11-02-2022 -Rajasthan High Court granted stay from recovery by the GST department forcing the assessee to deposit the amount towards GST

The Hon’ble High Court of Rajasthan vide its Order dated 09.02.2022 in the matter of M/s Dhariwal Products Vs Union of India & Ors. in Civil Writ Petition No. 2189/2022 stayed the recovery initiated by the GST authorities and directed the authorities not to take any coercive steps against the Petitioner or to force the petitioner to deposit any amount towards GST.

The Writ petition was preferred by the petitioner assailing the action of the GST Department and its officials in conducting search and seizure of the petitioner’s premises and forcing him to deposit huge sum towards GST.

FactsThe GST department conducted search operations on the premises of the Petitioner on 05.01.2022 and 06.01.2022. The GST officers was present at the residence of Petitioner and gave a notice to the Petitioner’s representative for appearance in the factory premises and thereafter extracted a confession from him, however, the same was retracted later on by the representative.  Further, the Petitioner was also forced to deposit a sum of Rs. 11.5 crores towards GST and the representative of the Petitioner is receiving repeated notices under Section 70 of the CGST Act, thus, he apprehends arrest on appearance before GST officers.

Petitioner’s Plea

  • The petitioner disputes the amount already been deposited as it was not a voluntary deposit and submitted that the procedure under Section 74 (issuance of Show Cause Notice) has not been followed by the GST Department.
  • Once the procedure under Section 74 is adopted, the department would be required to refund the amount already extracted from it and that is a reason GST authorities are by passing the lawful procedure and trying to extract more money from the petitioner under the façade of voluntary deposit.
  • Without determining the liability of the petitioner towards GST, the respondents are pressuring to voluntary deposit the amount or face the consequence of the arrest.
  • The petitioner with the above submissions and relying on the decisions in M/s Bhumi Associate v. Union of India, cited in 2021 (46 ) G.S.T.L. 36 (Guj.) and Deem Distributors Pvt. Ltd. v. Union of India, cited in 2022 (56) G.S.T.L. 282 (Telangana), urges that the impugned notices are grossly illegal and amounts to abuse of power by GST officers.


Hon’ble High Court held that prima facie, it appears that the impugned action has been taken by the GST authorities without following the Section 74. There is merit in the contention raised on the behalf of the petitioner that once the confession has been retracted, the procedure under Section 74 of the Act would have to be followed. Once this procedure is adopted, the responden authorities would not be able to procure allegedly short paid GS amounts by branding it to be a voluntary deposit and that is why dubitable procedure of issuing summons to petitioner unde Section 70 of the CGST Act is being adopted even though the petitioner’s/representative’s statement had already been recorded on the date of inspection/search itself.

The Hon’ble High Court with the above findings directed as under:

  1. No Coercive steps shall be taken against the petitioner in furtherance of search or seizure operations dated 05.01.2022 & 06.01.2022; and,
  2. The petitioner shall not be forced to deposit any amount towards GST without adhering to Section 74 of the Act.

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