Bombay High Court says White-collar Crimes are more Serious than Murder, Dacoity

Bombay High Court says White-collar Crimes are more Serious than Murder, Dacoity

The directors of Ganraj Ispat Private Limited filed a plea before the Bombay High Court (HC) for quashing criminal proceedings against them on allegations that they committed fraud under the Central Goods and Services Tax Act (CGST Act)

The division bench of HC comprising Justices TV Nalawade and MG Sewlikar, while dismissing the plea of the Directors, said that white-collar offenses are more serious than offenses like murder, dacoity etc. Such offenses are committed after hatching a conspiracy.

The HC further stated that the Court must keep in mind the gravity of white-collar crimes while granting relief of anticipatory bail as it hampers investigation and such an approach causes damage to the image of the judiciary.

The facts of the case are that the Petitioners are directors of M/s Ganraj Ispat Private Limited Company. The Company is registered under the provisions of the CGST Act. One Tushar Munot, who is a sole proprietor of M/s Rutu Enterprises was arrested by the GST intelligence officers (Respondents) in October 2020. In November 2020, a search of the premises of the company of Petitioners was conducted and some documents were seized.

The petitioners alleged that there were allegations of commission of offense under Section 132 of the CGST Act and it was informed to them that there were GST liabilities of Rs 84,00,046.

The petitioners admitted that they have created a record of false invoices for the input tax credit by deceiving the authority. Upon seizure of the records of the company, the directors voluntarily deposited the penalty amount.

On behalf of the petitioners, Senior Advocate M D Adkar urged that the GST liabilities of approx. Rs 84 lakh had been deposited by the petitioners with the Directorate-General of GST Intelligence under protest, so that they can challenge such liability imposed.

It was mentioned in the petition that the prosecution of the petitioners is on wrong conceptions and as the provisions of Sections 154, 157, and 172 of the Code of Criminal Procedure (CrPC) were not followed by the Respondents. They contended that all the provisions of the CrPC need to be applied for registration of crime, investigation, and for taking cognizance of the offense and as the procedure was not followed, action taken against them is illegal.

However, the tax department contradicted and stated that the petitions were misconceived. The department submitted that following investigation into another company, it was revealed that fake records of false invoices for input tax credit were issued to Ganraj Ispat for an amount of over Rs 5.5 crore for which GST of Rs 84 lakh was recoverable.

After hearing the submissions of both the parties and going through the material evidence on record the HC concluded that there is a prima facie case of fraud against the petitioners. The Court while relying on the provisions of the CGST Act, observed that in such cases of fraud both the adjudication and prosecution start simultaneously. It clarified that the CGST Act will apply over the CrPC.

The bench further stated that the earlier interim order passed in this case virtually prevented the tax department from exercising their powers, which also includes the issuance of summons and hence the petitioners got an indirect relief of anticipatory bail.

The Court while dismissing the petition stated, "In each petition, the Petitioner to deposit Rs.25,000 as costs of the petition. The amount is to be deposited in four weeks from the date of order and it is to be given to the respondents."