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Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Yes. Under CBIC’s guidance, a taxpayer may choose to pay an ascertained GST liability through Form GST DRC-03 during a search, inspection or investigation, before a show-cause notice under section 73(5) or 74(5) of the CGST Act. That is different from an officer compelling immediate recovery during an investigation, which CBIC says should follow due legal process. Whether a particular payment was genuinely voluntary depends on the evidence and circumstances.
Voluntary payment and forced recovery are different
CBIC Instruction No. 01/2022-23 [GST-Investigation], dated 25 May 2022, says the law does not bar taxpayers from voluntarily paying a tax liability they or the tax officer have ascertained during proceedings or afterward. The instruction also says there may not be any circumstance requiring recovery of tax dues during search, inspection or investigation proceedings themselves. Read the CBIC instruction.
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In practical terms, an investigation does not itself make an officer’s demand for on-the-spot payment a lawful recovery. A taxpayer who independently decides to pay an ascertained liability may do so through the prescribed process; an officer cannot treat the investigation as a substitute for the legal steps required to recover disputed dues.
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1Repair Windows errors before they cause bigger problems2Fix the driver behind crashes, sound loss and screen glitches3Clear out junk files and repair common Windows errorsHow to make and document a pre-notice payment
The cited materials describe a taxpayer informing the proper officer of a pre-notice payment through DRC-03, with the proper officer issuing an acknowledgment in DRC-04. GST Council material reproduces the Rule 142 procedure. See the GST Council material.
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Forms, rules and the GST portal workflow may change. Before filing, check the current notified rules and portal process, and confirm which provision applies to the relevant tax period and procedural stage.
- Keep a copy of the submitted DRC-03, portal confirmation and payment proof.
- Retain any DRC-04 acknowledgment, or record that one was not received.
- Keep related notices, summons, written communications and a dated account of events.
- Record who prepared and submitted the form, and how the liability and amount were determined.
What can show whether a payment was voluntary?
Submitting DRC-03 does not, by itself, settle whether a payment was voluntary. In disputes, courts have considered the timing of payment, whether the taxpayer independently ascertained a liability, who initiated and controlled the filing, whether a DRC-04 acknowledgment issued, the surrounding communications and whether the taxpayer later objected. These are factual considerations, not a formula that guarantees a particular result.
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In Vallabh Textiles v. Senior Intelligence Officer, the Delhi High Court considered the circumstances around payment during an ongoing search and the acknowledgment process. The judgment discusses DRC-03 and DRC-04; it does not mean every payment during a search is automatically invalid or refundable. Read the Vallabh Textiles judgment.
A 2026 Rajasthan High Court decision ordered a refund on the record before it, while leaving ultimate tax, interest or penalty liability to be adjudicated. Its result is specific to those facts, not a general rule that every DRC-03 payment made during a search must be returned. Read the Rajasthan High Court decision.
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If you believe payment was made under pressure
Preserve the records above and make a clear, dated record of what happened, including the people involved, what was said, how the amount was calculated and whether you objected. The cases show that the full circumstances matter; neither the timing of payment alone nor the form used necessarily resolves the issue.
Get advice from a qualified GST practitioner or tax lawyer if the amount is material or disputed, a notice has already been issued, or you believe payment was compelled. Ask them to assess the applicable statutory route and the evidence. The outcome, including any question of refund or further liability, depends on the relevant facts and law.
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Which GST provision applies?
CBIC’s 2022 instruction addresses voluntary payment before a show-cause notice under sections 73(5) and 74(5). The correct provision and the consequences of payment depend on the relevant tax period, alleged facts and procedural stage. Do not assume that paying prevents all interest, penalty or further proceedings in every case; verify the applicable law and obtain case-specific advice where needed.
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