Ms Ssk Devcon Private Limited Through Its Authorized Secretary Ajit Singh vs. The State Of Jharkhand

Held

The Court held that the criminal proceedings under Section 174 of the Indian Penal Code were an abuse of process of law and quashed them. The Court found that the summons issued under Section 70 of the CGST Act were replied to by the petitioners and entertained by the authority, which granted time for payment. The Court noted that the entire GST amount of Rs. 5,60,52,391/- had been deposited by February 8, 2019. It was also observed that no proceedings under Section 125 (general penalty) or Section 132 (punishment for offences) of the CGST Act had been initiated, and Section 70 of the CGST Act itself prescribes that inquiries proceed under the Civil Procedure Code, with only Sections 193 and 228 of the IPC applicable to such inquiries. The Court concluded that continuing proceedings under Section 174 IPC was unwarranted given the substantial payment of dues and the nature of the interaction with the authority. The issue regarding the amendment of the complaint petition was not required to be answered in light of the judgment relied upon by the revenue.

Facts

The petitioners, Satyendra Singh Kushwah (Director) and M/s. SSK Devcon Private Limited, sought to quash criminal proceedings initiated under Section 174 of the Indian Penal Code. The proceedings arose from a complaint alleging non-compliance with summons issued by the Central Goods and Service Tax Department. The company obtained GST registration on December 14, 2017, and allegedly failed to pay GST from January 2018 to November 2018. Four summons were allegedly ignored. The petitioners argued that the GST amount of Rs. 5,60,52,391/- was paid in installments, with the final payment made on February 8, 2019. They contended that the GST Act is a self-contained code with its own penalty provisions and that Section 174 IPC is not attracted. The revenue argued that the petitioners failed to comply with summons without lawful excuse, and the GST authority is a public authority under Section 156 of the CGST Act.

Key Issues

1. Whether the criminal proceedings under Section 174 of the Indian Penal Code are maintainable against the petitioners for alleged non-compliance with summons issued under Section 70 of the CGST Act, 2017, when the GST amount has been substantially paid and the summons were replied to. Petitioner's arguments: The petitioners contended that the GST Act is a complete code with specific provisions for penalties (Section 125) and punishment for offences (Section 132), rendering Section 174 IPC inapplicable. They argued that the GST amount of Rs. 5,60,52,391/- was paid in installments, with the final payment on February 8, 2019, and that the summons were replied to and entertained by the authority, evidenced by letters and granted time for payment. They also argued that there was no specific averment regarding the Director's involvement and that vicarious liability cannot be imposed without statutory basis. Revenue's arguments: The revenue argued that the petitioners failed to comply with summons without lawful excuse, intentionally omitting to give evidence or produce documents. They asserted that the GST authority is a public authority under Section 156 of the CGST Act, and non-compliance with its directions warrants proceedings under Section 174 IPC. They also relied on Section 89 of the CGST Act for the liability of persons looking after the company's day-to-day affairs and cited the Supreme Court judgment in S.R. Sukumar v. S. Sunaad Raghuram regarding amendment of complaint petitions.