FIR can be lodged under Code of Criminal Procedure for GST offences/ Case of Govind Enterprises Vs State of

Case of Govind Enterprises Vs State of UP reported in 2019-TIOL-1170-HCALL-GST

Facts:

Petitioner seeks quashing of first information report (FIR) dated 30.11.2018 lodged by Assistant Commissioner, Commercial Tax at police station Kosi Kalan, District Mathura, Uttar Pradesh under Sections 420, 467, 468, 471, 34, 120-B IPC. Thrust of the allegations made in the impugned FIR is that the dealer fraudulently, with a dishonest intention, by submitting false documents, with an intention to evade taxes, obtained registration, thereafter, took inward supply and passed on the goods to end users, without generating outward supply bills, received money in cash and deposited the same in bank account which was not declared at the time of seeking registration. According to the allegations, a bogus firm was got registered by showing false and bogus addresses of business; and, by taking advantage of such registration, inward e-way bills were generated to make purchase of goods worth Rs.35 odd crores and, thereafter, without generating outward supply bills, huge amount of money was deposited in cash in undisclosed bank account, suggesting that goods were sold without proper documentation, with a view to evade taxes

Petitioner submitted that till date no case had been registered under the provisions of the U.P. Act or under the CGST Act and no recovery demand has been raised and, therefore, lodging of the FIR under the provisions of the Indian Penal code is not legally sustainable; that the GST Act is a complete code in itself as it contemplates and deals with all kinds of situations and offences relating to registration of firms, tax evasion etc and it prescribes a specific procedure for arrest and prosecution, therefore, lodging of the FIR for offences punishable under the IPC by taking recourse to the provisions of the Code of Criminal Procedure, 1973 is not legally justified; that the power to arrest is to be exercised only where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of Section 132(1) of the U.P. Act, and, by order, has authorized any officer of Sales tax to arrest such person; that, under the circumstances, first a proceeding has to be drawn under the provisions of the U.P. Act and, only, thereafter there could be arrest, that too, after recording satisfaction and hence, lodging of the FIR straightaway is not legally permissible; that even assuming that a FIR can be registered, as no demand for recovery has yet been issued, there is no justification to effect arrest of the petitioner pending investigation

The Hon’ble Allahabad High Court held as under Sections 69, 134, and 135 of the U.P. Act are applicable in respect of offences punishable under the U.P. Act. They have no application on offences punishable under the Penal Code – Further, there is no provision in the U.P. Act which may suggest that the provisions of the U.P. Act overrides or expressly or impliedly repeals the provisions of the Penal Code. There is also no bar in the U.P. Act on lodging an FIR under the Code for offences punishable under the Penal Code even though, for the same act/ conduct, prosecution can be launched under the U.P. Act. Rather, section 131 of the U.P. Act impliedly saves the provisions of the Penal Code by providing that no confiscation made or penalty imposed under the provisions of the Act or the rules made there under shall prevent the infliction of any other punishment to which the person affected thereby is liable under the provisions of the U.P. Act or under any other law for the time being in force. Argument of petitioner that except for offences specified in section 132(5), section 132(4) of the U.P. Act renders all offences under the U.P. Act non cognizable, therefore no FIR can be lodged, is not acceptable, because subsection (4) speaks of offences under the U.P. Act and not in respect of offences under the Penal Code.

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The Hon’ble Allahabad High Court held as under Offences punishable under the Indian Panel Code are qualitatively different from an offence punishable under the U.P. Act. The contention of the petitioner that no FIR report can be lodged under the provisions of the Code of Criminal Procedure for offences punishable under the IPC, as proceeding could only be drawn against him under the U.P. GST Act, 2017, is rejected. Prima facie, necessary ingredients of an offence of cheating, by submitting false information and documents, are clearly spelt out in the FIR. Impugned FIR is, therefore, not liable to be quashed. To ensure that a person’s liberty is not jeopardized, on account of false implication, protection from arrest, pending investigation, may be granted by superior courts but that power is not ordinarily to be exercised in matters relating to economic fraud. As, in such matters, stay on arrest may become a hurdle in thorough investigation of the matter, particularly in tracing out the money trail. This is not a fit case where any relief should be granted to the petitioner in the writ jurisdiction – Petition is dismissed

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