TaxTMI 
TaxTMI 
2026 (9) TMI 1354
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....een lodged at the behest of opposite party no. 2/Assistant Commissioner, State Tax Division-7, Uttar Pradesh against one Sri Pramod Vijay Khullar alleging therein that he is proprietor of one firm M/s Multicom International and by way of using forged documents, he claimed fake input tax credit in order to provide benefit to other firms and in this manner, he caused a huge loss of Rs. 156 crore to the State exchequer. It is further alleged in the FIR that the said amount is already mentioned in earlier DRC-07 issued from the office of opposite party no. 2. When location of the alleged firm was tried to be ascertained, at the given location nothing was found. 4. Learned counsel for the applicant submitted that background of the case initiates from one adjudication order which was passed against M/s Multicom International with regard to show cause notice issued by Additional Director, DGGI, Zonal Unit Ahemdabad on dated 16.11.2022 under Section 74 of the CGST Act, 2017 read with Section 74 of the UPGST Act, 2017 read with Section 20 of IGST Act, 2017 read with Section 11 of CGST (Compensation to State) Act, 2017 and demanded the input tax credit of Rs. 78,05,91,663/- and exce....
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....e aforementioned transaction made by the alleged firm but all of a sudden, when applicant arrived in India on 19.4.2026, he was arrested by the DGGI, Ahemdabad on account of a Look Out Circular dated 24.2.2026 against him by the DGGI, who claimed that the learned Additional Chief Metropolitan Magistrate, Vadodra has passed oral instructions that GST department should arrest the accused and present in Court as claimed by Public Prosecutor- Sri Manish Mathur through letter dated 16.7.2025. As per the arrest memo, applicant was arrested on the ground that he has committed an offence specified in clause (a), or clause (b) of clause (c) or clause (d) of sub-section (1) of Section 132 of CGST Act, 2017. 6. It is submitted that DGGI, Ahemdabad had alleged that applicant's role emerged out on the basis of the evidence pertaining to the Show Cause Notices and in the order in original's duly adjudicated by the adjudicating authorities. It is submitted that amongst 45 firms, the name of M/s Multicom International, is reflected in the said Table, (against whom Show Cause Notice was issued on 16.11.2022 and adjudication order was passed on 6.6.2024) which itself illustrate that the D....
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....was earlier arrested in Case Crime no. 25342 of 2026 under sections 132(1), 132(5) of CGST Act, 2017 and was incarcerating from 20.4.2026 at Central Jail, Sabarmati, therefore, the present FIR appears to be second FIR with regard to the same offence. It was further held that the CGST Act, is a complete code and once prosecution is going under the provision of CGST Act, 2017, subsequent implication under the provision of BNSS, by the police was not justified. 8. Learned counsel for applicant contended that after submission of the charge sheet, learned Additional Chief Judicial Magistrate, Gautam Budh Nagar vide order dated 17.6.2026 took cognizance of offence against the applicant in pursuance to sections 318(4), 338, 336(3), 340(2), 345(2) and 61(2) BNS, 2023. The entire impugned proceedings which have arisen qua the applicant are without jurisdiction as the alleged offences are exclusively governed by the special statute namely the CGST Act, 2017/UPGST Act, 2017. Every allegation contained in the charge sheet pertains to the acts categorized under Chapter XIX of the CGST Act, 2017 and the corresponding provisions of UPGST Act, 2017 particularly Section 132 thereof. With regard ....
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.... our opinion, therefore, the yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceeding, the trial of the person concerned shall be in abuse of the process of the court." 11. Lastly, it is submitted that ironically, applicant is not associated with the firm- M/s Multicom International as he is admittedly neither the proprietor nor the employee of the said firm. Entire criminal prosecution against the applicant is unsupported by any legally admissible material establishing the essential ingredients of the alleged offences and the same are liable to be quashed and set aside. Submission on behalf of Opposite parties 12. Smt. Sandhya Singh, learned counsel for opposite party no. 2 and learned AGA for State vehemently opposed the prayer sought through instant application and submitted that the firm M/s Siddhi Vinayak Export was registered on 27.4.2019 for Tobacco products. Due to fraudulent, forged....
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....f 2025 was registered on 5.12.2025. 13. Learned counsels for opposite parties also indicated that applicant herein namely Kapil Chugh is the Gang leader of the entire scam. M/s Siddhi Vinayak Export showed outward supplies to M/s Zaux International Private Limited, which then showed fake supplies (without actual delivery of goods, supported only by fake bank transactions) to M/s Zenith Tele Communication Private Ltd. No relevant e-way bills exist on the departmental portal. Similar fraudulent transactions were routed via M/s Multicom International, M/s Kanak Shallfy Industries Pvt. Ltd., Jasper Trading House and A K Exports to inflate good values artificially and claim illegal ITC and GST refunds, causing massive revenue loss to the National Exchequer. 14. Learned counsel for opposite parties relied upon judgment rendered by Hon'ble Apex Court in case of State of West Bengal vs. Naryan K. Patodia reported in AIR 2000 SC 1405, relevant extract of which is quoted hereinbelow: "If the view of the learned single judge gets approval it would lead to startling consequences. The consequences of such an interpretation would be that if the person who commits the offence u....
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....of business; and, by taking advantage of such registration, inward e-way bills were generated to make purchase of goods worth Rs. 35 odd crores and, thereafter, without generating outward supply bills, huge amount of money was deposited in cash in undisclosed bank account, suggesting that goods were sold without proper documentation, with a view to evade taxes. It cannot, therefore, be said that a bare reading of the impugned FIR does not disclose commission of cognizable offences punishable under the Penal Code. Hence, the impugned FIR is not liable to be quashed. A Full Bench of this Court in Ajit Singh @ Muraha v. State of U.P., 2006 (56) ACC 433 after considering various decisions has taken a view that where prayer to quash the FIR cannot be accepted there should not ordinarily be a stay on arrest. Although, in a few decisions of the apex court, it has been held that, in suitable cases, to ensure that a person's liberty is not jeopardized, on account of false implication, protection from arrest, pending investigation, may be granted by superior courts but that power is not ordinarily to be exercised in matters relating to economic fraud. As, in such matters, stay o....
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....ssly barred or prohibited. The provisions of the GST Acts in this regard can be contrasted with the 49 (2018) 16 SCC 158." 17. Lastly, learned counsel for opposite parties submitted that instant petition for the aforesaid reasons is liable to be dismissed. Observation 18. After hearing rival submissions extended by learned counsels for the parties and perusing the records, this Court finds that the show cause notice (DRC-01) was issued under Section 74 of the CGST/U.P.GST Act, 2017 for June, 2019 and August 2019 (Financial Year 2019-20) which culminated into ex parte DRC-07 was passed on 24.11.2020 creating a total demand of Rs. 13,26,22,137 with instructions to pay interest under Section 50 of the GST Act, until actual payment. Based on data from MIS portal, AI reports, and the GST Common Portal a Notice under Section 61 (ASMT-10) was issued on 30.08.2023 and due to non-compliance by the applicant/authorized representative, proceedings under Section 73 was initiated on 23.2.2024, the show cause notice under Section 73 was issued. Thereafter, reminders dated 18.5.2024, 8.07.2024 were also issued and in pursuance to ex parte order (DRC-07) dated 30.08.2024 created a payment....