The Allahabad High Court, in Tanveer Asharaf v. State of U.P. and Another, considered whether criminal proceedings under the Bharatiya Nyaya Sanhita, 2023 could be initiated for the delayed or non-deposit of GST-TDS without first following the adjudication, penalty and prosecution mechanism prescribed under the U.P. Goods and Services Tax Act, 2017. The judgment was delivered on 22 May 2026 in Application under Section 528 BNSS No. 18970 of 2026.
The applicant had served as a Gram Panchayat Secretary. The proceedings arose from an allegation that GST-TDS of ₹8,629, deducted from payments relating to Gram Sabha development works, had not been deposited in the Government account within the prescribed time. Following an enquiry initiated on a complaint before the Lokayukta, an FIR was registered under Section 316(5) of the Bharatiya Nyaya Sanhita. A charge sheet was subsequently filed, and the Chief Judicial Magistrate took cognizance and issued a summoning order.
The applicant contended that the amount had been deposited immediately after the alleged default came to notice and that there was no allegation of embezzlement, dishonest misappropriation, fabrication of records, personal gain or diversion of Government funds. It was further argued that the GST legislation constitutes a complete and self-contained special statute covering tax deduction, delayed payment, determination of default, interest, penalty, prosecution and compounding.
GST: Special Statutory Mechanism for TDS Defaults
The High Court examined Sections 50, 51, 122, 125, 126 and 138 of the U.P. GST Act. It noted that Section 51 specifically governs tax deduction at source and requires the amount deducted to be deposited within the prescribed period. A failure to deposit the deducted amount attracts statutory interest under Section 50, determination under the adjudication provisions and penalty under Section 122.
The Court observed that the GST Act provides a comprehensive mechanism for dealing with non-deduction, short deduction, delayed deposit and non-deposit of GST-TDS. This mechanism extends to the determination of liability, levy of interest and penalty, prosecution and compounding of offences. Therefore, where the allegation is confined to a GST-TDS default, the authorities must ordinarily proceed under the special statutory framework.
The Court clarified that recourse to general criminal law may still be justified where the allegations independently disclose the ingredients of distinct criminal offences, such as dishonest misappropriation, forgery, fabrication of records, cheating, siphoning of funds or wrongful personal gain. In the present case, however, neither the FIR nor the charge sheet contained such allegations.
General Penal Law Cannot Replace the GST Procedure
On examining the prosecution record, the Court found that the allegation against the applicant was limited to the delayed or non-deposit of the deducted GST-TDS amount. The amount was subsequently deposited in the Government account, and no material indicated that it had been dishonestly retained or used for personal benefit.
The Court accordingly held that the matter fell within the statutory framework of the U.P. GST Act. Initiation of prosecution solely under Section 316(5) of the BNS, without resorting to the mechanism prescribed under the GST law, was therefore legally unsustainable.
The judgment reinforces the principle that when a special enactment creates a complete framework for dealing with a specified statutory default, the general penal law should not ordinarily be invoked unless the factual allegations constitute a separate and independently punishable criminal offence.
Retrospective Application of the Bharatiya Nyaya Sanhita
A separate issue arose because the alleged default related to the financial year 2017–18, while the FIR, charge sheet and cognizance order invoked the Bharatiya Nyaya Sanhita, 2023.
The High Court distinguished between substantive penal law and procedural law. It observed that although an investigation undertaken after the commencement of the new criminal laws may follow the procedure prescribed under the Bharatiya Nagarik Suraksha Sanhita, the substantive offence must be determined according to the penal law applicable on the date of the alleged occurrence.
Since Section 316(5) of the BNS was not in force during the financial year 2017–18, prosecution under that provision suffered from a fundamental legal infirmity. A subsequently enacted substantive penal provision could not be applied retrospectively to an alleged omission occurring before its enforcement.
Decision of the Allahabad High Court
The High Court held that continuation of the criminal proceedings would amount to an abuse of the process of law. It consequently quashed the charge sheet dated 1 September 2025, the cognizance and summoning order dated 2 April 2026, and the criminal proceedings against the applicant.
The Court, however, expressly clarified that its order would not prevent the competent authorities from proceeding against the applicant under the U.P. GST Act, 2017, where legally required, by strictly following the statutory provisions contained in that enactment.
Why Read This Judgment?
This judgment is relevant for advocates, Chartered Accountants, Company Secretaries, tax consultants, GST practitioners, corporate tax teams, Government bodies and local authorities dealing with GST-TDS compliance. It explains the relationship between a special tax statute and general criminal law, identifies the circumstances in which independent criminal prosecution may still be permissible, and reiterates the prohibition against retrospective application of substantive penal provisions.