2020 (3) TMI 289 - HC - GST

Dismissed petition challenging FIR alleging tax evasion through bogus firms; Court emphasizes thorough investigation, upholds application of IPC & GST Act.

Shahzad Alam And 2 Others Versus State Of U.P. And 3 Others

The High Court dismissed the petition to quash the FIR under Sections 420, 424, 467, 468, 120-B IPC, and GST Act. The Court held that the FIR disclosed ... Registration of FIR without any specific order under GST - Tax evasion - bogus firms - preparing and issuing false documents / invoices - it was found that the registered place was not being used for any business but only for preparing documents - Section 67 of GST Act - allegations are in respect of getting bogus firms registered under the GST Code and of preparing bogus invoices for the purpose of evading tax - HELD THAT:- In the instant case, we find that the allegations are in respect of getting bogus firms registered under the GST Code and of preparing bogus invoices for the purpose of evading tax - The above allegations have been made on the basis of search and seizure operations and the enquiry that followed. As to how the bogus tax invoices were used or were to be used would be determined on the basis of material collected during the course of investigation. The submission of the learned counsel for the petitioners that there could be no registration of first information report without a specific order under the GST Code in respect of evasion of tax is not acceptable for the simple reason that the GST Code does not impliedly or explicitly repeals the provisions of Indian Penal Code or the Code of Criminal Procedure and therefore an offence punishable under the Indian Penal Code can very well be reported and investigated as per law. As the impugned first information report discloses commission of cognizable offence, the prayer to quash the first information report cannot be accepted - Petition dismissed. Issues:Challenge to quash FIR under Sections 420, 424, 467, 468, 120-B IPC and GST Act; Allegations of bogus firms and false invoices for tax evasion; Lack of specific allegation of tax evasion in transactions; Lack of public witness for recovery; Interpretation of GST Code and applicability of IPC provisions.Detailed Analysis:The petition sought to quash an FIR dated 06.02.2020 under Sections 420, 424, 467, 468, 120-B IPC, and GST Act. The FIR alleged the creation of bogus firms and fabrication of false invoices for tax evasion. The FIR was based on information from GST Portal, mobile squad, and search operations revealing a declared business place used for preparing false documents. The FIR implicated the petitioners in setting up bogus firms to evade tax, supported by findings from search operations and subsequent inquiries.The petitioners challenged the FIR on grounds including lack of complaints from firms whose stamps were found, absence of specific tax evasion allegations, no public witness for recovery, and the necessity of a specific finding on GST evasion before an offense can be deemed committed. The State opposed quashing, citing substantial allegations of bogus firms and false invoices for tax evasion in the FIR, warranting investigation.The High Court analyzed the allegations and legal aspects involved. It noted the FIR's focus on bogus firm registrations and false invoices for tax evasion, based on search operations and subsequent inquiries. The Court emphasized that investigation should not be halted if allegations have substance, as in this case. The Court also referenced a previous case to highlight the application of IPC provisions alongside GST Act for offenses, rejecting the argument that FIR couldn't be lodged without a specific GST Code order on tax evasion.The Court addressed the petitioners' contention regarding the lack of complaints from firms whose stamps were found, stating it was irrelevant given the firms were non-existent. Ultimately, the Court dismissed the petition, as the FIR disclosed cognizable offenses related to bogus firms and false invoices for tax evasion, underscoring that the petitioners could seek bail despite the dismissal.In conclusion, the judgment upheld the FIR's validity, emphasizing the need for thorough investigation into the alleged creation of bogus firms and fabrication of false invoices for tax evasion, underscoring the importance of legal provisions under both the IPC and GST Act in addressing such offenses.