Spot Recovery During a GST Search Is Not Voluntary

Spot Recovery During explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

It happens often enough to have a name. The search has run for hours, the team is still there, and a figure is suggested. A DRC-03 is filed on a phone. Everyone goes home.

That payment is not what it appears to be, and the position is clearer than most people assume.

There is no power of recovery during a search. Recovery under s.79 presupposes an amount payable that has remained unpaid, and s.78 requires three months from service of an order before recovery is initiated. Payment before a notice is possible — under s.73(5) or s.74(5) — but only on the person's own ascertainment or as ascertained by the proper officer, communicated in writing. CBIC Instruction No. 01/2022-23 dated 25.05.2022 states that there is no provision permitting recovery during search, inspection or investigation, and that any payment must be voluntary. Courts have ordered coerced payments refunded.

Why there is no power

Recovery in the Act is s.79 — deduction from amounts payable, detention and sale of goods, garnishee notices, distraint, a certificate to the Collector, an application to a Magistrate. Every mode presupposes an amount payable.

Section 78 sets the precondition: any amount payable in pursuance of an order shall be paid within three months of service, and only then may recovery proceedings be initiated. The proviso allows a shorter period only where the proper officer considers it expedient in the interest of revenue, for reasons to be recorded in writing.

During a search:

• no notice has been issued;
• no liability has been determined;
• no order has been served;
• no period for payment has run.

There is therefore nothing to recover, and nothing to recover it under. Seizure is not recovery →

What a voluntary payment actually requires

The Act does allow payment before a notice, and it is often sensible. But it has a defined shape.

Section 73(5): a person may pay the amount of tax with interest, on the basis of his own ascertainment of such tax or the amount of tax as ascertained by the proper officer, and inform the proper officer in writing of such payment. Section 73(6): the officer shall then not serve any notice in respect of the tax so paid.

Section 74(5) does the same for a fraud matter, with penalty equal to fifteen per cent.

Three elements, all of which are absent in a spot payment:

An ascertainment. A computation — of what, for which period, at what rate, on what basis. A figure named across a table at midnight is not an ascertainment.

A choice. "May pay" — a decision taken with the ability to decide otherwise.

A written intimation. The payment must be communicated in writing to the proper officer for s.73(6) to operate at all.

A DRC-03 filed under pressure has the form of a voluntary payment and none of its substance.

The CBIC instruction

Instruction No. 01/2022-23 dated 25.05.2022 addressed the practice directly. Its substance:

• there is no provision in law permitting recovery of tax during search, inspection or investigation;
• voluntary payment is permitted under s.73(5) and s.74(5), in DRC-03;
• officers must not use force or coercion to obtain payment;
• where a taxpayer wishes to pay voluntarily during or after a search, the payment should be made through DRC-03 and, in practice, is properly made after the search team has left the premises;
• complaints of forced recovery are to be acted upon, with the CBIC directing that grievances be examined and appropriate action taken against officers where the allegations are found correct.

The instruction is a departmental document and does not, by itself, decide a case. But it is the department's own statement of the legal position, and it is quotable in a representation, in a grievance, and in a writ petition.

How courts have treated it

The pattern in the decisions has been consistent:

• payments made during or immediately at the end of a search, at unusual hours, without any ascertainment on record, have been treated as not voluntary;
• refund of such payments has been ordered, in several cases with interest;
• the absence of a written ascertainment and the timing of the DRC-03 have been the decisive facts;
• the department's own Instruction No. 01/2022-23 has been relied on.

The taxpayer's difficulty is almost always proof: the DRC-03 exists and appears voluntary on its face. Which is why what happens in the following days matters more than what happens on the night.

What to do

During the search:

1. Do not file a DRC-03. Say, courteously, that any payment will be considered after taking advice and computing the position.
2. Ask for the ascertainment in writing if a figure is being proposed. Section 73(5) contemplates an amount "as ascertained by the proper officer" — so ask for it on paper, with the period and the basis.
3. Record any demand for payment on the panchnama, before signing.
4. Note the times — when the payment was discussed, when it was made, when the team left.

If a payment was made:

1. Write within days, addressed to the Commissioner, stating that the payment was made during the search, without any ascertainment, and is not a voluntary payment under s.73(5) / 74(5); referring to Instruction No. 01/2022-23; and seeking refund.
2. Do not repeat it in subsequent months. A second and third payment strongly undercuts the case that the first was involuntary.
3. Do not describe it as an admission in any subsequent correspondence.
4. File a grievance on the departmental channel, which creates a dated record.
5. Consider a writ petition promptly — delay is the main reason these petitions fail.

Where paying really is the right answer

None of this means payment is wrong. Where a genuine liability is identified:

• compute it properly, period by period;
• pay under s.73(5) or s.74(5) in DRC-03;
• communicate the ascertainment in writing, which is what engages s.73(6) and stops the notice;
• do it after the search, on advice, in your own time.

That is a cheaper outcome than a notice — no penalty in a non-fraud case, fifteen per cent in a fraud case — and it is available for weeks or months afterwards. There is nothing to be gained by doing it at 2 a.m. DRC-03 →

Key takeaways

• There is no power of recovery during a search; s.79 needs an amount payable and s.78 needs three months from an order.
• A voluntary payment under s.73(5) or 74(5) requires an ascertainment, a choice, and a written intimation.
• CBIC Instruction No. 01/2022-23 dated 25.05.2022 states that no recovery may be made during search, inspection or investigation.
• Courts have ordered refund of payments made during searches, in several cases with interest.
• Do not file a DRC-03 during a search; record any demand for payment on the panchnama.
• If a payment was made, write within days and do not repeat it.

Read next

• Seizure Is to Secure and Identify, Not to Recover
• Seizure of Cash During a GST Search
• DRC-03 Voluntary Tax Payment — Before or After Notice
• Section 70: Summons and the Judicial Proceeding

Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition), CBIC Instruction No. 01/2022-23 dated 25.05.2022, and the ICAI Handbook on Inspection, Search, Seizure and Arrest under GST (July 2025). Judicial positions are stated in general terms.