Facts of the Case

Manoj Kumar Pareek, proprietor of M/s Sakambari Metalicks, filed Cr.M.P. No.2200 of 2018 before the High Court of Jharkhand at Ranchi, seeking quashing of criminal proceedings, including the order taking cognizance dated 08.08.2018, arising out of Jugsalai P.S. Case No.0085/18 dated 08.06.2018 (G.R. No.2006/18), pending before the Sub Divisional Judicial Magistrate, Jamshedpur. The FIR alleged that an inspection on 24.05.2018 found no actual business being operated at the petitioner's registered premises, that the registration had been obtained on the strength of a forged rent agreement, and that the petitioner had fraudulently availed Input Tax Credit of Rs. 5,73,42,065.90 without any genuine inward supply of goods, besides passing on ITC benefit of Rs. 2,39,56,138.42 under JGST/CGST and Rs. 3,43,99,080.27 under IGST to other persons between October 2017 and February 2018 through forged invoices. The FIR invoked Sections 464, 468 and 470 of the IPC read with Section 132(1)(c), 132(1)(e) and 132(1)(l) of the JGST Act. The matter was heard on 06.12.2023 by Hon'ble Justice Sanjay Kumar Dwivedi.

Issues Involved

  1. Whether continuation of criminal proceedings under Section 132 of the JGST Act and the IPC was sustainable once the underlying show-cause proceedings forming the basis of the FIR had already been quashed by a Division Bench of the High Court.
  2. Whether allowing the prosecution to continue in these circumstances would amount to an abuse of the process of law.

Petitioner's Arguments

  • The FIR was based solely on the inspection dated 24.05.2018, alleging absence of business activity at the registered premises and use of a forged rent agreement.
  • The petitioner had a genuine rent agreement with the landowner and had been regularly paying rent, supported by rent receipts placed on record.
  • The show-cause notice issued pursuant to the same inspection had already been challenged before a Division Bench in W.P.(T) No.1594 of 2019 and quashed by order dated 05.04.2023, with the matter remanded to the State for a fresh decision; identical criminal proceedings arising from connected matters (W.P.(Cr.) No.301 of 2021 and tagged cases) had also been quashed by the Court on 12.07.2023.

Respondent's Arguments

  • The State did not dispute the Division Bench's order dated 05.04.2023 quashing the underlying show-cause proceedings.
  • However, the State contended that criminality was independently made out, that the IPC sections were attracted, and that a charge-sheet had already been filed after the case was found to be true on investigation.

Court Order/Findings

  • The Court found that the very basis of the FIR — the inspection-based show-cause proceedings — had already been quashed by the Division Bench and remanded for a fresh decision.
  • Allowing the criminal proceedings to continue in these circumstances would amount to an abuse of the process of law, and the entire criminal proceedings, including the order taking cognizance dated 08.08.2018, were accordingly quashed.
  • Liberty was reserved to the State: if, after a fresh assessment pursuant to the Division Bench's order, a fresh cause of action emerges, the State may proceed in accordance with law.

Important Clarification

Where the very foundation of a criminal prosecution under Section 132 of the GST Act — namely, the underlying show-cause/assessment proceedings alleging fraudulent ITC — has already been quashed and remanded by the High Court, continuation of the parallel criminal case on the same allegations amounts to an abuse of process, though the State retains liberty to reinitiate action if a genuine fresh cause of action emerges from the remanded proceedings.

Sections Involved

  • Section 132(1)(c), 132(1)(e) and 132(1)(l) of the Jharkhand Goods and Services Tax Act, 2017 – punishment for fraudulent availment of input tax credit and issuance of invoices without supply.
  • Sections 464, 468 and 470 of the Indian Penal Code, 1860 – forgery-related offences pleaded alongside the JGST allegations.

Decision – In Favour of

The decision favours the Assessee. The criminal proceedings under Section 132 of the JGST Act and the connected IPC provisions were quashed, though the State retains liberty to act afresh if warranted by the remanded assessment.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Jharkhand at Ranchi
  • Case No.: Cr.M.P. No.2200 of 2018
  • CNR: Not available on record
  • Coram: Hon'ble Justice Sanjay Kumar Dwivedi
  • Decision Date: 06 December 2023
  • Disposal Nature: Criminal proceedings quashed

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