Shahzad Alam And 2 Others vs. State Of U.P. And 3 Others

Held

The Court held that the allegations in the FIR clearly indicate the creation of bogus firms and fabrication of false invoices with the intent to evade tax. The FIR was lodged after scanning GST portal information, information from the mobile squad regarding seized goods without documents, and findings from search and seizure operations. The Court found that the place searched was being used for preparing false documents/invoices. The extent of utilization of these invoices and the actual tax evasion would be determined during the investigation. The Court rejected the argument that an FIR cannot be registered without a specific order under the GST Code for tax evasion, stating that the GST Code does not repeal the provisions of the Indian Penal Code or the Code of Criminal Procedure. It was held that offences punishable under the IPC can be reported and investigated. The Court also dismissed the argument that no FIR should be registered in the absence of a complaint from the firms whose papers were found, especially when those firms were found to be non-existent. The Court relied on the Apex Court's view in Vinod Raghuvanshi Vs. Ajay Arora and Ors. that an investigation should not be shut out at the threshold if allegations have substance. The Court also referred to a previous judgment of its own bench in Govind Enterprises vs. State of U.P. and others, which held that GST Act provisions do not override or repeal IPC provisions and that FIRs can be lodged under CrPC for offences punishable under IPC even if prosecution can be launched under the GST Act.

Facts

The petitioners, Shahzad Alam, Dilshad Malik, and Azad Malik, sought to quash a First Information Report (FIR) dated February 6, 2020. The FIR was registered under Sections 420, 424, 467, 468, 120-B of the Indian Penal Code and Sections 122/132 of the GST Act. The FIR alleged that the petitioners were involved in setting up bogus firms and fabricating false tax invoices to evade GST. Investigations revealed that the declared place of business was not functioning as a registered office, and documents, including tax invoices, rubber stamps, and seals of various firms, were recovered from the premises. The petitioners' explanations were found contradictory or unsatisfactory, leading to the conclusion that they were involved in tax evasion. The FIR was lodged by the Commercial Tax Officer (Special Investigation Cell), Ghaziabad.

Key Issues

1. Whether the First Information Report (FIR) discloses commission of cognizable offences under the Indian Penal Code and the GST Act, warranting investigation? (Section 154 CrPC, Section 132 GST Act, Sections 420, 424, 467, 468, 120-B IPC). The petitioners argued that no specific allegation of tax evasion in a particular transaction or movement of goods was made, that the recovery was not supported by public witnesses, and that no offence could be said to be committed without a specific finding of GST evasion. They also contended that without a complaint from the firms whose seals were allegedly used, no FIR should be registered. The respondent State argued that the FIR clearly spells out the creation of bogus firms and fabrication of false invoices, and the extent of tax evasion is a matter for investigation. They asserted that since the FIR discloses cognizable offences, it cannot be quashed.