In Cr. M.P. No. 3155 of 2019 -JHAR HC- Jharkhand High Court quashes criminal proceedings against directors of M/s Shri Ram Alloys and Ingot Pvt. Ltd. for alleged improper GST credit utilization, says grounds for FIR already quashed by Division Bench
Justice Sanjay Kumar Dwivedi [31-08-2023]

Read Order: Nikit Mittal and Ors v. The State of Jharkhand

Chahat Varma

New Delhi, September 22, 2023: The Jharkhand High Court has quashed criminal proceedings against the directors of M/s Shri Ram Alloys and Ingot Pvt. Ltd., for alleged improper utilization of Input Tax Credit (ITC). The Court ruled that continuing the proceedings would constitute an abuse of the legal process after a Division Bench quashed the basis for the FIR and remanded the matter for fresh consideration.

In all these cases, prayers were made to quash the entire criminal proceedings, which were registered for offenses under Sections 409, 420, and 120-B of the Indian Penal Code, along with Sections 73, 74, 132(1)(e), 132(1)(f), 132(1)(i), and 132(1)(iv) of the Goods and Services Tax Act, 2017 (GST Act). These proceedings were pending in the court of the Chief Judicial Magistrate, Bokaro.

In summary, in this case, an FIR was filed, alleging that during the period from July 1, 2017, to March 31, 2018, which was when the GST Act, was in effect, the petitioners, who were directors of M/s Shri Ram Alloys and Ingot Pvt. Ltd, Bokaro, aided in the improper utilization of ITC. Based on these allegations, the FIR was registered against the petitioners for abetment, leading to the initiation of prosecution proceedings.

The counsel representing the petitioners argued that according to Section 134 of the Jharkhand Goods and Services Tax Act, only the Commissioner of the State Taxes had the authority to approve prosecution, whereas in this case, the Additional Commissioner granted such approval. Additionally, the counsel contended that the individuals had not been named as accused, and the allegations have been levied against the company. Furthermore, it was argued that in cases arising from GST, only a complaint should be permissible, whereas in the present situation, an FIR has been lodged.

It was further stated that a batch of writ petitions was filed to challenge the demand and assessment, and these cases were registered. The counsel emphasized that a Division Bench had heard all the writ petitions, and a judgment was delivered on 14.09.2022. According to this judgment, the demand and assessment orders were quashed, and the cases were sent back for fresh consideration.

The single-judge bench of Justice Sanjay Kumar Dwivedi determined that the grounds on which the FIR was filed had already been quashed by the Division Bench of this court, along with several other cases. The matter had been remanded to the relevant authority for the issuance of a fresh order. Therefore, allowing the proceedings to continue would constitute an abuse of the legal process.

As a result, the bench ordered that all the ongoing criminal proceedings in the court of Chief Judicial Magistrate, Bokaro, be quashed.