PROVISIONS ON OFFENCES UNDER GST LAW (PART-2)

[Dr. Sanjiv Agarwal]

Liability of Officers and Punishment (Section 133)

Section 133 deals with liability of officers under the GST law including certain other persons who may be Government servant or even non-Government servants.  Section 133 has also been made applicable to IGST as per section 20 of the IGST Act, 2017 and to UTGST as per section 21 of the UTGST Act, 2017.

Persons liable for prosecution

Section 133 provides that following persons shall be liable for prosecution:

1. Person engaged in connection with the collection of statistics under section 151
2. Person engaged in compilation or computerisation thereof or if any officer of central tax having access to information specified under sub-section (1) of Section 150
3. If person engaged in connection with the provision of service on the common portal or the agent of common portal
4. Government servants with the previous sanction of the Government.

In case of (a), (b) and (c) above, the persons can be prosecuted only with the previous sanction of the Commissioner.

Punishment

The guilty person shall be liable for prosecution leading to following punishments:

1. Imprisonment for a term which may extend to six months, or
2. Monetary fine which may extend Rs. 25000/-, or
3. Both of the above

Pre-conditions for application of Section 133

Following pre-conditions govern application of Section 133:

1. Culpable mental state is only a presumption
2. This assumption is necessary for any prosecution of an offence under GST law.
3. Culpable mental state is presumed for the accused or offender.
4. It is for the accused to proof that the ‘culpable mental state’ does not exist for the alleged offence.
5. It is necessary for the court to believe it to exist beyond reasonable doubt.

Cognizance of Offences (Section 134)

No court shall take cognizance of any offence punishable under this Act or the rules made there under except with the previous sanction of the Commissioner, and no court inferior to that of a Magistrate of the First Class, shall try any such offence.

This section provides for cognizance of offences taken by courts. Section 134 provides no court shall take cognizance of any offence under this Act or rules made there under unless sanctioned by Commissioner under this Act. No court inferior to that of Magistrate of first class shall try such offences.

This implies that any offences under the GST law including rules made thereunder can be tried or prosecuted only before a court subject to following conditions:

1. Cognizance of offence can be taken only by a court which is not lower or inferior to a court of magistrate of the first class
2. Previous sanction of the Commissioner

Both the above conditions are mandatory for taking any cognizance of offences.

Presumption of culpable mental state (Section 135)

In any prosecution for an offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.

Explanation- For the purposes of this section,-

(i)   the expression “culpable mental state” includes intention, motive, knowledge of a fact, and belief in, or reason to believe, a fact;

(ii)  a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.

This section assumes the existence of culpable mental state on the part of accused, thus, creating an obligation on the person alleged of culpable mental state to prove it otherwise.The presence of ‘culpable’ mental state is necessary for prosecution.

Meaning and scope of culpable mental state

The culpable mental state includes intention, motive, knowledge of a fact, belief in or reason to believe in a fact.

In case of an offence involving culpable mental state on the part of accused, the court shall presume such state unless the accused proves that fact that he had no such mental state with respect to the act.

Explanation (i) to section 135 gives an inclusive meaning to culpable mental state according to which, in reference to a ‘fact’, it includes any one or more of the following :

1. Intention
2. Motive
3. Knowledge
4. Belief
5. Reason to believe

All the above actions constitute a state of culpable mental mind as such intention etc. may have the effect of malafide in terms of tax evasion or any other related action.

How to prove a presumption?

Explanation (ii) to sub-section 1 provides that a fact is said to be proved only when the Court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.

In the erstwhile laws, there was nothing like presumption and the onus was on the revenue to prove the offence or culpable mental state, e.g., suppression or mis-statement or concealment etc with an intent to evade payment of tax. As a general principle of jurisprudence, it is a settled law that burden of proof to charge someone with malafide intention or mensrea lies with the person who makes such allegations. The same applies to criminal laws.

It is evident from the two clauses of explanation that the first clause seeks to provide the scope of culpable mental state, while the second clause provides the defence available to the accused to prove his non-guilt.

In SHAH GUMAN MAL VERSUS STATE OF ANDHRA PRADESH - 1980 (2) TMI 96 - SUPREME COURT, it was held that burden of prove is on prosecution and it must establish the foundation of facts. In yet another case of COLLECTOR OF CUSTOMS, MADRAS AND OTHERS VERSUS D. BHOORMULL - 1974 (4) TMI 33 - SUPREME COURT, in relation to a case of smuggling, it was held that it is not required to prove a case with mathematical precision and observed as follows:

“The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus legal proof is not necessarily perfect proof often it is nothing more than a prudent man’s estimate as to the probabilities of the case”.