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No Stay from Arrest for GST Evasion

No Stay from Arrest for GST Evasion | FIR registered under Indian Penal Code maintainable

Below are the relevant facts and observations from the case of Govind Enterprises (Criminal Misc. Writ Petition No. 7303 of 2019) decided by Allahabad Hon’ble High Court: 

Facts: First Information Report (FIR) was lodged under Sections 420, 467, 468, 471, 34, 120-B of Indian Penal Code (IPC) against petitioners as per the Criminal Procedure Code (CPC), 1973. The facts are that, inward e-way bills were generated worth Rs.35 Crores. Goods were passed to customers,without generating Outward Supply Bills. Money was received in cash from customers and deposited in bank account which was not declared at the time of seeking registration. Therefore, suggesting that goods were sold without proper documentation, with a view to evade taxes and the facts squarely falling under clauses (a) and (d) of sub-section (1) of section 132.

The relevant observations of Court were as follows (ignoring the contentions of petitioner that Goods and Services Tax (GST) Act is a complete code in itself and lodging of the FIR under the provisions of the IPC is not legally sustainable):

  • There is no bar in the GST Act on lodging an FIR CPC for offences punishable under the IPC. The offence of ‘Cheating to Government’ punishable under IPC is clearly made out. It is immaterial that, for the same act/conduct, prosecution can be launched under the GST Act also.
  • Section 131 of the GST Act states “…no confiscation made or penalty imposed under the provisions of this Act or the rules made thereundershall prevent the infliction of any other punishment to which the person affected thereby is liable under the provisions of this Act or under any other law for the time being in force”.
  • ‘Stay from arrest’ if granted to petitioners may become a hurdle in thorough investigation of the matter, particularly in tracing out the money trail. Therefore, this is not a fit case where any relief should be granted.
  • Protection from arrest, pending investigation, may be granted by Superior Courts but that power is not ordinarily to be exercised in matters relating to economic fraud. 

Consequently, no stay from arrest was granted. FIR and corresponding Investigation was held to be maintainable.

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