The Hon'ble High Court of Madhya Pradesh in Deepak Singhal v. Union of India [W.P. NO. 21645 OF 2024, August 30, 2024] held that where a complaint was made and FIR was registered against one Shreenath Soya's proprietor in which petitioner had been implicated later on, penal provisions of IPC invoked without invoking penal provisions of section 132 of CGST Act, no sanction before launching prosecution taken from Commissioner as required under section 132(6) of CGST Act, FIR and consequential proceedings emanating therefrom were to be quashed, as against petitioner.
Facts of the Case:
The petitioner, Deepak Singhal, is the proprietor of a firm named M/s. Agrawal Soya Extracts Pvt Ltd, engaged in the business of trading Soya beans seeds and Soya De-Oiled Cakes. On August 11, 2021, Respondent No. 5 issued a summons to the petitioner under Section 70 of the GST Act, 2017 read with Section 174 of M.P GST Act, 2017. In compliance with this summons, the petitioner's statements were recorded by the authorities.
Subsequently, on February 14, 2022, Respondent No. 5, exercising powers conferred under Section 67(2) of the GST Act, 2017, conducted search and seizure operations on the premises of M/s. Shreenath Soya Exim Corporate. An inspection report dated July 4, 2022, was prepared, alleging that M/s. Shreenath Soya Exim Corporate was a bogus firm, fraudulently registered, which had issued invoices/bills without the actual supply of goods/services, leading to wrongful availment or utilization of input tax credit/refund of tax.
Based on a complaint dated December 25, 2022, made by Respondent No.5 to Respondent No. 6, FIR No. 61/2022 was registered on December 26, 2022, under Sections 420, 467, 468, 471 of the IPC against M/s. Shreenath Soya Exim Corporate's proprietor Sachin Pateria. The petitioner was implicated later in this FIR on the basis of a memorandum under Section 27 of the Evidence Act.
Aggrieved by these actions, the petitioner approached the High Court seeking relief, including the quashing of the FIR and related proceedings.
Held by the Court:
The Hon'ble High Court of Madhya Pradesh in Deepak Singhal v. Union of India [W.P. NO. 21645 OF 2024, August 30, 2024] held that:
The court observed that the GST Act, 2017 is a special legislation that comprehensively deals with procedure, penalties, and offences relating to GST. It emphasized that GST Authorities cannot be permitted to bypass the procedure for launching prosecution under the GST Act, 2017 and invoke provisions of the Indian Penal Code without utilizing the penal provisions from the GST Act. The court held that this approach would defeat the very purpose of enacting a special statute such as the GST Act, 2017.
The court opined that there was no allegation against the petitioner of forming a bogus firm. It held that even if the allegations in the inspection report and FIR were taken at face value, they constituted offences squarely covered by the penal provision of Section 132 of the GST Act, 2017. The court noted with concern that no sanction before launching prosecution (i.e., registration of FIR) was taken from the Commissioner as required under Section 132(6) of the GST Act.
The Hon'ble Court held that there was no justification for the GST authorities to invoke penal provisions of the IPC without invoking penal provisions under the GST Act, especially when the allegations revealed as a result of search and seizure conducted by GST Authorities constituted offences covered under the penal provisions of the GST Act. It observed that allowing GST Authorities to adopt such a course of action would amount to an abuse of the process of law, which cannot be permitted by the court.
Relying on the judgment of the Hon'ble Supreme Court in Sharat Babu Digumarti v. Government (NCT of Delhi) 2017 (2) SCC 18, the court held that when a special provision having an overriding effect covers a criminal act and the offender, they get out of the net of the IPC. The court emphasized that a special law shall prevail over general and prior laws.
Based on these observations and findings, the Hon'ble High Court allowed the petition and quashed the FIR in Crime No.61/2022 under Sections 420, 467, 468, and 471 registered with Respondent No. 6 and consequential proceedings emanating therefrom, as against the petitioner. The court concluded that this decision was in the interest of upholding the sanctity of the special legislation and preventing the circumvention of procedural safeguards provided in the GST Act.
Relevant Sections:
"Section 67 of Central Goods and Services Tax Act, 2017"
"Section 69 of Central Goods and Services Tax Act, 2017"
"Section 70 of Central Goods and Services Tax Act, 2017"
"Section 122 of Central Goods and Services Tax Act, 2017"
"Section 132 of Central Goods and Services Tax Act, 2017"
Pari Materia / Cases Referred:
Sharat Babu Digumarti v. Government (NCT of Delhi) 2017 (2) SCC 18
The court relied on this case, citing that when a special provision having an overriding effect covers a criminal act and the offender, they get out of the net of the IPC. The court emphasized that a special law shall prevail over general and prior laws.
Comments