[S.69 CGST Act] Fake Supplier Addresses Indicate Prima Facie GST Evasion: Himachal Pradesh High Court Refuses To Quash Complaint

“When the officials went to the addresses mentioned in the invoices and found that no such entity existed, it was sufficient to infer that the invoices were fake, and the material shown to have been supplied as per the invoices could not have been supplied since no such person existed at the given address”, stated the bench.

Section 69 of The Central Goods and Services Tax Act, 2017, does confer power on the Commissioner to order arrest in case any of the specified offences under Section 132 of the CGST Act.

Justice Rakesh Kainthla stated that the Court has to see a prima facie case while exercising inherent power and does not sift the evidence to determine its creditworthiness or value. This is for the Trial Court to see where the matter is pending; hence, the complaint cannot be quashed simply because the investigation was not made with the GST authorities at Delhi.

In this case, the petitioners/assessee indulged in large-scale evasion of tax by availing the fraudulent input tax credit. They declared inward supplies (purchases) from Delhi and U.P.-based floating fictitious and non-existent firms, which were registered to pass on the fraudulent benefit of input tax credit on the strength of fake invoices.

Hence, a complainant was filed against the assessee for the commission of offences punishable under Section 69 read with Section 132 of HPGST/CGST Act, 2017, read with Section 20 of the IGST Act, 2017.

Being aggrieved from the filing of the complaint and the proceedings pending before the Trial Court, the petitioners have filed the petition asserting that the provisions of HPGST/CGST and IGST Acts are silent regarding the arrest, investigation and filing of the complaint.

The assessee submitted that HPGST Act has made the provisions of search and seizure provided under Cr.P.C. applicable to the HPGST Act. The Officers under the Act have been given unbridled powers. The provisions of Sections 69 and 132 are arbitrary and unreasonable. It is violative of Article 21 of the Constitution of India.

The department submitted that the petitioners were liable to be arrested for the violation as per Sections 69 and 132 of the Act. The provisions of arrest are governed by the Cr. P.C. The provisions of Cr.P.C. will also apply to the investigation and filing of the complaint as per Section 4(2) read with Section 5 of the Cr. P.C.

The bench referred to the case of Radhika Agarwal v. Union of India, (2025) 150 GSTR 121, where the Supreme Court held that the provisions of Cr.P.C. apply to the proceedings conducted under GST Act if there is no provision to the contrary.

Therefore, the submission that the provisions of Cr.P.C. do not apply to GST Act and the Act is silent regarding the procedure for investigation, inquiry, or trial is not correct, added the bench.

The bench further opined that “It was submitted that the investigation was not properly conducted. The officials visited the addresses mentioned in the invoices and did not contact the GST Officials in Delhi to ascertain the proper names and addresses. This submission will not help the petitioners. When the officials went to the addresses mentioned in the invoices and found that no such entity existed, it was sufficient to infer that the invoices were fake, and the material shown to have been supplied as per the invoices could not have been supplied since no such person existed at the given address.”

In view of the above, the bench dismissed the petition.

Case Title: Gagandeep Singh and another v. State of H.P. and another

Case Number: Cr. MMO No. 338 of 2024

Counsel for Petitioner/Assessee: Dinesh Singh Rawat and Anil Chauhan

Counsel for Respondent/Department: Prashant Sen

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