahri and Honorable Mr. Justice Kuldeep Tiwari.
FACTS OF THE CASE:
The respondent conducted a search on the premises of the petitioner and on the second search, took the Chartered Accountant and Director of the petitioner to their office. Both the individuals were kept in office till 1:00 am. Through the Input Tax Credit from electronic credit ledger, a sum of ₹2.15 crores was deposited. However, copy of Panchnama, copy of electronic goods and electronic gadgets, which are necessary to file returns, we’re not recorded by the respondents. Thus, a petition was filed in this regard and for the refund of the amount of ₹2.15 crores that were deposited.
JUDGEMENT:
The Court held that no recovery of tax should be made during search, investigation or inspection unless it is voluntary. A reference was made to Bhumi Associates v/s Union of India (SCA No.3196 of 2021). The Delhi High Court, in a similar case, had held that tax deposited non-voluntarily was against the provision of Section 74 of the CGST Act. The court thereby ruled that the amount be returned with a 6% simple interest from the date of deposit till the date of payment.
JUDGEMENT REVIEWED BY ARYA THAKUR.
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