HC concluded that Continuing Criminal Proceedings under Section 174 of IPC would amount to an Abuse of the process of Law
Quashing of Criminal Proceedings u/s.174 of IPC by Jharkhand HC: In a recent development, the Jharkhand High Court has ruled in favor of Satyendra Singh Kushwah, Director of M/s. SSK Devcon Private Limited, and the company itself, quashing the criminal proceedings initiated against them for noncompliance with GST summons under Section 70 of the Central Goods and Service Tax Act, 2017.
Background of the Case
The petitions (Cr.M.P. No. 2454 of 2019 and Cr.M.P. No. 2449 of 2019) sought the quashing of criminal proceedings arising from Complaint Case No.1880 of 2019. The complaint alleged that the accused failed to pay GST from January 2018 to November 2018 and deliberately ignored summons issued by the Central Goods and Service Tax Department.
Legal Proceedings
During the hearing, Mrs. Shilpi Sandil Gadodia, counsel for the petitioners, argued that the GST amount had been paid in installments, totaling Rs. 5,60,52,391. She emphasized the completeness of the GST Code, pointing out the provisions for penalties. Gadodia contended that Section 174 of the Indian Penal Code, invoked for noncompliance, was not applicable in this case.
On the opposing side, Mr. P.A.S. Pati, representing the GST authority, argued that the petitioner’s noncompliance with summons justified the criminal proceedings under Section 174 of the Indian Penal Code. He asserted that the petitioner-company, being a private limited company, fell under Section 89 of the CGST Act.
Decision of the Court
After careful consideration of the arguments and reviewing the materials on record, the Court observed that the summoned company had replied to the notices and had already paid the GST amount. It noted that no further proceedings were initiated for tax determination under Section 73 of the CGST Act.
The Court emphasized that Section 70 of the CGST Act dealt with summoning powers and that the procedure followed was in accordance with the Civil Procedure Code. It also highlighted the limited penalties under Section 125 of the CGST Act.
Conclusion
In light of the facts presented, the Jharkhand High Court concluded that continuing criminal proceedings under Section 174 of the Indian Penal Code would amount to an abuse of process of law. Consequently, the Court quashed the entire criminal proceedings against the petitioners.
This decision provides clarity on the legal implications of noncompliance with GST summons and underscores the importance of following prescribed procedures under the CGST Act. Businesses should remain informed about such legal developments to ensure compliance with GST regulations.
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