Bogus firms and fabricated invoices can justify an FIR without prior GST adjudication where cognizable offences are disclosed.

Allegations that bogus firms and fabricated invoices were created to evade tax, supported by search, seizure, portal data and inspection material, were held sufficient to justify investigation because the reliability of that material and the intended use of the invoices are matters for trial. The Court also stated that a prior GST adjudication or complaint from the firms whose seals and papers were recovered was not a prerequisite for lodging an FIR where cognizable offences were disclosed. It further held that the GST framework does not displace the Indian Penal Code or criminal procedure in such cases, so quashing at the threshold was unwarranted and investigation could continue.

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Issues: (i) Whether the first information report disclosing allegations of bogus firms and fabricated invoices was liable to be quashed at the threshold; (ii) Whether the absence of a prior GST finding or complaint from the firms whose seals and papers were found barred registration of the first information report and investigation for the alleged offences.

Issue (i): Whether the first information report disclosing allegations of bogus firms and fabricated invoices was liable to be quashed at the threshold.

Analysis: The allegations were that the declared business premises were used for preparing false documents and invoices to evade tax. The material before the police and tax authorities arose from search and seizure operations, portal information, inspection, and the explanations submitted by the persons concerned pursuant to summons. The Court held that the sufficiency or reliability of such material, and the manner in which the invoices were used or intended to be used, were matters for investigation and trial. It further held that investigation should not be stifled at the threshold where the allegations disclose substance and a cognizable offence.

Conclusion: The first information report was not liable to be quashed on this ground.

Issue (ii): Whether the absence of a prior GST finding or complaint from the firms whose seals and papers were found barred registration of the first information report and investigation for the alleged offences.

Analysis: The Court held that the GST regime did not exclude or repeal the operation of the Indian Penal Code or criminal procedure for offences disclosed on the facts. It also held that a specific prior order determining tax evasion was not a prerequisite for lodging an FIR where the allegations disclosed cognizable offences. The absence of complaints from the firms whose documents were recovered was held to be immaterial, particularly because those firms were found to be non-existent on enquiry.

Conclusion: Registration of the first information report and continuation of investigation were permissible.

Final Conclusion: The challenge to the first information report failed, and the petition was dismissed while leaving the petitioners at liberty to seek bail.

Ratio Decidendi: Where allegations supported by search, seizure, and enquiry disclose the preparation of bogus firms and false invoices to evade tax, an FIR need not await a prior GST adjudication, and quashing at the threshold is unwarranted if a cognizable offence is made out.

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