Supreme Court Dismisses Special Leave Petition as Not Pressed After Assessee Seeks Statutory Appeal Liberty

Issue

• Whether a writ petition challenging coercive recovery of tax dues during a search under Section 67 and seeking refund of amounts voluntarily deposited via Form DRC-03 is maintainable when statements and panchnamas confirm voluntary payment and absence of coercion.

Facts

• Search and Seizure: The assessee ran an unregistered coaching institute for 4th and 5th-grade students. A search under Section 67(2) from October 6 to October 10, 2023, seized records and recorded statements revealing unregistered status, unrecorded cash fee collections, and suppressed income.
• Voluntary Deposit: On a written undertaking and upon obtaining temporary registration, the assessee deposited approximately ₹1.96 crores via Form DRC-03 toward tax, interest, and penalty. Panchnamas and statements affirmed that the payments were voluntary and free from coercion.
• Writ Petition & Subsequent Refund Claim: The assessee filed a writ petition alleging coercive recovery during the search. Later, on August 28, 2025, the assessee filed a refund claim in Form RFD-01, which was eventually rejected by the proper officer via Form RFD-06 on February 3, 2026, after issuing a show-cause notice in RFD-08 and receiving a reply in RFD-09.
• High Court Order: The High Court dismissed the writ petition, holding that contemporaneous panchnamas showed voluntary admissions of liability, two-year silence made the coercion narrative an afterthought, and refunds under Section 54 are not available for voluntarily satisfied dues.
• Supreme Court Proceedings: The assessee filed a Special Leave Petition (SLP) against the High Court’s order but chose not to press the petition, instead seeking liberty to file a statutory appeal before the Appellate Authority.

Decision

• Withdrawal of SLP: The Special Leave Petition was dismissed as not pressed, granting the assessee liberty to pursue statutory appellate remedies.
• Dismissal of Writ & Rejection of Refund: The underlying High Court order dismissing the writ petition and upholding the rejection of the refund claim remained undisturbed.

Key Takeaways

• Contemporaneous Records Preclude Coercion Claims: Signed panchnamas and recorded statements explicitly affirming the voluntariness of tax payments during search operations create a strong factual bar against subsequent belated allegations of coercion.
• Inappropriateness of Writ for Factual Disputes: Allegations of forced recovery involving disputed questions of fact and contemporaneous silence are not amenable to writ scrutiny under Article 226 when statutory mechanisms exist.
• Statutory Appeal as Appropriate Remedy: Litigants seeking to challenge tax liabilities, search-related deposits, or refund rejections should pursue statutory appeals before the Appellate Authority rather than invoking writ jurisdiction without establishing genuine duress.