2021 (3) TMI 853 - HC - GST

Jurisdiction - power of respondent No.2, who was an ETO, to set the criminal law in motion without the previous sanction/permission of the Commissioner of Central Government as provided for under Section 132(6) of the CGST Act - whether lodging of FIR amounts to prosecution or not - procuring bogus purchase invoices to avail ineligible credit - HELD THAT - Since the inherent powers vested under Section 482 Cr.P.C. are extremely wide and undefined, a great deal of circumspection needs to be exercised. In the case in hand, as also stated by the learned counsel for the petitioner, investigation is still underway and final report under Section 173 Cr.P.C. has not yet been presented by the investigating agency. Therefore, this Court would not be justified in embarking upon the truthfulness or falsehood of the allegations levelled in the complaint. Moreover, a perusal of the FIR in question does prima facie disclose the commission of offences alleged against the petitioner. Needless to add the correctness or otherwise of the allegations would be gone into by the trial Court as and when the evidence is adduced by both the parties. No doubt, Section 4(2) Cr.P.C. does stipulate that if a special procedure is prescribed under a special enactment then the procedure would have to be followed as per the enactment and not under the Code and perusal of Section 132(6) of the CGST Act, also makes it abundantly clear and leaves no manner of doubt that a person under this section can be prosecuted for an offence only with the previous sanction of the Commissioner. However, in the case in hand the 'prosecution' of the petitioner has not even been initiated. Prosecution of a person or an accused commences only when the Magistrate or Court concerned takes cognizance of the same. In other words, prosecution means the initiation or commencement of the criminal proceedings when formal charge-sheet is presented before a Court of law. Coming to the instant case, as already admitted by the learned counsel for the petitioner, investigation is still underway and chargesheet/ final report under Section 173 Cr.P.C. has not yet been presented before the Court concerned. The complaint filed by respondent No.2 cannot be said to be beyond his jurisdiction because the previous sanction of the Commissioner as provided for under Section 132(6) of CGST Act, would be required only after the conclusion of the investigation and at the stage of presentation of charge-sheet/final report under Section 173 Cr.P.C., when judicial notice of the offence(s) are taken for the first time by a Court of law. Lodging of the FIR does not amount to prosecution and is clearly distinguishable from prosecution. Petition dismissed.

Summary

Issues Involved:
1. Quashing of FIR under Section 482 Cr.P.C.
2. Allegations of wrong ITC claims under CGST Act, 2017.
3. Jurisdiction and authority of the Excise Taxation Officer.
4. Validity of actions taken without prior sanction of the Commissioner under Section 132(6) of the CGST Act.

Issue-wise Detailed Analysis:

1. Quashing of FIR under Section 482 Cr.P.C.:
The petitioner sought to quash FIR No.321 dated 19.07.2019, registered under Section 132 of the CGST Act, 2017, and Sections 420, 467, 468 & 471 IPC. The petitioner contended that he had resigned from the company on 05.01.2018, which was communicated to the Ministry of Corporate Affairs on 13.01.2018. Post-resignation, he had no role in the company’s affairs. The Court noted that the inherent powers under Section 482 Cr.P.C. are wide and undefined, requiring circumspection. Since the investigation was ongoing and the final report under Section 173 Cr.P.C. had not been presented, the Court refrained from assessing the truthfulness of the allegations. The FIR disclosed prima facie commission of offences, and the correctness of allegations would be examined during the trial.

2. Allegations of wrong ITC claims under CGST Act, 2017:
The petitioner argued that the company claimed 'NIL' transactions for the financial year 2017-18, contradicting the FIR's allegations of ?5,49,68,735/- ITC claims. The State countered that the company, registered by the petitioner, was found to be fake and non-existent, procuring bogus invoices from other firms. The company did not affect any purchase or sale in 2017-18, but for 2018-19, it showed purchases, sales, and huge ITC claims. The petitioner's name remained on the GST portal, and no application for amending the registration certificate was made, indicating his resignation claim was an eye wash.

3. Jurisdiction and authority of the Excise Taxation Officer:
The petitioner contended that the Excise Taxation Officer (ETO) exceeded his jurisdiction by filing the complaint without prior permission from the Commissioner of Central Government as required under Section 132(6) of the CGST Act. The State argued that officers of both Central and State Tax are authorized to initiate enforcement actions irrespective of administrative assignments. The business premises inspection revealed the firm was non-existent, and the petitioner claimed ITC worth ?5,49,68,735/- without physical movement of goods, causing a significant loss to the State exchequer. The ETO's actions were within jurisdiction as the firm was non-existent, and the petitioner's name was still on the GST portal.

4. Validity of actions taken without prior sanction of the Commissioner under Section 132(6) of the CGST Act:
The petitioner argued that the ETO could not set criminal law in motion without the Commissioner’s prior sanction. The Court clarified that Section 132(6) of the CGST Act requires the Commissioner’s sanction for prosecution, which commences when a Magistrate or Court takes cognizance of the offence. Since the investigation was ongoing and no charge-sheet/final report under Section 173 Cr.P.C. had been presented, the complaint by respondent No.2 was not beyond jurisdiction. The requirement for the Commissioner’s sanction would arise only after the investigation and at the stage of presenting the charge-sheet.

Conclusion:
The Court dismissed the petition, stating that the inherent power under Section 482 Cr.P.C. was not justified for quashing the FIR at this stage. The investigation was ongoing, and the allegations would be examined during the trial. The actions of the ETO were within jurisdiction, and the requirement for the Commissioner’s sanction would arise at the prosecution stage, not at the FIR lodging stage.