CHARGE SHEET UNDER SECTION 132.

[Sadanand Bulbule]

Dear all

Plz refer Para No 38 of the Hon'ble Madras High Court judgement reported in 2019 (5) TMI 895, which reads as under:

38. Thus, ‘determination’ of the excess credit by way of the procedure set out in Section 73 or 74, as the case may be is a prerequisite for the recovery thereof. Sections 73 and 74 deal with assessments and as such it is clear and unambiguous that such recovery can only be initiated once the amount of excess credit has been quantified and determined in an assessment. When recovery is made subject to ‘determination’ in an assessment, the argument of the department that punishment for the offence alleged can be imposed even prior to such assessment, is clearly incorrect and amounts to putting the cart before the horse.38. Thus, ‘determination’ of the excess credit by way of the procedure set out in Section 73 or 74, as the case may be is a prerequisite for the recovery thereof. Sections 73 and 74 deal with assessments and as such it is clear and unambiguous that such recovery can only be initiated once the amount of excess credit has been quantified and determined in an assessment. When recovery is made subject to ‘determination’ in an assessment, the argument of the department that punishment for the offence alleged can be imposed even prior to such assessment, is clearly incorrect and amounts to putting the cart before the horse.

Query:

In the light of the above ruling, can a charge-sheet still be filed under Section 132[1][i] for the offences classified under Section 132[1] [b] & [c] without/before determination of tax evaded under Section 74?

Assuming it is filed without adjudication under Section 74, is it tenable during trial in the court of law?

Experts to throw light with more case laws.

[Sadanand Bulbule]

For academic information:

2025 (11) TMI 1262 - PUNJAB AND HARYANA HIGH COURT - Vishal Versus State of Haryana and others.

[Sadanand Bulbule]

For academic information:

It is well settled by a series of decisions of the Supreme Court that ordinarily no writ lies against a charge sheet or show-cause notice vide Executive Engineer, Bihar State Housing Board vs. Ramdesh Kumar Singh and others 1995 (11) TMI 381 - Supreme Court, Special Director and another vs. Mohd. Ghulam Ghouse and another 2004 (1) TMI 378 - Supreme Court, Ulagappa and others vs. Divisional Commissioner, Mysore and others 2000 (7) TMI 975 - SC Order, State of U.P. vs. Brahm Datt Sharma and another 1987 (2) TMI 507 - Supreme Court etc. The reason why ordinarily a writ petition should not be entertained against a mere show-cause notice or charge-sheet is that at that stage the writ petition may be held to be premature.

A mere charge-sheet or show-cause notice does not give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so. It is quite possible that after considering the reply to the show-cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ lies when some right of any party is infringed. A mere show-cause notice or charge-sheet does not infringe the right of any one. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance.

AI Summary

Retention of Input Tax Credit: prosecution under GST requires prior adjudication and quantification of the evaded tax
Prior adjudication and quantification of the tax evaded or input tax credit wrongly availed is a substantive precondition to initiating prosecution in many instances; criminal liability principally attaches to those who retain and utilise the benefit of wrongfully availed ITC, whereas issuers of invoices without supply who do not retain benefit are ordinarily subject to civil adjudication and specified penalties. Investigations, show cause notices, arrests and charge sheets must rest on independent satisfaction of the proper officer and sufficient evidence of mens rea and retention of benefit, failing which proceedings risk being invalidated.