CGST Act | Jharkhand High Court Quashes Criminal Proceedings For Noncompliance With GST Summons Under Section 70

Notably, Section 70 of the CGST Act empowers concerned officers to issue summons to persons to give evidence and produce documents.

The ruling came in two petitions made for quashing the entire criminal proceedings arising out of a Complaint Case including the order taking cognizance whereby the Court had taken cognizance under Section 174 of the Indian Penal Code, pending in the court of the Judicial Magistrate, 1st Class, Ranchi.

The complaint case was filed alleging therein that the accused had taken G.S.T. Registration in 2017 but had not made payment of GST from January, 2018 to November, 2018 before initiation of the investigation.

It was also alleged that the accused deliberately ignored the summons issued by the Central Goods and Service Tax Department under Section 70 of the Central Goods and Service Tax Act, 2017 and did not appear at any date against four summons issued to the accused.

It was further alleged that the accused has violated the provisions of Section 70 of the CGST Act and since the accused did not appear against the summons, proceeding under Section 174 of the Indian Penal Code is initiated against the accused person.

Advocate Shilpi Sandil Gadodia appearing for the petitioners submitted that although in the complaint, the allegations were made that four summons have been issued against the petitioner company, but the details of the said summons have not been mentioned in the complaint petition.

She further submitted that the petitioner-company was engaged in providing services for transportation of coal and with the advent of the GST regime, the petitioner obtained registration in respect of its business carried out in the State of Jharkhand.

She also submitted that for the services provided by the petitioner-company, it raised bills for payment to its clients and the said clients being service recipients were delaying in releasing payment to the petitioner-company.

On the other hand, P.A.S. Pati, the counsel for opposite party no.2 submitted that the petitioner failed to comply with summons without lawful excuse and intentionally omitted to give evidence or to make a statement and to produce the documents and the things mentioned in the schedule.

He further submitted that the authorized representative of the company did not appear and that is why the complaint case was filed under Section 174 of the Indian Penal Code, which is meant for non-compliance of the direction of the public authority and GST authority is the public authority in view of Section 156 of the CGST Act, 2017.

He also submitted that the petitioner-company is a private limited company and in view of that, Section 89 of the CGST Act is applicable and there is no requirement of giving such a statement and in view of that provision, every person who was looking dayto-day affairs of the company is liable.

By way of referring to Section 135 of the CGST Act, Advocate Pati, submitted that presumption of culpable mental state can be proved only in trial. He submitted that once a summon is issued and the petitioner has not appeared, in view of that Section 174 of the Indian Penal Code is well maintainable, and on these grounds, he submitted that the petitions were fit to be dismissed.

In view of the above facts and submissions of the counsel for the parties, the Court stated that it was crystal clear that as far as the amount of GST was concerned, that was already been deposited, and however in the counter affidavit, it was stated that sum of Rs.5,21,95,792/- was received by the authority concerned subject to verification - the non-filing of any case or initiation of proceeding for any recovery suggested that there was no due against the petitioners.

The Court noted that there was no further proceeding against the petitioner for determination of any tax not paid and that provision is there in Section 73 of the CGST Act, 2017, and thus, it was an admitted fact that the amount in question was already paid.

While expounding on Section 70 of the CGST Act, 2017, the Court noted that the section speaks of power to summon persons to give evidence and produce documents and inquiry under the same will proceed under the provision of the Civil Procedure Code and only Sections 193 and 228 of the Indian Penal Code is applicable in view of Subsection (2) of Section 70 of the said Act.

The Court further expounded on Section 125 of the CGST Act, 2017 which speaks of general penalty to the tune of maximum Rs.25,000/- only and Section 132 of the said Act, prescribes for punishment.

It is an admitted case that no case under Sections 125 and 132 of the said Act is initiated against the petitioners, the Court asserted.

The Court pointed out that the documents on record clearly suggested that summons were replied to, which was also entertained by the authority by way of granting time, and thus, it cannot be said that this was a case of non-compliance of summons issued by the authority concerned.

The bench of Justice Sanjay Kumar Dwivedi observed, “In view of the above facts and considering that the summons were replied, which were entertained by the authority concerned and it cannot be said that the petitioners have not complied with the summons, issued by the authority concerned and further there are procedure prescribed under the CGST Act, 2017 for penalty under Section 125 which restricted to a fine of Rs.25,000/- only and none of the failure prescribed in Section 132 of the said Act is the subject matter of the present cases and further Section 70 of the said Act speaks of procedure to be adopted for summoning, that will in accordance with the Code of Civil Procedure and further considering that the reply to the summons were entertained by the authority concerned, to allow to continue the proceeding under Section 174 of the Indian Penal Code against the petitioners will amount to abuse of process of law.”

In view of the aforesaid facts, reasons and analysis, the entire criminal proceedings including the order pending in the Court of the Judicial Magistrate, 1st Class, Ranchi were quashed, and accordingly, the petitions were allowed and disposed of.

Case Title: Satyendra Singh Kushwah vs The State of Jharkhand and Anr

LL Citation: 2024 LiveLaw (Jha) 6

Case No.: Cr.M.P. No. 2454 of 2019

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