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SC asks Centre to not use "threat and coercion" in GST recovery operations.


The Supreme Court directed the Centre to persuade traders to clear GST dues voluntarily without using force during search and seizure operations. The bench emphasized the need for payment to be voluntary and without coercion, allowing individuals time to seek advice and settle liabilities.

The Supreme Court on Wednesday instructed the Centre to refrain from employing "threat and coercion" tactics during search and seizure operations aimed at recovering Goods and Services Tax (GST) from traders. The bench, comprising Justices Sanjiv Khanna, MM Sundresh, and Bela M Trivedi, who are reviewing different sections of the GST Act, emphasised that the law does not grant authorities the power to use force to collect outstanding dues.

"There is no power under the Act to compel any person to pay the tax liability during the search and seizures. Request your department to ensure that the payment is made voluntarily without any use of force. A period of three to four days must be provided to the accused individual to seek advice, contemplate, and settle the liability. It should be voluntary and there should not be use of any threat or coercion," the bench told Additional Solicitor General SV Raju, appearing for the Centre.

Raju did not rule out the possibility of using force in the past but mentioned that usually the payment during search and seizure is voluntary."Yes, there is possibility of both ways but mostly the payment is done voluntarily or after a few days as the alleged offender wanted to consult his advocate for payment of liability. There may have been some instances in the past, but that is not the norm,' he said during the day-long hearing.

The bench noted that several petitioners have alleged that authorities resorted to intimidation and exerted pressure during search and seizure operations.

It said, "We know what is on paper and what happens in reality when a person is subjected to search and seizure. In case of payment refusal, it is permissible to temporarily seize the assets; however, a period must be allowed for consultation, consideration, and resolution of the obligation. You can't put him under threat and coercion of arrest."

When Raju said many a time the alleged offenders adopt various methods to evade taxes, the bench told him, "Arrest him but it should be strictly under the procedure laid down under law." It said unlike the Income Tax Act, there is a provision for arrest under section 69 of the GST Act.

Senior advocate Sujit Ghosh, representing one of the petitioners, highlighted that despite the safeguards stipulated in the law, there is a failure in their enforcement, with individuals being intimidated with arrest to compel payments. During the hearing on a batch of 281 petitions, the bench reminded Additional Solicitor General SV Raju that the GST law incorporates mechanisms for checks and balances.

"We agree there cannot be a broad-brush approach but we have to ensure that safeguards are there. Strict compliance with section 69 (power to arrest) and section 70 (power to summon) is necessary. If the legislature has enacted safeguard provisions, they must be implemented strictly. You have to apply your mind at the time of summon or arrest," the bench told Raju.

The law officer mentioned situations where goods are transported in oil tankers, auto-rickshaws, and various methods are used to avoid responsibility.

Senior advocate Kavin Gulati, who is representing one of the petitioners, mentioned that in his almost thirty-year career, he has never witnessed as many arrests and confiscations as those that have occurred in the last five years under the GST regime.

'Provide clarity'

On May 2nd, the Supreme Court urged the government to furnish details regarding the issuance of notices and arrests carried out under the GST Act. Expressing concern over potential harassment and deprivation of freedom, the court indicated its intention to interpret the law and devise appropriate guidelines to safeguard citizens' rights.

Specifically, the court highlighted its apprehensions regarding the lack of clarity in Section 69 of the GST Act, which deals with the authority to make arrests. It emphasized its commitment to interpreting the law in a manner that upholds individual liberties and prevents undue harassment of citizens.

Source -


Recovery Proceedings


Demand and Penalty

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May 13, 2024

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