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Exposure of Prosecution under the Indian Penal Code for Offences under GST

In the Matter of: Shri. Sentu Dey Vs. State of Tripura & Ors. [Crl. Petn. No.14/2021]

Forum: High Court of Tripura

Order Delivered on: May 28, 2021

Factual Background: The petitioner is a sole proprietorship firm. The Superintendent of State Taxes filed a complaint before the Sub-Divisional Magistrate under Section 190 read with Section 200 of the Code of Criminal Procedure (“Cr.P.C.”) that the petitioner has under-declared the outward taxable turnover and paid less tax from August 2017 onwards. Thereafter, the Sub-Divisional Magistrate transferred the case to Magistrate who first, fixed the case for examination under section 200 of Cr.P.C., and subsequently passed an order that “before taking cognizance the matter be investigated by Police” under section 156(3) of Cr.P.C. after registering the complaint as an FIR and called for a report. Petitioner/Assessee filed a writ petition inter alia contending that the offence alleged against the petitioner is one punishable under Section 132 of the State Goods and Services Act, 2017 (“SGST Act”), which is a special statute. The general provisions of the Indian Penal Code, 1860 (“IPC”) in such a case cannot be invoked.

Judgment:

The Hon’ble High Court observed that the provisions of Section 132 of SGST Act provides punishment for certain offences related to the Goods and Services Tax. However, certain acts or omissions which fall within the ambit of a special penal statute such as the SGST Act may, at the same time, have an element of an offence under the provisions of IPC. The Hon’ble High Court referred to various Supreme Court rulings for, whether the accused in such a situation can be made answerable only for the special statue offence or for the general offence also, and held that in a given case an act or omission on part of the dealer may form offence only under SGST Act. But in a given case where the ingredients of the provisions of IPC are satisfied, the action can also amount to offences punishable under IPC. The High Court issued a word of caution and stated that the tax administration of the State should not invoke provisions of the IPC without application of mind in every case. The High Court accordingly quashed the order of the Magistrate for police investigation.

Analysis:

It is important to note that where any offence under the Central Goods and Services Tax Act, 2017 or SGST Act is grievous or constitutes an offence under IPC, then it can lead to holding criminal proceedings against the offenders under IPC without waiting or following the procedure under SGST Act. But to invoke the provisions of IPC for the offences under the Central Goods and Services Tax Act, 2017 or the SGST Act, the tax department should take necessary caution to establish the guilt or offence of the assessee and not merely file a complaint in a casual manner or with ill-intention before the Magistrate.