2021 (11) TMI 722 - HC - GST

Prosecution, under Section 132(1)(c) of the Central Act - parallel proceedings under Section 74 of the Central Goods and Services Tax Act, 2017 - HELD THAT - It appears, arising from investigation carried out on the basis of certain information received from the petitioner's bank, two proceedings have arisen - one under Section 74 of the Central Act and another seeking prosecution, under Section 132(1)(c) of the Central Act. In the first place, the proceedings under Section 74 of the Central Act have been initiated against the petitioner vide show cause notice dated 04.06.2021 requiring it to show cause - criminal prosecution has been initiated before the court of competent jurisdiction namely the Chief Judicial Magistrate, Meerut. There is no difficulty in recognizing the principle that the single transaction may give rise to both criminal and civil consequences. In the instant case, the same appears to have been caused. There is no principle in law as may warrant any interference in the present petition to either grant injunction against the pending proceedings under Section 74 of the Central Act or to quash the same, merely because the criminal proceedings is pending against the petitioner arising from the same transaction under Section 132(1)(c) of the Central Act - Both proceedings may continue simultaneously such that the rule of evidence applicable to each may be applied independently. Petition dismissed.

Summary

Issues:
1. Challenge to show cause notice under Section 74 of the Central Goods and Services Tax Act, 2017.
2. Parallel proceedings under Section 74 of the Central Act and criminal prosecution under Section 132(1)(c) of the Central Act.
3. Interference in civil proceedings due to pending criminal prosecution.

Analysis:
1. The petitioner sought a writ to quash a show cause notice issued under Section 74 of the Central Goods and Services Tax Act, 2017. Citing a Telangana High Court decision, the petitioner argued against parallel proceedings during a criminal prosecution. The notice demanded explanation for alleged IGST credit misuse, interest, and penalties.

2. The court noted two proceedings against the petitioner: one under Section 74 of the Central Act and another for criminal prosecution under Section 132(1)(c) of the Central Act. It emphasized that a single transaction can lead to both civil and criminal consequences, allowing simultaneous proceedings with independent evidentiary rules and outcomes.

3. The judgment highlighted the distinction from the Telangana High Court case where both proceedings were under the GST Act without a pending criminal prosecution. It concluded that the petitioner's case did not warrant interference to halt or quash the civil proceedings due to the ongoing criminal prosecution arising from the same transaction.

4. Ultimately, the court dismissed the petition as misconceived, permitting the petitioner to raise objections in both criminal and civil proceedings. It clarified that the dismissal did not prejudice the petitioner's rights in either forum, emphasizing the separation of criminal and civil proceedings with distinct legal standards and potential outcomes.