The High Court of Jharkhand allowed a petition filed for quashing the entire criminal proceedings for alleged GST evasion and non-compliance with summons issued by the Central Goods and Service Tax Department and held that GST payment has been made, no further proceedings for unpaid taxes are needed, and summons compliance makes continuing IPC Section 174 proceedings an abuse of process of law.
Brief Facts:
The complaint case was filed alleging that the accused had taken G.S.T. Registration and has been providing various taxable services to various service recipients but has not made payment of GST before initiation of the investigation. It was alleged that the accused had deliberately ignored the summons issued by the Central Goods and Service Tax Department and did not appear on any date against four summons issued to the accused. He has violated the provisions of section 70 of the CGST Act and proceeding under section 174 of the IPC is initiated against the accused person. The petitioner filed a petition for quashing the entire criminal proceedings arising out of the complaint case.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the petitioner contended that although in the complaint, the allegations are made that four summons have been issued against the petitioner but the details of the summons have not been mentioned in the complaint petition. She argued that the services provided by the petitioner, raised bills for payment to its clients and the said clients being service recipients were delaying in releasing payment to the petitioner. She further argued that submits that the GST is a complete Code in itself and there are provisions of penalty and in view of that, Section 174 of the Indian Penal Code is not attracted. She also submitted that 45 days’ time was requested for further depositing the GST amount and the letter was issued by the GST authority in which direction was issued to make full payment of the GST amount and the total amount was paid. She further contended that the summon has already been replied to and there was no occasion on the authority concerned to file a complaint case under Section 174 of the Indian Penal Code and deposition of the GST amount is accepted by the authority concerned.
Contentions of the Respondent:
The learned counsel appearing on behalf of the Respondent contended that the petitioner had failed to comply with the summons without lawful excuse and intentionally omitted to give evidence or to make a statement and to produce the documents. He argued that the authorized representative of the company has not appeared and that is why the complaint case was filed under Section174 of the Indian Penal Code, which is meant for non-compliance with the direction of the public authority and GST authority is the public authority in view of Section 156 of the CGST Act, 2017. He further contended that the presumption of culpable mental state can only be proved in trial and summon is issued and the petitioner has not appeared, in view of that section 174 of the IPC is well maintainable.
Observations of the court:
The court observed that the authority allowed time and directed to make full payment of the GST amount, some money was deposited and four weeks’ time was requested to deposit further amount and payments have been made to the concerned authority. Thus, the amount of GST concerned has already been deposited. The court further observed that no further proceeding against the petitioner for determination of any tax not paid and that provision is there in Section 73 of the CGST Act, 2017. Thus, it is an admitted fact that the amount in question has already been paid.
The court stated that Section 70 of the CGST Act, 2017 speaks of summoning persons to give evidence and produce documents, and inquiry under the same will proceed under the provision of the civil procedure code and only 193 and 228 of the IPC is applicable in view of subsection (2) of Section 70 of the said act.
The court held that the summons had been replied to, which was also entertained by the authority by way of granting time. Thus, it cannot be said that this is a case of non-compliance of the summon issued by the authority concerned and to allow to continue the proceeding under section 174 of the IPC against the petitioners will amount to abuse of process of law.
The decision of the Court:
The court allowed the petition and quashed the complaint and the order taking cognizance.
Case Title: Satyendra Singh Kushwah vs. The State of Jharkhand
Coram: Hon’ble Mr. Justice Sanjay Kumar Dwivedi
Case No.: Cr.M.P. No. 2454 of 2019
Advocate for the Petitioner: Mrs. Shilpi Sandil Gadodia
Advocate for the Respondent: Mr. P.A.S. Pati
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