GST-linked criminal prosecution quashed where underlying assessment was set aside and the FIR lost its foundation

Criminal proceedings based on a GST-related FIR were held unsustainable where the foundational assessment and demand proceedings had already been quashed and remitted for fresh consideration. The court reasoned that, once the underlying GST action was set aside, the prosecution resting on the same substratum could not independently survive and would amount to abuse of process of law. On that basis, the continuation of the criminal case was quashed along with the prosecution.

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Issues: Whether the criminal proceedings arising out of the GST-related FIR could be sustained after the foundational demand and assessment proceedings had already been quashed and remitted for fresh consideration, and whether continuation of the prosecution would amount to abuse of process of law.

Analysis: The petitioners were prosecuted on allegations of wrongful availment and misuse of input tax credit during the GST regime. The challenge was that the very basis of the FIR was the assessment and demand action, which had already been set aside by the Division Bench, with the matter remitted for fresh adjudication. Once the foundational proceedings had been quashed, the criminal case resting on the same substratum could not independently survive. In such circumstances, continuation of the prosecution would serve no lawful purpose and would only perpetuate proceedings based on an extinguished foundation.

Conclusion: The criminal proceedings were not sustainable and were quashed.

Final Conclusion: The prosecution could not continue after the underlying GST assessment had been nullified, and the petitioners obtained quashing of the entire criminal case.

Ratio Decidendi: Where criminal proceedings are founded entirely on GST assessment or demand actions that have already been quashed, continuation of the prosecution constitutes abuse of process and is liable to be quashed.

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