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2024 Supreme(Online)(MP) 14086
HIGH COURT OF MADHYA PRADESH
SUSHRUT ARVIND DHARMADHIKARI, SHRI JUSTICE DUPPALA VENKATA RAMANA, JJ
Deepak Singhal – Appellant
Versus
Union Of India – Respondent
WP 21641/2024
Shashwat Seth,
GST Act mandates adherence to its procedural safeguards for prosecution, preventing invocation of IPC provisions without compliance.
Headnote:(A) Goods and Services Tax Act, 2017 - Sections 67(2), 70, 132(6) - Indian Penal Code - Sections 420, 467, 468, 471 - Petition to quash FIR and proceedings against petitioner for alleged offences under IPC without invoking GST provisions - Court held that GST Act is a complete code and any prosecution under IPC without following GST procedures is impermissible. (Paras 3, 9, 10, 12)
(B) Legal Procedure - The court emphasized that GST authorities cannot bypass the procedural safeguards of the GST Act, particularly the requirement of prior sanction under Section 132(6) before prosecution. (Paras 9, 10)
Facts of the case:
The petitioner, a proprietor of a firm, was summoned under GST provisions and later implicated in a criminal case based on allegations against another firm. The petitioner contended that the FIR was improperly registered under IPC without following GST procedures.
Findings of Court:
The court found that the GST Act provides a complete framework for addressing offences related to GST and that the FIR against the petitioner was invalid as it did not comply with the necessary procedural requirements.
Issues: The main issue was whether GST authorities could prosecute under IPC without invoking GST provisions when the alleged offences fell under GST.
Ratio Decidendi: The court ruled that the GST Act's provisions must be followed, and bypassing them to invoke IPC provisions constituted an abuse of process.
Result: Petition allowed; FIR quashed.
O R D E R
Per: Justice Sushrut Arvind Dharmadhikari Heard finally at motion stage with consent of the parties.
1. The petitioner herein has filed the present petition seeking following reliefs from this court:-
―7.1 To issue a writ of Mandamus thereby quashing the entire proceedings and ancillary proceedings in pursuance to the summons issued on 11/08/2021 against the petitioner.
7.2. To issue a writ of mandamus thereby quashing the proceedings instituted against the petitioner in the Crime No.
62/2022 and its ancillary proceedings.
7.3. To issue a writ thereby seeking a clarification from the GST department and the police authority to explain its stance as to why the petitioner has been implicated in the whole proceedings of the Crime No. 62/2022.
7.4. To allow the petition with costs.
7.5. To issue or pass any such orders or direction as this Hon.
Court may deem fit to pass in the matter in hand.‖
2. Brief facts of the case necessary for the disposal of present petition are as hereunder:-
i. Petitioner is a proprietor of the proprietor firm named as M/s. Agrawal Soya Extracts Pvt Ltd carrying out its business of trade of Soya beans seeds and Soya De-Oiled Cakes.
ii. On 11.08.2021, summon was issued to petitioner herein by Respondent No. 5 under Section 70 of GST Act, 2017 read with Section 174 of M.P GST Act, 2017 pursuant to which statements of petitioner were recorded.
iii. On 14.02.2022, Respondent No. 5 in exercise of power conferred under Section 67(2) of GST Act, 2017, conducted search and seizure operations on the premises of M/s. Shreenath Soya Exim Corporate and prepared inspection report dated 04.07.2022 in which it has been alleged that M/s. Shreenath Soya Exim Corporate was bogus firm and fraudulently registered, which issued invoice/bill without supply of goods/services leading to wrongful availment or utilization of input tax credit/refund of tax.
iv. Complaint dated 25.12.2022 was made by Respondent No.5 to Respondent No. 6, on the basis of which FIR No. 62/2022 under Section(s) 420, 467, 468 , 471 of IPC was registered by Respondent No. 6 on 26.12.2022 against M/s. Shreenath Soya Exim Corporate’s proprietor Sachin Pateria in which petitioner has been implicated later on, on the basis of memorandum under Section 27 of Evidence Act.
v. Aggrieved of the same, petitioner has approached this court.
3. Learned Counsel for the Petitioner has submitted that GST Act, 2017 is a complete code which provides for procedure to be adopted by GST Authorities, penalties in case of breach of provisions of GST Act and punishment for offences committed under GST Act. It is further submitted that admittedly in the case at hand, search and seizure operations conducted by GST Authorities under Section 67(2) of GST Act revealed commission of offence which is punishable under Section 132 of GST Act and hence, GST being a special statute, any offence which is squarely covered by the GST Act, provisions of IPC could not have been invoked without invoking the provisions of GST Act and hence registration of FIR at the instance of GST Authorities under provisions of Indian Penal Code without invoking penal provisions under GST Act is bad in law and the FIR and consequential proceedings are liable to be quashed on this ground. It is further submitted that Section 132(6) of GST Act requires previous sanction of the Commissioner before a person can be prosecuted for offences committed under Section 132 of GST Act and GST Authorities in order to bypass such procedural safeguard have gotten FIR registered under the penal provisions of IPC without invoking penal provisions under GST Act which cannot be permitted and hence on this ground also, FIR and consequential proceedings are liable to be quashed. In support of his submission, Learned Counsel for the petitioner has placed reliance on judgment of hon’ble apex court in Sharat Babu Digumarti Vs. Government (NCT of Delhi) 2017 (2) SCC 18 .
4. Per Contra, Learned Counsel for Respondents has submitted that offe
