The Allahabad High Court has quashed criminal proceedings against a Gram Pradhan and Gram Panchayat Secretary who were prosecuted under Section 316(5) of the Bharatiya Nyaya Sanhita, 2023 (BNS) over the alleged delayed/non-deposit of ₹8,629 deducted towards GST/TDS from payments relating to Gram Sabha development works.

The bench of Justice Saurabh Srivastava, exercising the Court’s inherent jurisdiction under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), held that the allegations were essentially covered by the statutory framework of the U.P. Goods and Services Tax Act, 2017 (UPGST Act and the prosecution under the subsequently enacted BNS could not be sustained for an alleged occurrence relating to financial year 2017–18.

The bench however, clarified that its order would not prevent the competent authorities from proceeding against the applicants under the UPGST Act, 2017, strictly in accordance with the statutory procedure.

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The proceedings arose from allegations concerning GST/TDS amounts deducted in connection with development works carried out by a Gram Sabha.

The applicants, Pankaj Singh and another, were serving as Gram Pradhan and Gram Panchayat Secretary respectively during the relevant period. Following a complaint before the Lokayukta, an enquiry was conducted. On the basis of the enquiry report, district authorities directed registration of an FIR against the applicants and other co-accused.

Consequently, an FIR dated October 19, 2024 was registered under Section 316(5) BNS.

After investigation, the Investigating Officer submitted a charge sheet dated September 1, 2025. The Chief Judicial Magistrate, Basti thereafter took cognizance and passed the summoning order dated April 2, 2026 in Case No. 1325 of 2026.

The applicants approached the High Court seeking quashing of the charge sheet, cognizance/summoning order and the entire criminal proceedings.

A significant aspect of the case was the relatively narrow nature of the allegation.

According to the applicants, the enquiry and FIR alleged that ₹8,629 relating to GST/TDS deductions on materials purchased for certain Gram Sabha works had not been deposited into the Government account within the prescribed time.

The applicants asserted that after the alleged non-deposit came to their knowledge, they, along with the co-accused, deposited the entire amount into the Government account and submitted the relevant receipts before the competent authority.

They therefore argued that the case did not involve embezzlement, dishonest misappropriation, personal appropriation of Government funds or wrongful gain.

The applicants contended that the UPGST Act is a special and self-contained legislation dealing comprehensively with GST deduction, deposit, assessment, adjudication, penalties and prosecution.

Reliance was placed particularly on Sections 51, 122, 126 and 127 of the GST framework. According to the applicants, any failure to deposit GST/TDS within the prescribed time was specifically regulated by the GST legislation and therefore could not automatically be converted into an offence under the general criminal law.

The applicants also raised a second and independent challenge: the alleged occurrence related to financial year 2017–18, whereas the BNS came into force subsequently. They argued that applying a substantive penal provision of the BNS to an earlier alleged occurrence amounted to impermissible retrospective application of criminal law.

The applicants relied upon the Supreme Court decision in Sharat Babu Digumarti v. Government of NCT of Delhi and the Allahabad High Court’s decision in Deepu & Others v. State of U.P.

They also pointed out that a co-accused, Tanveer Ashraf, had already obtained an order from the Allahabad High Court quashing the proceedings, with liberty to the authorities to proceed in accordance with the UPGST Act.

The State opposed the application, maintaining that the charge sheet had been filed after investigation and that sufficient material had been collected to proceed against the applicants.

The State also argued that the applicants had admittedly failed to deposit the deducted GST/TDS amount within the prescribed period and that criminal liability could not be ruled out at the stage of proceedings.

However, the Court noted that the State could not dispute the applicants’ detailed submission that the alleged conduct was governed by the UPGST Act, which provides a complete mechanism for adjudication, penalty and prosecution.

This became central to the Court’s determination.

The Court framed two principal questions.

First, whether State authorities could initiate criminal prosecution under the general penal provisions of the IPC/BNS without invoking the penal provisions and mandatory statutory mechanism prescribed under the UPGST Act.

Second, whether an FIR, charge sheet and cognizance under the BNS could legally be sustained when the alleged occurrence related to financial year 2017–18, before the BNS came into force.

The Court observed that the sole allegation was delayed/non-deposit of GST/TDS deducted in relation to Gram Sabha works.

The Court considered the relevant provisions of the GST Act, including: Section 50, dealing with interest on delayed payment of tax; Section 51, dealing with tax deduction at source; Section 122, prescribing penalties for specified GST contraventions; Section 126, laying down general principles governing penalties; and Section 138, dealing with compounding of offences.

Section 51 specifically governs tax deduction by Government departments, local authorities and governmental agencies and requires the amount deducted to be paid to the Government within the prescribed period. The Court also noted that failure by a deductor to pay the deducted tax attracts interest under Section 50 and that determination of the amount in default is governed by the statutory mechanism.

Section 122(1)(v), as considered by the Court, specifically addresses failure to pay to the Government an amount deducted as tax under Section 51. Section 126 additionally embodies the statutory principles concerning penalties for minor breaches and rectifiable omissions made without fraudulent intent or gross negligence.

The Court also took note of Section 138, under which offences under the GST Act can be compounded subject to the statutory conditions. Upon payment of the determined compounding amount, further proceedings in respect of the same offence are barred under the provision.

The Court’s key conclusion was that the GST legislation creates a comprehensive statutory framework governing GST-related defaults.

It observed that the combined reading of the relevant provisions demonstrates that the GST Act regulates matters concerning deduction, collection, deposit, adjudication, interest, penalty, prosecution and compounding of GST liabilities.

The Court held that the legislature had consciously created a complete code to deal with non-deduction, short deduction, delayed deposit and non-deposit of GST amounts.

Importantly, the Court did not hold that general criminal law can never apply where GST-related conduct is alleged. Instead, it drew a distinction between a mere statutory GST default and conduct independently constituting a distinct criminal offence.

According to the Court, where a special statute occupies the field with a comprehensive mechanism, resort to general penal law may be justified where the allegations independently disclose ingredients of offences such as dishonest misappropriation, forgery, fabrication of records, cheating or wrongful gain.

Applying that principle to the facts, the High Court found that neither the FIR nor the charge sheet alleged embezzlement of Government funds, dishonest misappropriation, siphoning of money for personal use, fabrication or manipulation of records, fake transactions, forged documents, dishonest withdrawal or wrongful gain attributable to the applicants.

Instead, the prosecution case was confined to delayed/non-deposit of GST/TDS.

The Court also noted that the amount allegedly not deposited was subsequently deposited into the Government account.

Consequently, the allegations were held to fall squarely within the statutory framework of the UPGST Act rather than the ambit of Section 316(5) BNS. The Court concluded that initiation of criminal prosecution under the general penal law, without resort to the GST statutory mechanism, appeared legally unsustainable.

The High Court also referred to the Supreme Court’s ruling in Sharat Babu Digumarti, observing that where a special statute creates a complete mechanism dealing with offences, penalties and prosecution, resort to general penal law is not permissible in the absence of independent ingredients constituting a separate offence under the general criminal law.

On this basis, the Court found substance in the applicants’ contention that prosecution solely under Section 316(5) BNS, without invoking the statutory mechanism under the GST Act, was legally unsustainable.

The Court separately examined the applicability of the BNS to the alleged conduct.

The alleged GST/TDS default related to financial year 2017–18. However, the FIR was registered on October 19, 2024, the charge sheet was filed on September 1, 2025 and cognizance was taken on April 2, 2026, all under the BNS.

The Court relied upon its earlier decision in Deepu, which considered the applicability of the new criminal laws to occurrences predating their enforcement.

The Court emphasized the distinction between substantive penal law and procedural law. While investigation taking place after enforcement of the new criminal laws may follow the applicable procedural framework, the substantive offence cannot be altered by subsequently enacted penal legislation.

The Court held that the alleged omission occurred during financial year 2017–18.

Accordingly, registration of the FIR under Section 316(5) BNS, filing of the charge sheet under that provision and cognizance taken under the same provision suffered from a manifest legal infirmity because the prosecution had invoked a penal provision that was not in existence on the date of the alleged occurrence.

The Court therefore concluded that prosecution of the applicants under Section 316(5) BNS for the alleged 2017–18 occurrence could not legally be sustained.

In view of both findings, the Court held that continuation of the criminal proceedings would amount to abuse of the process of law.

Exercising its inherent jurisdiction under Section 528 BNSS, the Court quashed: the charge sheet dated September 1, 2025; the cognizance/summoning order dated April 2, 2026; and the proceedings in Case No. 1325 of 2026 arising from Case Crime No. 215 of 2024 under Section 316(5) BNS, insofar as they related to the present applicants.

The Court expressly clarified that its order would not prevent the concerned authorities from proceeding against the applicants under the UPGST Act, 2017, if required, and in strict compliance with the statutory provisions.

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