TaxTMI 
TaxTMI 
Section 132 proceedings needs to be quashed after Closure of Peoceedings Recorded by GST department
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....ection 132 proceedings needs to be quashed after Closure of Peoceedings Recorded by GST department<br> Query (Issue) Started By: - Diksha Sabarwal Dated:- 17-8-2026 Last Reply Date:- 20-8-2026 Goods and Services Tax - GST<br>Got 4 Replies<br>GST<br>Hi Experts, Closure of Proceedings were recorded by the department after filing of DRC-03 under Section 74 and the proceedings of the GST were dropp....
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....ed by the department. Now the question is what will happen to the Chargesheet filed and proceedings under Section 132 proceedings. How it will be ending after Closure of Proceedings are recorded. Whether Compounding application needed to be moved or closure of proceedings have to be filed with affidavit on closure of proceedings to magistrate for end of trial? Reply By Sanjeev Agarwal: The Rep....
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....ly: Compounding is not automatically required. Closure/dropping of proceedings under Section 74 does not by itself terminate a pending Section 132 prosecution. The two proceedings are legally independent. CBIC's prosecution guidelines specifically recognise that prosecution may continue even where adjudication was initiated separately. However, the same guidelines also state that where the....
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.... assessee is exonerated on merits and the allegation itself is found unsustainable, criminal prosecution on the identical facts should not ordinarily continue. (CBIC GST) Therefore, the exact wording of the Section 74 closure order is crucial. If the order records a finding on merits that the alleged tax evasion/fraud/suppression or other ingredients are not established, the better course is....
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....: • File the certified Section 74 closure/adjudication order before the Magistrate. • Place on record DRC-03, payment proof and all relevant departmental communications. • Seek appropriate discharge/closure of the criminal proceedings, specifically demonstrating that the Department itself has finally rejected the factual foundation of the prosecution. ....
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....• If the Magistrate cannot or does not terminate the prosecution on that basis, approach the jurisdictional High Court for quashing of the complaint/chargesheet. I would not recommend filing a compounding application as the first step if the Department has exonerated the assessee on merits. Compounding under Section 138 is essentially a settlement mechanism and may involve payment of the ....
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....prescribed compounding amount. It is better kept as an alternative if the merits-based challenge does not succeed. Also, merely filing an affidavit of closure before the Magistrate will not automatically end the trial. A specific judicial order terminating the criminal proceedings would ordinarily be required. Practical conclusion: Merits-based closure under Section 74 seek termination/qu....
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....ashing of Section 132 prosecution first. Compounding under Section 138 is an alternative, not an automatic requirement. The decisive document is the actual Section 74 closure order. If it contains clear findings of exoneration on merits, the case for quashing becomes substantially stronger. Reply By KASTURI SETHI: The Reply: Both are independent proceedings. Manoj Kumar Arora v. Union o....
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....f India - 2018 (4) TMI 2042 - SC Order Reply By KASTURI SETHI: The Reply: Judgement of Supreme Court in favour of the assessee Radheshyam Kejriwal v. State of West Bengal & Anr. 2011 (2) TMI 154 - Supreme Court: • The Supreme Court laid down that adjudication proceedings and criminal prosecution on identical facts cannot exist in contradiction. Where an assessee is exonerat....
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....ed on merits in departmental adjudication, criminal prosecution cannot be sustained on the same allegations, as the standard of proof in criminal trials is higher ("beyond reasonable doubt") than in departmental proceedings ("preponderance of probabilities"). Reply By VENU K: The Reply: Experts opinions are spot on. Also refer Explanation I to Sec 74 which says: For the purpose of Sec 73 and ....
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....this section_ (i) The expression "all proceedings in respect of the said notice" shall not include proceedings under Sec 132<br> Discussion Forum - Knowledge Sharing ....