GST Evasion FIR filed without Commissioner’s Sanction: Allahabad HC permits Investigation, Bars Charge Sheet Filing [Read Order]

The Allahabad HighCourt recently permitted the continuation of investigation in a Goods andServices Tax (GST) evasion case, where a First Information Report (FIR) was alleged to have been lodged without obtaining prior sanction from the GST Commissioner. The High Court accordingly restrained the authorities from filing a charge sheet during the pendency of proceedings.

The Petitioner Rohit Gupta filed a criminal miscellaneous writ petition challenging an FIR which was registered under sections 420, 465, 468 and 471 of the Indian Penal Code, 1860 at Raisatti Police Station in Sambhal District in Uttar Pradesh.

Pranjal Shukla appearing for the petitioner contended that the impugned FIR was wholly malicious and amounted to an abuse of the process of the Court.

The bone of contention raised stated that the initiation of criminal proceedings was unsustainable as no sanction, as contemplated under Section 132(6) of the GST Act had been obtained from the Commissioner prior to the registration of FIR.

The counsel further apprised the Court that the issue regarding alleged GST evasion already stood settled by the High Court in an earlier writ tax case - (M/s Chand Traders Vs. State of U.P. and Another). The petitioner was stated to be the sole proprietor of M/s Chand Traders. It was thus argued that the very basis of the FIR is non-existent.

The petitioner’s counsel further referred to an instruction dated 01.09.2022 issued by the Central Board of Indirect Taxes and Customs, GST Singh, New Delhi as well as the notification dated 06.09.2023 issued by the Additional Commissioner (GST), State Tax, U.P., Lucknow wherein it was stated that prior sanction has to be obtained before prosecution can be launched.

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The counsel further stated that only a complaint shall lie in case of evasion of GST Act. As such, the criminal prosecution of petitioners pursuant to the impugned FIR is wholly illegal and thus unsustainable.

The State Counsel sought time to file a counter affidavit against the petitioner’s plea.

The Division Bench of Justice Rajeev Misra and Justice Achal Sachdev noted that the matter required consideration and did not quash the FIR, but permitted the investigation to continue.

However, the court directed that the petitioner shall not be arrested in relation to this crime, and that the charge sheet prepared by the investigating officer not be filed before Court till the pendency of the present writ petition.

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