Rs.1.5 crores Illegal Gratification by GST Intelligence Officer: Kerala HC quashes Proceedings under PC Act in Absence of Evidence [Read Order]

In a recent case on huge amount of Illegal Gratification, the Kerala High Court quashed the proceedings under the Prevention of Corruption Act (PC) ,1988 as there was no evidence to establish the knowledge of accused that his car was availed for the purpose of carrying Rs.1.5 crores to the Goods and Service Tax (GST) intelligence officer for lower the tax rate that the company owed to pay. Santhosh Antony and V. Jayanandakumar, the accused Nos. 1 and 8, respectively, filed a petition in C.C. No. 7 of 2022 to halt the charge sheet and any further proceedings. The Inspecting Assistant Commissioner (Intelligence) was accused No. 1, the Intelligence Officer was accused No. 2, and the Intelligence Inspectors, Commercial Taxes, Thrissur, were accused Nos. 3 and 4. In order to lower the tax rate from 12.5% to 4% of the tax owed from M/s. Nano Excel Enterprises Pvt. Ltd., to whom accused No. 5 served as the Managing Director and accused No. 7 as the Director, they conspired with other accused. Read More: New ISD Rules Effective April 2025: How Debit and Credit Notes Affect ITC Distribution In aid of the conspiracy, the compounding tax that the company in question was required to pay was lowered from Rs. 13,06,29,613/- to Rs. 7,00,68,469/-. In 2009–2010, the company's financial advantage was Rs. 6,05,61,144 accordingly. They shared an unlawful gratification of Rs. 1.5 crores with accused Nos. 1 through 4 in exchange for the same. Transaction facilitation was done by Accused Nos. 6 and 8. The bribe from the company of accused Nos. 5 and 7 was taken to the hotel where the money was transferred using the vehicle that accused No. 8 provided. Worried About SME IPO Pitfalls? Gain Clarity with This Advanced Course! Register Now The accused had committed offences punishable under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988 (PC Act) and Section 120B of the Indian Penal Code, 1860 (IPC). The petitioners would contend that there is not enough materials to prosecute them and the final report as against them is liable to be quashed. Read More: Capital Gains arising on Mutual Fund Investments of Non Residents not Taxable in India: ITAT It was contended that the materials produced by the prosecution are insufficient to make out a prima facie case against accused Nos.1 and 8 and therefore proceeding against them will be a travesty of justice. No doubt, if the materials produced by the prosecution are insufficient to constitute any offence, continuance of the prosecution against the accused can have no justification. The Apex Court, in State of Haryana and Others v. Bhajan Lal and Others, after considering the earlier precedents, laid down principles which the High Court must consider while exercising its jurisdiction under Section 482 of the Code of Criminal Procedure, 1973 (Code) for quashing a proceeding. Read More: Top Stories Income Tax, GST Depts Join Forces: Reopening Old I-T Assessments Over GST Invoice Mismatches and Fake ITC Claims The first accused submitted that no witness has been cited by the prosecution to prove either the demand or receipt of gratification by him. It is trite that not only acceptance but also demand for material thing or pecuniary advantage by the public servant should be proved to establish an offence under Section 13(1)(d) of the PC Act. Worried About SME IPO Pitfalls? Gain Clarity with This Advanced Course! Register Now Accused No.8 submitted that only allegations raised against him is that his car was used to take Rs.1.5 crores to Pearl Regency hotel. There is no other allegation to implicate him with the crime. Even accepting that his car was used for such a purpose, that is not enough to establish his complicity with the offence of criminal conspiracy resulting in commission of an offence under Section 13(1)(d) of the PC Act. The bench found that “It is true the prosecution did not bring forth any direct evidence to prove handing over of bribe money to accused No.1 or any other official of the commercial tax department.” The single bench of Justice P.G. Ajithkumar refused to accept the contentions of the 1st accused in support of his plea to quash the final report in C.C.No.7 of 2022 as against him. It was further observed that , sufficient evidence is proposed to prove that the said car was used to carry Rs.1.5 crores from the office of M/s.Nano Excel company to Pearl Regency hotel for being handed over in terms of the instructions of accused No.7. But, no evidence has been collected to establish that accused No.8 knew that his car was availed for the purpose of carrying such a sum and also that he was a party to the conspiracy of bribing. In the statement filed by the investigating officer also, no such evidence has been pointed out. Therefore, prosecution of accused No.8 for the offences punishable under Section 13(1)(d) r/w Section 13(2) of the PC Act and Section 120 B of the IPC cannot be justified. Such an exercise will end only in futility. The court dismissed one petition and allowed the other by quashing further proceedings in C.C. No.7 of 2022 as against accused No.8. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates