GST registration cancellation upheld for forged invoices without actual transactions under sections 132 and 134

The HC dismissed the petition challenging GST registration cancellation for forging invoices and bills without actual coal transactions and failure to produce books of accounts. The court held that GST Act 2017 is a complete code with specific provisions for offences under sections 132 and 134, requiring Commissioner's sanction for court cognizance. Following SC precedent in Jayant v. State of Madhya Pradesh, which addressed identical circumstances involving forged invoices without transactions, the court applied the SC's directions from paragraphs 21.4 and 21.5 of that judgment to dispose of the petition, finding the legal framework adequate to address such disputes.

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Issues Involved:
1. Quashing of the First Information Report (FIR) and entire criminal proceedings.
2. Allegations of causing loss to State Revenue and fraudulent activities under the JGST Act, 2017.
3. Applicability of IPC sections when Special Law prescribes punishment.
4. Sanction for prosecution under the JGST Act.
5. Directions from the Supreme Court on similar issues.

Summary:

1. Quashing of the First Information Report (FIR) and entire criminal proceedings:
The petitioner sought the quashing of the FIR and entire criminal proceedings in connection with Patratu (Bhurkunda) P.S. Case No. 45/2021, registered under Sections 120B/406/420/471 of the Indian Penal Code and Sections 132(1)(b), 132(1)(c), 132(1)(e), and 132(1)(f) of the Jharkhand Goods and Services Tax Act, 2017.

2. Allegations of causing loss to State Revenue and fraudulent activities under the JGST Act, 2017:
The FIR alleged that the petitioner, proprietor of M/S Maa Mahamaya Enterprises, caused a loss of Rs. 1,33,03,569.00 to the State Revenue by using e-way bills and GST returns fraudulently. The enterprise was initially registered under the JVAT Act and later migrated to the JGST Act. The petitioner made purchases from a non-existing taxpayer, M/S Janki Coal Trading, leading to proceedings for reversal of Input Tax Credit (ITC) and cancellation of GST registration.

3. Applicability of IPC sections when Special Law prescribes punishment:
The petitioner argued that when punishment is prescribed under the JGST Act, IPC sections should not be attracted. He relied on a precedent set by a Coordinate Bench of the Court. However, the State's counsel argued that criminality under Special Law and IPC can coexist, supported by a Supreme Court judgment in The State of Maharashtra & another v. Sayyed Hassan Sayyed Subhan & others.

4. Sanction for prosecution under the JGST Act:
The Court noted that Section 134 of the JGST Act requires prior sanction from the Commissioner before taking cognizance of any offence. The FIR included the necessary sanction from the competent authority.

5. Directions from the Supreme Court on similar issues:
The Court referred to the Supreme Court's judgment in Jayant and others v. State of Madhya Pradesh, which provided directions on handling cases involving offences under Special Law and IPC. The Supreme Court clarified that prosecution under both enactments is permissible if the ingredients of the provisions are satisfied.

Conclusion:
The Court concluded that the respondent-State should act in terms of the Supreme Court's directions in paragraphs 21.4 and 21.5 of the Jayant judgment. Consequently, the petition for quashing the FIR and criminal proceedings was dismissed, and any interim orders were vacated.

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