Section 67 of the CGST Act, 2017 --- Search and Seizure – deposits made during search-  The petitioners sought direction to the respondents to refund an amount of Rs. 2.54 crores and supply copy of Panchnama dated 05.03.2020 and 15.01.2021 along with other electronic gadgets resumed from the premises of the petitioner. A search of the factory premises of the petitioner was carried out and the respondent seized all the documents lying there. The business premises of the petitioner was searched second time on 15.01.2021. As per investigation carried out, the suppliers of three entities were cancelled dealers and the petitioner was liable to pay GST on inputs purchased from these entities. The respondent forced the Director of the petitioner to reverse the amount. The counsel for the respondents argued that the petitioner has voluntarily chosen to make payment of tax along with penalty. The court observed that whether the amount paid by the petitioner could be retained by the department, without issuing the show cause notice under Section 74 (1) that too after expiry of two years. The court relied upon the decision of the Delhi High Court in Vallabh Textiles vs. Senior Intelligence Officer and others and observed that the ratio of the judgment is directly applicable to the facts of the present case. The amount was deposited during search and as per judgment passed, this deposit 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.

Held that:- The Hon’ble High Court directed the respondents to return the amount of Rs.2.54 crores to the petitioner(s) along with simple interest at the rate of 6% per annum from the date of deposit till the payment is made, within a period of 10 days.