The GST authorities are not permitted to bypass the penal provisions of the GST Act and utilize the IPC.

Introduction

A recent court case where the petitioner, M/s. Agrawal Soya Extracts Pvt Ltd, challenged the proceedings initiated against them by the GST authorities under the Indian Penal Code (IPC). The petitioner argued that the alleged offenses fell squarely within the purview of the Goods and Services Tax (GST) Act and that the GST authorities had bypassed the prescribed procedures by invoking the IPC without obtaining the necessary sanction.

Facts of the Case

• The petitioner is a proprietor firm dealing in soya beans and soya de-oiled cakes.
• The GST authorities conducted a search and seizure operation on the premises of M/s. Shreenath Soya Exim Corporate, alleging fraudulent registration and issuance of invoices without supply of goods.
• Based on the findings, an FIR was registered against the proprietor of M/s. Shreenath Soya Exim Corporate, implicating the petitioner.
• The petitioner contended that the GST Act provides specific procedures and penalties for offenses related to GST and that the authorities had violated these procedures by invoking the IPC.

Arguments and Court's Decision

The petitioner's counsel argued that:

• The GST Act is a complete code that outlines procedures, penalties, and punishments for GST-related offenses.
• The alleged offenses in this case were covered under the GST Act, and the authorities should have followed the procedures prescribed therein.
• The GST authorities had bypassed the procedural safeguard of obtaining prior sanction from the Commissioner as required under Section 132(6) of the GST Act.

The court, after considering the arguments and relevant statutory provisions, held that:

• The GST Act is a special legislation that provides a comprehensive framework for GST-related matters.
• The GST authorities cannot bypass the procedures prescribed under the GST Act by invoking the IPC, especially when the alleged offenses are covered under the GST Act.
• The authorities' failure to obtain prior sanction from the Commissioner was a violation of the procedural safeguards and amounted to abuse of process of law.

Conclusion

The court allowed the petitioner's plea and quashed the FIR and subsequent proceedings against them.

GST Case Law Deepak Singhal Versus Union Of India

Citation-2024 TAXONATION 2258 (MADHYA PRADESH)

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