Unscrupulous Litigants Should Not Go Scot-Free: Supreme Court

Case title: Dinesh Gupta vs The state of Uttarpradesh

Case no.: S.L.P.(Crl.) No.3343 of 2022

Decided on: 11.01.2024

Quorum: Hon’ble Justice Vikram Nath, Hon’ble Justice Rajesh Bindal


Owner of M/s D.D. Global Capital Pvt. Ltd., Karan Gambhir has filed a First Information Report (FIR) against Sushil, Rajesh, Dinesh, Baljeet Singh, and other individuals. Among the private limited companies implicated are BDR, Gulab Buildtech, and Verma Buildtech. To reverse the summons order and FIR, Dinesh and Rajesh Gupta filed a petition in High Court. According to the complaint, Karan’s business gave Gulab Buildtech and Verma Buildtech short-term loans that were later converted into debt equity with the promise of large returns.

Despite purportedly forging a share pledge agreement, the complainant was able to secure a sizeable shareholding. Unannounced approval of amalgamation plans decreased the company’s ownership stake. Lawsuit after the accused disregarded the complainant’s requests for loan repayment. IPC Sections 420, 467, and 120-B are the subject of a charge sheet that the police have filed. The appeals took place after the High Court denied the petitions to set aside the summoning order and FIR.


The appellant contended that a purely civil dispute involving financial transactions between corporations is being framed as a criminal case. Despite the fact that the company has no connection to Gautam Budh Nagar and that all transactions between the parties took place in New Delhi, the complaint was filed in Gautam Budh Nagar.


They claimed that the accused, working together, defrauded the complainant of crores of rupees by falsely promising higher returns. The High Court’s order contains no errors. The appeals are well-deservedly dismissed.


The court determined that if the FIR in question is pursued further, it will constitute an absolute abuse of court process. This is a clear case of malicious prosecution. Regardless of the commercial nature of the dispute, a criminal complaint was filed and a FIR was registered. Abuse of power and legal machinery undermines public trust in the judiciary. FIR and criminal proceedings were quashed, and the complainant was fined ₹25 lakhs to prevent future abuse of judicial remedies.

The court ruled that the respondents should be subject to stringent terms and conditions, including costs. It’s time to firmly examine any lawsuits that have been started and are riddled with deceit, secrecy, and forum shopping. Even state actions or the conduct of government servants who are parties to such malicious litigation should be severely reprimanded. Turning a civil matter into a criminal case not only overburdens the criminal justice system, but also violates the principles of fairness and proper legal conduct.


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Written by – Surya Venkata Sujith


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A penalty of Rs 25 lakhs has been imposed on the complainant for employing ‘unscrupulous litigation tactics’: Supreme Court

Case Title: Dinesh Gupta v. State Of Uttar Pradesh & Anr.

Case No: S.L.P.(Crl.) No.3343 of 2022

Decided on: 11th January, 2024


Facts of the Case

In the current scenario, the respondent lodged an FIR against, among others, the promoters of three companies, alleging forgery and cheating. According to the complainant, their company was persuaded to provide short-term loans to the accused companies. The Chief Judicial Magistrate of Gautam Budh Nagar issued the summons. Disputing this, the accused individuals/appellants sought relief from the High Court, which, upon dismissal, led to the filing of the current appeal.


The central issue in this case involves the appeal against the summoning order issued by the Chief Judicial Magistrate in response to an FIR filed by the respondent, alleging forgery and cheating in connection with short-term loans extended to the accused companies.

Legal Provision

As per the Section 463 of the Indian Penal Code, 1860: Whoever makes any false document or false electronic record or part of a document or electronic record, with intent to cause damage or injury, to the public or to any person, or to support any claim or title, or to cause any person to part with property, or to enter into any express or implied contract, or with intent to commit fraud or that fraud may be committed, commits forgery.

Section 415 of the Indian Penal Code, 1860 states that whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property, to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to “cheat”.

Court’s analysis and decision

The Supreme Court strongly criticized a litigant for abusing the legal system by filing a false and frivolous complaint without disclosing essential facts. The Court rebuked the respondent for engaging in forum shopping and filing an FIR against the appellants despite the commercial nature of the dispute. Justices Vikram Nath and Rajesh Bindal, constituting a Division Bench, imposed a cost of ₹25 lakhs on the respondent, condemning such abuse of power.

The Court, expressing disdain for unscrupulous litigants, emphasized the need to prevent them from evading accountability. Addressing the issue of false jurisdiction, the Supreme Court pointed out that the FIR was registered in Noida, while the registered offices of the involved companies were in Delhi. The Court characterized this as a manipulative form of forum shopping, raising serious doubts about the complainant’s credibility.

The Court criticized the Trial Court’s order, stating that it lacked thoughtful consideration while taking cognizance and issuing summons to the accused. It noted the complainant’s concealment of material facts and the fabrication of a false narrative of document forgery, attributing it to a criminal act. The Court recorded its disapproval, stating that the respondent had opted for criminal charges with a motive for personal vengeance rather than seeking genuine justice.

The Court highlighted the conversion of a civil matter into a criminal case, stressing that it not only burdens the criminal justice system but also violates principles of fairness and proper legal conduct. The Court expressed concern about the damage to trust in the legal system and the potential harmful precedent set by such misuse of criminal proceedings.

Additionally, the Court noted that a short-term loan given in 2010 remained unaddressed until the filing of the FIR after 8 years and 7 months. It opined that these circumstances revealed the malicious intentions of the complainant, deliberately causing substantial delay for opportune moments to initiate baseless litigation.

Concluding that it was a clear case of malicious prosecution, the Court dismissed the FIR against the appellants.

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Written by- Afshan Ahmad

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EGS employees not liable to file an Industrial dispute for termination of employment, but is entitled to compensation : Bombay HC

TITLE : Ashok Bhikanrao Deshmukh v The State of Maharashtra

CITATION : W.P 2149 of 2011

CORAM : Hon’ble justice Ravindra V. Ghuge and Hon’ble Justice Y.G. Khobragade

DATE:  28th November, 2023


A writ of Certiorari and Mandamus was filed by the petitioner regarding his termination of employment against the state.


The petitioner was appointed on the Employment Guarantee Scheme on 1985 and he was terminated on 1987 orally. He raised an industrial dispute in 1994 and the labour court subsequently quashed the termination order and granted reinstatement. The state filed a writ against the impugned award of the labour court, which was then reversed by the single bench judge. However, it was observed by the court that if the petitioner is eligible, he may be considered for Government resolution of 1995. The state deemed him ineligible as he was not employed on 1993.


It was argued that when the Government resolution scheme was analysed by the Supreme Court, the cut off date was of 1993 and on continuous service. The court has consistently held that EGS recruitments are not continuous employment nor they can raise an Industrial Dispute. But relying upon the judgement of Supreme Court in the matter of Assistant Engineer v Mohanlal, that the employee may be granted of monetary compensation.

The court granted 2,00,000 as compensation for the mere fact that he has been litigating for 37 years as now and has turned 60 years old.

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Written by- Sanjana Ravichandran

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Goods and service tax litigation


GST Litigation means a unified tax system that has replaced multiple indirect taxes imposed by both the Central and State Governments. This new tax structure grants authority to both the Central and State Governments to impose and collect taxes on goods and services. The primary aim of implementing GST is to enhance the efficiency of tax collection, reduce corruption, and simplify inter-state movement of goods. GST serves as an indirect tax, effectively replacing various indirect taxes in India, including excise duty, VAT, and services tax. The Goods and Services Tax Act was enacted by the Parliament on March 29, 2017, and was implemented on July 1, 2017. GST is levied on the supply of goods and services, operating as a comprehensive, multi-stage, destination-based tax that is imposed at each value addition

 the litigation related to GST including – carry forward of transitional credits from the previous indirect tax system, eligibility for input tax credit on various goods/services and denial of refund claims, non or short payment of output tax liability – comes under the umbrella of GST Litigation.

.Crucial facts about GST

  • France was the first country to impose the Goods and Services Tax (GST).
  • The GST in India is modeled after the one in Canada.
  • The Vijay Kelkar Committee recommended that GST be implemented in India.
  • The Goods and Services Tax (GST) was imposed in India on July 1, 2017.
  • Assam was the first state to implement the GST.
  • GST has appointed Amitabh Bachchan as its brand ambassador.
  • The GST was enacted by Article 279 of the Indian Constitution.
  • In September 2016, the President of India established the GST Council.
  • The GST Council is now chaired by Finance Minister Arun Jaitley.
  • The GST Council currently has 31 members.

Important features of GST

  • Goods and Services Tax (GST) is a comprehensive indirect tax levied on the supply of goods and services in India. Here are some of the salient features of GST:
  • One Nation, One Tax: GST replaced multiple indirect taxes levied by the Central and State Governments, such as excise duty, service tax, value-added tax (VAT), and others. It brought uniformity in the tax structure across India, eliminating the cascading effect of taxes.
  • Dual Structure: GST operates under a dual structure, comprising the Central GST (CGST) levied by the Central Government and the State GST (SGST) levied by the State Governments. In the case of Inter-state transactions, Integrated GST (IGST) is applicable, which is collected by the Central Government and apportioned to the respective State. Import of goods or services would be treated as inter-state supplies and would be subject to IGST in addition to the applicable customs duties.
  • Destination-based Tax: GST is a destination-based tax, levied at each stage of the supply chain, from the manufacturer to the consumer. It is applied to the value addition at each stage, allowing for the seamless flow of credits and reducing the tax burden on the end consumer.
  • Input Tax Credit (ITC): GST allows for the utilization of input tax credit, wherein businesses can claim credit for the tax paid on inputs used in the production or provision of goods and services. This helps avoid double taxation and reduces the overall tax liability.
  • GST would apply to all goods and services except Alcohol for human consumption. GST on five specified petroleum products (Crude, Petrol, Diesel, ATF & Natural Gas) would be applicable from a date to be recommended by the GSTC. Tobacco and tobacco products would be subject to GST. In addition, the Centre would have the power to levy Central Excise duty on these products. Exports are zero-rated supplies. Thus, goods or services that are exported would not suffer input taxes or taxes on finished products.
  • Threshold Exemption: Small businesses with a turnover below a specified threshold (currently, the threshold is ₹ 20 lakhs for suppliers of services/both goods & and services and ₹ 40 lakhs for suppliers of goods (intra–Sate) in India) are exempt from GST. For some special category states, the threshold varies between ₹ 10-20 lakhs for suppliers of goods and/or services except for Jammu & Kashmir, Himachal Pradesh, and Assam where the threshold is ₹ 20 lakhs for a supplier of services/both goods & services and ₹ 40 lakhs for a supplier of goods (Intra–Sate). This threshold helps in reducing the compliance burden on small-scale businesses.
  • Composition Scheme: The composition scheme is available for small taxpayers with a turnover below a prescribed limit (currently ₹ 1.5 crores and ₹ 75 lakhs for special category states). Under this scheme, businesses are required to pay a fixed percentage of their turnover as GST and have simplified compliance requirements.
  • Online Compliance: GST introduced an online portal, the Goods and Services Tax Network (GSTN), for registration, filing of returns, payment of taxes, and other compliance-related activities. It streamlined the process and made it easier for taxpayers to fulfill their obligations.
  • Anti-Profiteering Measures: To ensure that the benefits of GST are passed on to the consumers, the government established the National Anti-Profiteering Authority (NAA). The NAA monitored and ensured that businesses did not engage in unfair pricing practices and profiteering due to the implementation of GST. All GST anti-profiteering complaints are now dealt with by the Competition Commission of India (CCI) from 1st December 2022.
  • Increased Compliance and Transparency: GST aims to enhance tax compliance by bringing more businesses into the formal economy. The transparent nature of the tax system, with the digitization of processes and electronic records, helps curb tax evasion and increase transparency.
  • Sector-specific Exemptions: Certain sectors, such as healthcare, education, and necessities like food and grains, are either exempted from GST or have reduced tax rates to ensure affordability and accessibility.
  • Accounts would be settled periodically between the Centre and the States to ensure that the credit of SGST used for payment of IGST is transferred by the Exporting State to the Centre. Similarly, IGST used for payment of SGST would be transferred by the Centre to the Importing State. Further, the SGST portion of IGST collected on B2C supplies would also be transferred by the Centre to the destination State. The transfer of funds would be carried out based on information contained in the returns filed by the taxpayers.

Landmark cases on GST laws

Case Details: Union of India v. Mohit Minerals (P.) Ltd. (2022 SCC OnLine SC 657…)

Facts of the Case

The assessee had challenged the IGST levy on a reverse charge basis on the Ocean Freight in respect of the import of goods under CIF contracts for which it was already paying the IGST at the time of import with the value of imported coal under the Customs laws. The Hon’ble Gujarat High Court held that the IGST levy on ocean freight is ultra-vires the levy provisions of the IGST Act. Against the said order, the Government filed the appeal before the Apex Court.

The Apex Court has observed that the ocean freight from a foreign location to a customs station in India in CIF import contracts has sufficient territorial nexus for levying IGST under reverse charge. On an interpretation of Sections 5(3) and 5(4) of the IGST Act, read with Section 2(93) of the CGST Act, the importer can be classified as the ‘recipient’ of the services. On this interpretation, the validity of the notifications levying GST under RCM on ocean freight has to be upheld.

Supreme Court Held

The Apex Court held that there is no legal fiction or power to bifurcate the composite supply into the supply of goods and supply of services and to levy reverse charge GST on the supply of services component under section 5(4) of the IGST Act. Given this, the GST on a reverse charge basis can’t be levied on ocean freight in CIF contracts as it is part of ‘composite supply’ attracting section 2(30) and section 8 of the CGST Act.

Given the above, it was held that the impugned notifications are validly issued under Sections 5(3) and 5(4) of the IGST Act, but it would violate Section 8 of the CGST Act and the overall scheme of the GST legislation as no such power can be noticed concerning interpreting a composite supply of goods and services as two segregable supply of goods and supply of services.

Some crucial sections of the GST act

1                 7    Meaning & Scope of Supply
2 9 Levy and Collection of CGST on Intra-State Supply
3 12  Time of Supply of Goods
4 13 Time of Supply of Services
5 15 Value of Supply of Goods & Services
6 16  Eligibility and conditions for taking input tax credit
7 17(5) ITC is not allowable on certain supplies (Blocked Credit)
8   18  ITC in Special Circumstances

My analysis and view

According to my analysis of the implementation of a fresh act, some disturbances are expected in its first days it is yet to be seen how innovation and the right set of plans can help with new compliances and over the route of expanding the economy.


Managing tax litigation in India, especially indirect tax (GST) litigation, can be a complex and challenging process. However, by staying informed on the latest GST laws, maintaining accurate records, seeking professional advice, and following the steps involved in the litigation process, businesses can effectively navigate GST disputes and minimize the risks associated with non-compliance.

Written by

Kaulav Roy Chowdhury