This section provides for imprisonment for certain offences.

Section 132(1)

[1][Whoever commits, or causes to commit and

retain the benefits arising out of, any of the following offences]:—

Question & Answer

According to the existing provisions of Section 132(1), only supplier or recipient can be punished for committing above offences.

In practice, there is a kingpin/mastermind who creates number of sham entities in the name of dummy persons who are generally poor persons or employees. The kingpin/mastermind make them proprietor Parher/director of such sham entities for gains and enjoy the fruits of tax evasion.

After amendments, in addition to supplier or recipient, such kingpin/mastermind can also be subject to punishment.

Section 132(1)(a)

supplies any goods or/both services without issue of any invoice,

in violation of the provisions of this Act or the rules made thereunder,

with the intention to evade tax;

This clause gets attracted if all the following conditions are satisfied

(a) Any person supplies any goods or services or both without issue of any invojce: and

(b) Such supplies are made with the intention to evade tax.

The only limiting factor of this clause is that the act must be done with an intention to evade tax and not due to bonafide mistake.

With an intention to evade tax further implies that supplies which are exempted or on which no tax is payable shall not be covered under this clause.

Section 132(1)(b)

Issues any invoice or bill without supply of goods or/both services

in violation of the provisions of this Act, or the rules made thereunder

leading to wrongful availment or utilisation of ITC or refund of tax;

This clause shall get attracted if following conditions are satisfied cumulatively:

(a) Any person issues any invoice or bill without supply of goods or services or both; and

(b) Issuance of such invoices leads to wrongful availment or utilisation of ITC or refund of tax.

[2][Section 132(1)(c)

avails ITC using the invoice or bill referred to in clause (b) or

fraudulently avails ITC without any invoice or bill;]

Section 132(1)(d)

collects any amount as tax but fails to pay the same to the Government

beyond a period of three months from due date of its payment;

This clause shall again apply to the supplier who

(a) collects any tax and

(b) fails to pay the same to the Government beyond a period of 3 months from the due date of payment.

Section 132(1)(e)

evades tax, [3][***] or fraudulently obtains refund and

where such offence is not covered under clauses (a) to (d);

The scope of this clause is very wide and covers all situations where there is evasion of tax, or fraudulent claim of refund except the situations covered in clause (a) to (d).

Therefore, whenever there is evasion of tax or fraudulent claim of credit or refund and such offence is not covered in clause (a) to (d) of this sub-section shall get covered here. Government by providing for this clause made sure that no evasion or fraudulent claim remain not penalized

Section 132(1)(f)

Falsifies or substitutes financial records or

produces fake accounts or documents or

furnishes any false information

with an intention to evade payment of tax due under this Act;

Provisions of this clause shall get attracted in the following situation:

(a) Any person liable to maintain financial records falsifies or substitutes financial records; or

(b) Any person responsible to main accounts and documents produces fake accounts or documents;

(c) Any person who furnishes any false information.

with an intention to evade payment of tax.

[4][Section 132(1)(g)

obstructs or prevents any officer in the discharge of his duties under this Act;

Section 132(1)(h)

acquires possession of, or

in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or

in any other manner deals with

any goods which he knows or has reasons to believe are liable to confiscation;

This clause shall be applicable where any person who deals with any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder.

Section 132(1)(i)

receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services

which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder;

As compared to clause (h) which deals with the goods, this clause deals with the supply of services.

This clause shall be applicable where any person receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder. The term 'reason to believe' is used in this clause and not suspect to believe and shall mean where a person acting reasonably in normal circumstances should have come to know that supply of services are in contravention of provision of Act read with Rules enacted thereunder.

Section 132(1)(j)[5]

tampers with or destroys any material evidence or documents;

Section 132(1)(k)[6]

fails to supply any information which he is required to supply under this Act or the rules made thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; or

Section 132(1)(l)

attempts to commit, or abets the commission of any of the offences mentioned above

Any person who attempts to commit or abets any of the offences specified in sub section (1) are also subject to penalty under this sub-section.

Any person attempts to commit or abets the commission of said offences is very wide terms and depending on the facts of each case, in the opinion of the author even the tax consultants may get covered under this sub-section and be subject to penalty.

Section 132(1)

Offences specified above shall be punishable as follows

Explanation to Section 132

For the purposes of this section, the term “tax” shall include the amount of

tax evaded or

ITC wrongly availed or utilised or

refund wrongly taken

under the provisions of

this Act,

the SGST Act,

the IGST Act or

the UTGST Act and

cess levied under the Goods and Services Tax (Compensation to States) Act.

S-132(1)

Type of Offence

Tax Involved

Offence shall be punishable with imprisonment for a term which may extend to

(i)

any of above offences

> Rs. 5 Cr

5 yrs and with fine

(ii)

any of above offences

exceeds 2 Cr but ≤ 5 Cr

2 yrs and with fine

(iii)

Offence specified in clause (b)

exceeds 1 Cr but ≤ 2 Cr

1 yr and with fine

Section 132(1)(iv)

in cases where he commits or abets the commission of an offence specified in clause (f) [7][***],

he shall be punishable with imprisonment for a term which may extend to

6 months or with fine or with both.

Section 132(2)

If a person convicted of an offence under this section is again convicted of an offence under this section,

then, he shall be punishable for the second and for every subsequent offence

with imprisonment for a term which may extend to 5 years and with fine.

Section 132(3)

The imprisonment referred to in clauses (i), (ii) and (iii) of sub-section (1) and sub-section (2) shall,

in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court,

be for a term not less than 6 months.

Cognizable Offences

Cognizable offences means serious category of offences in respect of which a police officer has the authority to make an arrest without a warrant and to start an investigation with or without the permission of a Court.

Non-cognizable offences –

Non cognizable offences means relatively less serious offences in respect of which a police officer does not have the authority to make an arrest without a warrant and an investigation cannot be initiated without a Court order, except as may be authorized under special legislation.

Section 132(5)

The offences shall be cognizable and non-bailable if both conditions are satisfied  

(i) Offence is specified in clause (a) to (d) of sub section (1) above and

(ii) Offence is punishable under clause 132(1)(i) [i.e Tax evaded or ITC wrongly availed or utilised or refund wrongly taken exceeds Rs. 5 Cr]

An offence to be cognizable, must fulfil both conditions

(a) Offence must be specified in clause132)(1)(a) or (b) or (c) or (d) and

(b) Tax evasion should be more than Rs.5 Cr

Section 132(4)

Notwithstanding anything contained in the Code of Criminal Procedure, 1973,

all offences under this Act, except the offences referred to in sub-section (5)

shall be non-cognizable and bailable.

Section 132(6)

A person shall not be prosecuted for any offence under this section except with the previous sanction of the Commissioner.

For complete guidelines, please refer Instruction No. 04/2022-23 [GST-investigation, dated-01-09-2022]

Amit Beriwal v State of Odisha [2020-VIL-350-Ori, dated 27.07.2020]

The alleged GST fraud committed by the petitioner is having humongous ramification on the revenue collection by the State. At this backdrop, the possibility of the accused tampering the evidence and or influencing/intimidating the witnesses also cannot be ruled out. Considering holistic view of the facts and circumstances in the instant case.

Court is not inclined to release the accused-petitioner on bail at this stage.

Kamal and Sant Kumar & Another v State of Haryana, [2022 (%) TMI 1185-Punjab and Haryana HC Dated 16.05.2022]

The evidence collected during the course of investigation clearly points towards complicity the petitioners, who have committed a colossal fraud of about Rs.1.80 crores. Such like huge loss is virtually an attempt to shatter the economy of the country. Bearing the aforesaid facts and circumstances in mind and while noticing that the petitioners is habitual offenders, this Court does not find any ground for grant of bail to the petitioners at stage.

Hon’ble Apex Court in Y.S. Jagan Mohan Reddy v CBI (2013 (5) TMI 896 - SC] DGGI v Saurabh Srivastava, 2022(5) TMI 1182 (23.02.2022)

Considering the seriousness and nature of the offence of issuing fake invoices of Rs. 5.65 crore allegedi' commited by the applicant/accused, this Court is not inclined to grant concession of hail to applicant accused

Mohammad Abbas Shabbirali Savjani v State of Gujarat, 2022 (6) TMI 963 - Gujarat High Court (13.06.2022)

The petitioner who is alleged to have frequently availed ITC of Rs. 137.28 crore cannot be granted bail...in the considered opinion of this Court, this should not be the case where this Court would exercise discretionary jurisdiction u/s 438 of the Code of Criminal Procedure to release the present applicant on anticipatory bail. Hence the present application is rejected.

Paresh Nathalal Chauhan v The State of Gujarat and another, 2022(2) TMI 351 (Dated 01.02.2022)

The appellant cannot be indefinitely detained in custody more so having already undergone a period of 25 months of custodv when he can be sent behind bars for maximum five years. It is almost S0% of the sentence.

Jagdish Arora v UOI [2020 VIL-388 MP, dated 18.08.202020]

There is no documentary material produced on record to show that the applicants were legally in charge and responsible for the day-to-day working of the Company. They had resigned legally from the Directorship of the Company:. Merely on a bald statement of an emplovee of the Company. it cannot be held that the present applicants were in charge and responsible for the functions of the Company

Considering the gravity and the nature of the allegations levelled against the applicant and the fact that the investigation of the case is at nascent stage and further considering the fact that now a days economic offences are rampant and should be dealt with due firmness

Mohit Bathla v CGST, Division Panipat, Commissionerate, Panchkula, reported as 2022 (5) TMI 292 -SUPREME COURT

The security and documents of surety furnished at that stage shall continue to be operative conditions of bail. The amount of deposit shall await the final orders to be passed at the conclusion of the proceedings in the aforesaid complaint. The appellant shall not misuse his liberty in any manner and that any infraction may entail in withdrawal of the benefit grant in terms of the orders passed by this Court

Ashish Kumar and Sonu Kumar Khuswah v State of Haryana, 2022(5)TMI 1184- Punjab and Haryana High Court ( 10.05.2022)

This Court is of the opinion that the conclusion of trial is likely to consume considerable time as only two prosecution witnesses have been examined out of total thirty four prosecution witnesses, therefore, further detention of the petitioners may not serve any useful purpose, who are presently confined in judicial custody after their arrest. Apart from it, the material are police officials and officials of Excise Department and presently, there does not seem to be any possibility of their being won over.

Resultantly, without meaning any expression of opinion on the merits of the case, it is ordered that the petitioners be released on regular bail in the above case, subject to their furnishing of requisite bail bonds/surety bonds to the satisfaction of the trial Court/Duty Magistrate concerned. The petition is allowed.

Devendra Dwivedi v UOI and others. [2021(1) TMI 302-Supreme Court (Dated 07.01.2021)

The petitioners have an efficacious remedy in the form of proceedings under Article 226 of the Constitution to challenge the constitutional validity of the provisions of the statute which are placed in issue. Following this action is desirable. for this Court will then have the benefit of a considered view emanating from the High Court-