Shahzad Alam And 2 Others v. State Of U.P. And 3 Others
[Citation -2020-LL-0224-109]

Citation 2020-LL-0224-109
Appellant Name Shahzad Alam And 2 Others
Respondent Name State Of U.P. And 3 Others
Relevant Act SGST
Date of Order 24/02/2020
Judgment View Judgment
Keyword Tags search and seizure operation • goods and services tax • standard of proof • business activity • commission • penalty • rent

1 Court No. - 47 Case :- CRIMINAL MISC. WRIT PETITION No. - 3225 of 2020 Petitioner :- Shahzad Alam And 2 Others Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Mohit Behari Mathur Counsel for Respondent :- G.A. Hon'ble Manoj Misra,J. Hon'ble Deepak Verma,J. Heard learned counsel for petitioners; learned A.G.A. for State-respondents 1, 2 and 3; and perused record. instant petition seeks quashing of first information report dated 06.02.2020 registered as Case Crime No. 0350 of 2020 at P.S. Sihani Gate, District- Ghaziabad, under Sections 420, 424, 467, 468, 120-B I.P.C. and section 122/132 of Goods and Services Tax Act (hereinafter referred to as GST Act). impugned first information report has been lodged by Commercial Tax Officer (Special Investigation Cell), Commercial Tax, Range A, Ghaziabad alleging that on scanning of information available at GST Portal and information received from mobile squad of Commercial Tax Department regarding vehicles seized with goods without proper documents, exercising power under Section 67 of GST Act, Joint Commissioner (Investigation), Trade Tax, Range A, Ghaziabad, by order dated 06.11.2019, constituted and authorized team of officers to carry out search and seizure operations at declared places of business. It is alleged that when team visited declared place, it found that it was not functioning as registered office of any firm; no business activity could be noticed; no goods were found; and person present there, namely, Shubham Sharma, informed that 2 place was not being used for any business but only for preparing documents. Shubham Sharma informed team that he works for Dilshad Malik (petitioner no.2). electricity connection of premises was found in name of Shahzad Alam (petitioner no.1). In room, tax invoices and E-way bills of 61 firms were found. In addition thereto, rubber stamps and seals of Proprietor/Authorized signatory of 16 firms were found. cheque book of Nirala Traders and Bilty Book of two transporters and original tax invoices of one Ravi Industries was found. Upon search of another room, one Abid was found, who disclosed that he works for Junaid Malik. In that premises, bill and electricity bill was found which was in name of Dilshad Malik. In that room, rubber stamp/seal of Proprietor of M/s. A.K. Metal Traders with specified GST number was found. What was noticed was that none of firms whose papers were found had specified address as their place of business. Consequently, on basis of information received, separate teams were constituted to make inspection of firms whose documents were found there and, upon enquiry, majority of those firms were found non-existent. place from where papers, rubber stamps and seals were recovered was discovered to be under control of Shahzad Alam and Dilshad Malik (petitioner no.1 and petitioner no.2, respectively). On basis of above inspection/inquiry, prima facie conclusion was drawn that Dilshad Malik and Shahzad Alam had been indulging in preparing and utilizing bogus tax invoices for evading tax. As result, summons were issued under Section 70 of GST Act seeking their explanation. On basis of explanation submitted, further enquiry was conducted by Inspection Team, upon which, it was found that Shahzad Alam is resident of New Islam Nagar, Meerut 3 and place which was earlier inspected has been in name of Shahzad Alam which had been let out to Azad Malik (petitioner no.3). In his explanation, Shahzad Alam stated that he carries no business from that specified place. said explanation was not found correct because Joint Team had found original papers of M/s. Capital Industries (GSTN number specified) whose proprietor was Shahzad Alam. It is stated in FIR that Azad Malik was also interrogated. He stated that he had taken place on rent from Shahzad Alam for keeping old generators and for selling spare parts. When he was enquired in respect of papers found there, he stated that he has no knowledge as to how those papers were found there. Later, however, he submitted written submission claiming responsibility for documents seized from specified place and claiming that his earlier statement was made under some misconception. It is alleged that thereafter Dilshad Malik (petitioner no.2) was also summoned. In his statement made to Team, he stated that he works on commission and that he has no firm registered in his name though he stated that room which was searched earlier was taken by him on rent but no rent deed was prepared. However, he could not provide details as to since when premises was taken on rent. It is alleged in FIR that statement of Dilshad Malik (petitioner no.2) was contrary to records as M/s. K.L. Enterprises was registered in his name and trade was also shown in name of firm. By narrating facts noticed above, derived on basis of inspection/enquiry, conclusion was drawn that Dilshad Malik and Shahzad Alam had set up bogus firms for purpose of evading tax and had been preparing false documents/invoices for that end and that Azad Malik had been 4 working as their Agent. Learned counsel for petitioners has challenged impugned first information report, inter-alia, on following grounds:- (a) that no firm/company whose rubber stamps were allegedly found at specified place made complaint of utilizing their seals for preparing bogus documents; (b) that there is no specific allegation in respect of evasion of tax in any specific transaction or movement of goods; (c) that recovery is not supported by any public witness; and (d) that unless and until specific finding is returned in respect of evasion of GST, no offence can be said to be committed, as alleged in first information report. learned A.G.A. has opposed prayer for quashing first information report by submitting that allegations made in impugned first information report clearly spell out creation of bogus firms and fabrication of false invoices. As to how these invoices have been utilized and to what extent tax had been evaded is matter of investigation and since impugned first information report discloses commission of cognizable offences, prayer to quash first information report cannot be accepted. We have heard rival submissions and have perused record carefully. allegations in impugned first information report are in respect of getting bogus firms declared/registered under GST Act and fabricating documents/invoices with view to 5 evade Tax. impugned first information report appears to have been lodged after scanning information available at GST Portal and information received from mobile squad in respect of seizure of goods/vehicles without documents as also after gathering information from search and seizure operation and enquiry that ensued, which led to inference that declared place of business was bogus. Rather, place was being used for purpose of preparing false documents/invoices. As to how those invoices have been utilized or were to be utilized would be matter of investigation. FIR specifically alleges that information was gathered not only from search and seizure operations but also on basis of explanation submitted by suspects pursuant to summons served upon them. Whether search and seizure operation memorandums, in absence of public witness, would have sufficient reliability is issue to be examined at stage of trial and not at this stage. In Vinod Raghuvanshi Vs. Ajay Arora and Ors.: (2013) 10 SCC 581 (para 30), Apex Court had taken view that investigation should not be shut out at threshold if allegations have some substance. In instant case, we find that allegations are in respect of getting bogus firms registered under GST Code and of preparing bogus invoices for purpose of evading tax. above allegations have been made on basis of search and seizure operations and enquiry that followed. As to how bogus tax invoices were used or were to be used would be determined on basis of material collected during course of investigation. submission of learned counsel for petitioners 6 that there could be no registration of first information report without specific order under GST Code in respect of evasion of tax is not acceptable for simple reason that GST Code does not impliedly or explicitly repeals provisions of Indian Penal Code or Code of Criminal Procedure and therefore offence punishable under Indian Penal Code can very well be reported and investigated as per law. Division Bench of this Court of which one of us (Manoj Misra, J.) was member in Criminal Misc. Writ Petition No. 7303 of 2019 : Govind Enterprises vs. State of U.P. and others, decided on 30.05.2019, after scanning through number of decisions of Apex Court as well as High Court including statutory provisions, held as follows:- Upon careful consideration of rival submissions, decisions noticed above, relevant provisions of U.P. Act as also Penal Code and Code, we find that Sections 69, 134, and 135 of U.P. Act are applicable in respect of offences punishable under U.P. Act. They have no application on offences punishable under Penal Code. Further, there is no provision in U.P. Act, at least shown to us, which may suggest that provisions of U.P. Act overrides or expressly or impliedly repeals provisions of Penal Code. There is also no bar in U.P. Act on lodging FIR under Code for offences punishable under Penal Code even though, for same act/ conduct, prosecution can be launched under U.P. Act. Rather, section 131 of U.P. Act impliedly saves provisions of Penal Code by providing that no confiscation made or penalty imposed under provisions of Act or rules made thereunder shall prevent infliction of any other punishment to which person affected thereby is liable under 7 provisions of U.P. Act or under any other law for time being in force. argument of learned counsel for petitioner that except for offences specified in sub- section (5) of section 132, sub-section (4) of section 132 of U.P. Act renders all offences under U.P. Act non cognizable, therefore no FIR can be lodged, is not acceptable, because sub-section (4) speaks of offences under U.P. Act and not in respect of offences under Penal Code. It is noteworthy that section 135 of U.P. Act makes significant departure from general law by providing that in any prosecution for offence under U.P. Act, which requires cuplable mental state on part of accused, court shall presume existence of such mental state. same does not hold true for offences punishable under Penal Code. Hence, to prove mensrea, which is one of necessary ingredients of offence punishable under Penal Code, standard of proof would have to be higher to prove commission of offence punishable under Penal Code than what would be required to prove offence punishable under U.P. Act. As such, offences punishable under Penal Code are qualitatively different from offence punishable under U.P. Act. In view of reasons recorded above, and by keeping in mind provisions of Section 26 of General Clauses Act, 1897 as also law laid down by apex court in that regard, which we have noticed above, we are of considered view that contention of learned counsel for petitioner that no first information report can be lodged against petitioner under provisions of Code of Criminal Procedure for offences punishable under Indian Penal Code, as 8 proceeding could only be drawn against him under U.P. Goods and Services Tax Act, 2017, is liable to be rejected and is, accordingly, rejected. [Note : U.P. Act should be read as U.P. Goods and Services Tax Act, 2017). Another submission made by petitioners' counsel, that in absence of complaint from those firms whose papers were found no FIR ought to be registered, is unworthy of acceptance, particularly when those firms were found non-existent. For reasons aforesaid, as impugned first information report discloses commission of cognizable offence, prayer to quash first information report cannot be accepted. petition is dismissed without prejudice to right of petitioners to apply for bail. Order Date :- 24.2.2020 Sunil Kr Tiwari Shahzad Alam And 2 Others v. State Of U.P. And 3 Other
Report Error