New Delhi, May 26 (PTI) Concerned over instances of coercive recovery measures being taken by some taxmen, the GST investigation office has clarified that entities can pay tax dues at any stage during search operation.

In an instruction, it also asked chief commissioners to take "strict disciplinary action" against officers for using force or coercion for getting the tax due amount deposited during search or inspection or investigation.

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"It is clarified that there may not be any circumstances necessitating 'recovery' of tax dues during the course of search or inspection or investigation proceedings. However, there is also no bar on the taxpayers for voluntarily making the payments on the basis of ascertainment of their liability on non-payment/short payment of taxes before or at any stage of such proceedings," the GST investigation wing said.

The tax officer should inform the taxpayers regarding the provisions of voluntary tax payments through DRC-03, it added.

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In the instruction, it said that instances have been noticed where some of the taxpayers after voluntarily depositing GST liability through DRC-03 have alleged use of force and coercion by the officers for making 'recovery' during the course of search or inspection or investigation.

AMRG & Associates Senior Partner Rajat Mohan said this instruction would improve the ease of doing business if followed in letter and spirit.

"However, like most departmental clarifications, these instructions also have limited practical application and thereby taxpayers being searched are still dependent on the whims and mercies of the search team," Mohan said.

EY India tax Partner Bipin Sapra said, "While the circular will reduce the use of coercion by the department to get the tax deposited during the investigation process, given that the officers have powers to summon and freeze bank accounts, any direct instruction may be of little help."

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