Facts of the Case

The petitioner, Biplab Kumar Chowdhury, filed a Public Interest Litigation alleging that the private respondents were engaged in the construction business but were not paying GST, thereby evading tax.

The respondents objected to the maintainability and bona fides of the PIL. The private respondents submitted that an FIR had already been registered against the petitioner at their instance. The concerned GST Authorities informed the Court that the private respondents had obtained GST registration on 15 July 2022 and that action was being taken regarding whatever defaults they had committed. The Income Tax Department also submitted that appropriate action would be taken after completion of the action by the GST Authorities.

The Court noted that FIR No. 200 of 2020 dated 30 November 2020 had been registered at Police Station Airport, Birati, for offences under Sections 406, 420 and 506 IPC at the instance of the private respondents against the petitioner. It was also undisputed that an FIR had been registered against the private respondents at the instance of the petitioner.

The Court found that these cross-FIRs demonstrated an existing personal dispute between the petitioner and the private respondents. Significantly, the petitioner had suppressed from the PIL the fact that FIRs had been lodged against each other.

Issues Involved

The principal issues before the Court were:

  1. Whether a PIL alleging GST non-payment and tax evasion could be maintained when the petitioner had an existing personal dispute with the private respondents.
  2. Whether suppression of the cross-FIRs constituted suppression of material facts affecting the petitioner’s bona fides.
  3. Whether the PIL jurisdiction was being used to advance a private dispute rather than a genuine public cause.
  4. Whether the petitioner had approached the Court with clean hands.
  5. Whether the petitioner’s previous litigation conduct was relevant in determining whether the present PIL constituted misuse of judicial process.
  6. Whether dismissal with exemplary costs was justified in the circumstances.

Petitioner’s Arguments

The petitioner alleged that:

  • The private respondents were engaged in the construction business.
  • They were not paying the applicable GST amount.
  • Their conduct amounted to tax evasion.
  • Judicial intervention through a Public Interest Litigation was therefore warranted in the public interest.

The petitioner sought to place the alleged GST defaults and tax evasion before the High Court as a matter requiring action against the private respondents.

Respondents’ Arguments

The respondents opposed the PIL on the ground that it had not been filed with bona fide intention.

The private respondents argued that:

  • An FIR had been registered against the petitioner at their instance.
  • There was an existing personal dispute between the parties.
  • The PIL mechanism was being used to carry that private dispute into the Court.

The GST Authorities submitted that:

  • The private respondents had obtained GST registration on 15 July 2022.
  • Action was already being taken concerning whatever defaults had been committed by them.

The Income Tax Department submitted that:

  • Action would be taken after completion of the action by the GST Authorities.

The respondents also produced the order dated 22 September 2022 passed in Biplab Kumar Chowdhury vs The State of West Bengal & Ors., WPA 3116 of 2022, to demonstrate the petitioner’s previous litigation conduct.

Court Order / Findings

The Calcutta High Court dismissed the Public Interest Litigation with costs of ₹50,000.

The Court recorded the following significant findings:

  • FIR No. 200 of 2020 dated 30 November 2020 had been registered at Police Station Airport, Birati, under Sections 406, 420 and 506 IPC at the instance of the private respondents against the petitioner.
  • An FIR had also been registered against the private respondents at the instance of the petitioner.
  • The existence of these cross-FIRs demonstrated a personal dispute between the petitioner and the private respondents.
  • The petitioner was dragging that personal dispute before the Court through the mechanism of a Public Interest Litigation.
  • Such use of PIL jurisdiction was impermissible.
  • The petitioner had suppressed the fact that FIRs had been lodged against each other.
  • The petitioner had therefore not approached the Court with clean hands.
  • The PIL remedy had been misused.

On these findings, the Court dismissed the PIL and imposed ₹50,000 as costs.

Important Clarification

The judgment should not be read as a finding that allegations of GST evasion can never be raised before a constitutional court. The decisive factor in the present case was the Court’s finding that the petitioner had used PIL jurisdiction to carry forward a personal dispute while suppressing material facts concerning cross-FIRs between the parties.

Another important aspect is that the GST Authorities had already informed the Court that the private respondents had taken GST registration on 15 July 2022 and that action was being taken concerning their defaults. The Income Tax Department also stated that action would follow after completion of the GST Authorities’ action.

Accordingly, the dismissal was based principally on lack of bona fides, suppression of material facts, absence of clean hands and misuse of PIL jurisdiction, rather than on any proposition that genuine GST evasion complaints are immune from lawful investigation or action.

Sections / Legal Provisions Involved

  • Section 406, Indian Penal Code, 1860 – Criminal breach of trust.
  • Section 420, Indian Penal Code, 1860 – Cheating and dishonestly inducing delivery of property.
  • Section 506, Indian Penal Code, 1860 – Punishment for criminal intimidation.
  • Applicable GST law – GST registration, tax compliance and action concerning alleged defaults.
  • Public Interest Litigation principles – Bona fide public interest, absence of private motive, clean hands doctrine, disclosure of material facts and prohibition against abuse of judicial process.

Clarification on statutory reference: The order does not specify any particular section of the CGST Act or SGST Act for the alleged GST default. Therefore, attributing a specific GST section to the judgment would go beyond the text of the order.

Link to download the order -https://www.mytaxexpert.co.in/uploads/1783321035_1257compressed.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.