SGST High Court Cases

GST - Section 74(1) of the CGST Act, 2017 - Rule 142 of the CGST Rules, 2017 - Search proceedings at factory premises - Liability to reverse input tax credit on inputs purchased from cancelled dealers - Refund claim of amount collected during search operation without issuing show cause notice and passing any order – Respondent contention that petitioner has voluntarily chosen to make payment of tax along with penalty – whether the amount paid by the assessee could be retained by the department without issuing the show cause notice under Section 74(1) of the CGST Act - HELD – from the date when the search was conducted and amount was deposited, no summons under Section 74(1) of the CGST Act have been issued till date. Though the respondents can initiate proceedings under Section 74 (1) of the Act by issuing notice within the period of limitation, they cannot retain the amount deposited by the petitioner, which as per respondent-department was voluntary - The amount was deposited during search cannot be taken to be voluntary. Since no proceedings under Section 74(1) of the CGST Act have been initiated till date, as per Rule 142(1A) of CGST Rules, 2017, the department cannot even issue Form GST DRC-01A to ask the petitioner to make payment of tax, interest and penalty due - The very fact that in two years’ time, no notice has been issued, the deposit of tax during search cannot be retained by the department till the adjudication of notice - respondents are directed to return the amount deposited during search operation to the petitioners along with simple interest at the rate of 6% per annum from the date of deposit till the payment is made – writ petition is allowed

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