Gujarat HC bars CBIC from making spot recovery during inspections

The Gujarat High Court has directed the Central Board of Indirect Taxes and Customs (CBIC) to bar field units from making any on the spot recovery in any form during search or inspections.

In an interim order seen by ET, the Court has said that strict disciplinary action should be taken against officers that do not follow the directive in this regard.

"No recovery in any mode by cheque, cash, e­payment or adjustment of input tax credit should be made at the time of search or inspection proceedings under Section 67 of the Central Gujarat Goods and Services Tax Act, 2017 under any circumstances," the division bench of Justices JB Pardiwala and Ilesh J Vora said in their order.


"If complaint or grievance is filed by assessee and officer is found to have acted in defiance of the afore­stated directions, then strict disciplinary action should be initiated against the concerned officer," the Court added.

The bench however said that the directions have been proposed by the Court as it will await the response of the government through the additional solicitor general Devang Vyas.

The matter has been scheduled for hearing next for February 18.

The proposed directions include that in case an assessee wants to make voluntary payment by filing the relevant form, the assessee should be asked or advised to file it the next day or after the search proceedings have ended and officers have left the premises.

Facility of filing complaint after the end of search proceedings should be made available to the assessee if the assessee was forced to make payment in any mode during the pendency of the search proceedings, the Court said.

Experts said that the court order was a welcome move for genuine taxpayers as it will reduce undue harrasment at the hand of goods and service tax (GST) authorities.

"However, in select cases of wilful evaders this ruling will dampen the collection momentum," said Rajat Mohan, senior partner at AMRG Associates.