GST
Pressure to deposit ITC during a visit
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Facts
Payment during search or investigation should be voluntary. The Supreme Court in Radhika Agarwal (27 February 2025) noted payments made under coercion can be challenged and refunded.
Provisions and law
- Sec 73(5), CGST Act 2017A person may pay tax with interest before a Sec 73 notice is issued and inform the officer; no penalty is then payable.
- Sec 74A(8), CGST Act 2017Under Sec 74A, paying tax and interest before the notice means no penalty in non-fraud cases; in fraud cases a 15 percent penalty is also paid.
- Sec 69, CGST Act 2017Arrest only for specified offences under Sec 132, with Commissioner approval and grounds of arrest informed.
Analysis
You can pay voluntarily through DRC-03 if you agree the credit was wrong, and early payment can reduce penalty. But do not pay under pressure on the spot without understanding the case. If you pay, note in writing that it is under protest and without admitting liability, and record what happened. Take advice from a CA and a lawyer the same day.
Conclusion
- Ask for the written basis of the demand.
- Do not sign blank papers or pay without advice.
- If you pay, record that it is under protest.
- Write to senior officers if pressure was used.
- Consult a CA and lawyer immediately.
A Savvy can do this for you
Reply to fake ITC notice when a supplier is found non-existent, Sec 16(2)(c)
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