Dinesh Vyas vs. The Union Of INDIA Through GST Council

Facts

The petitioner, Dinesh Vyas, filed a writ petition before the Jharkhand High Court challenging an order taking cognizance dated July 24, 2018. This order arose from an application under Section 167 Cr.P.C. which was treated as Complaint Case No. 2144 of 2018, pending before the Special Court, Economic Offences, Jamshedpur. The petitioner argued that the complaint was not filed under the relevant sections of the Central Goods and Services Tax Act, 2017, and that cognizance was taken without the required sanction from the concerned authority, as stipulated by Section 134 of the Act. The respondent-DGGI, in its counter affidavit, stated that sanction was granted on September 26, 2023, and further steps were being taken.

Held

The Court held that the order taking cognizance dated July 24, 2018, was not in accordance with the law. The reasoning was that cognizance was taken in the absence of a proper complaint and without the mandatory sanction from the competent authority, which is a procedural requirement under the Central Goods and Services Tax Act, 2017. The Court noted that the sanction was granted much later, on September 26, 2023, significantly after the cognizance was taken. Therefore, the Court found the earlier order to be flawed. The principle established is that cognizance of offences under the CGST Act must strictly adhere to the procedural safeguards, including obtaining prior sanction. The Court set aside the impugned order taking cognizance and allowed the writ petition.

Key Issues

1. Whether the learned Court could take cognizance of an offence under the Central Goods and Services Tax Act, 2017, in the absence of a proper complaint and prior sanction from the competent authority, as required by Section 134 of the Act? The petitioner contended that the cognizance taken on July 24, 2018, was illegal as it was based on an application under Section 167 Cr.P.C. for remand, not a formal complaint, and crucially, without the mandatory sanction under Section 134 of the CGST Act. The petitioner emphasized that the Act prescribes a specific procedure for taking cognizance, which was not followed. The respondent-DGGI acknowledged that sanction was granted much later, on September 26, 2023, and indicated that subsequent procedural steps were being undertaken in accordance with the CGST Act.