The Chhattishgarh High Court held that while exercising its inherent jurisdiction, the High Court does not function as a trial court and cannot undertake a roving enquiry into the truthfulness, reliability, or admissibility of evidence collected during an investigation.

The Bench emphasized that quashing is an exception rather than the rule, and criminal proceedings cannot be scuttled at the threshold when the charge-sheet discloses a factual foundation that warrants a regular trial.

The Court dismissed a petition filed under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), seeking to quash a 2014 cheating and forgery case involving tax evasion via bogus billing.

The Division Bench of Chief Justice Ramesh Sinha and Justice Ravindra Kumar Agrawal observed, "At this stage, this Court is only required to ascertain whether the allegations contained in the FIR and the material collected during investigation disclose the commission of cognizable offences. The defence sought to be projected by the petitioner, including reliance upon the statements of certain witnesses and the contention that the prosecution case is factually incorrect, cannot be examined in a petition seeking quashment of criminal proceedings. The law is well settled that the High Court, while exercising its inherent jurisdiction, does not function as a trial Court and cannot undertake a roving enquiry into the truthfulness, reliability or admissibility of the material collected during investigation. The veracity of the prosecution case, as also the defence of the accused, must necessarily be tested during the course of trial by leading evidence and subjecting the same to judicial scrutiny."

Advocate Atul Kumar Kesharwani appeared for the Petitioner, while Government Advocate Soumya Rai appeared for the State.

Brief Facts of the Case

The present petition was preferred under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (B.N.S.S.) by the petitioner seeking the quashing of the First Information Report registered at Police Station Civil Lines, District Bilaspur, Chhattisgarh. The said FIR was initially registered against the petitioner for offences punishable under Sections 420 (cheating) and 467 (forgery of valuable security) of the Indian Penal Code, 1860 (IPC).

The prosecution case originated from a written complaint lodged by the Commercial Tax Officer, Bilaspur. It was alleged that the petitioner, as the proprietor of M/s Sai Nath Enterprises, obtained registration under the Chhattisgarh Value Added Tax Act, 2005 (VAT Act) for carrying on business in coal and coke. However, a scrutiny of departmental software data and online returns revealed that various registered dealers had claimed input tax credit on bogus purchases allegedly made from the petitioner’s firm. While the petitioner disclosed sales of approximately ₹47.37 lakhs in his VAT returns, the departmental records reflected transactions worth ₹356.25 lakhs, thereby implying tax evasion to the tune of ₹17.81 lakhs and causing loss to the State exchequer.

Contentions of the Parties

The petitioner contended that the impugned FIR, charge-sheet, and consequential criminal proceedings were wholly illegal, arbitrary, and constituted a gross abuse of the process of law. It was submitted that the entire dispute essentially pertained to alleged discrepancies in tax returns and tax evasion under the Chhattisgarh VAT Act, 2005. Since the VAT Act is a special fiscal enactment providing a complete mechanism for assessment, adjudication, and penal action, the mechanical invocation of IPC offences without resorting to the statutory remedies under the special law was wholly misconceived.

It was urged that the essential ingredients of cheating and forgery were completely absent, as the final report did not contain any material demonstrating the preparation, recovery, or use of any forged documents attributable to the petitioner. It was further pointed out that statements of prosecution witnesses indicated that another individual, was the person actually involved in generating the bogus bills, and that any alleged tax liability had already been discharged, leaving no surviving loss to the State revenue.

Per contra, the State opposed the petition and submitted that the criminal proceedings were initiated strictly in accordance with law after a detailed investigation. It was contended that the material collected during the investigation prima facie disclosed that the petitioner and the co-accused acted in concert pursuant to a criminal conspiracy to cause wrongful loss to the Government and corresponding wrongful gain to themselves.

Regarding the issue of delay, it was argued that the timeline was adequately explained in the final report. It was submitted that the petitioner had absconded after the registration of the crime and shifted outside the State of Chhattisgarh. Despite continuous efforts, his whereabouts could not be traced for a considerable period until he was ultimately apprehended in Pune, Maharashtra, via mobile location tracking. It was concluded that since the charge-sheet disclosed the commission of cognizable offences, the disputed questions of fact and the correctness of the allegations could only be examined during the trial, and therefore, the petition deserved to be dismissed.

Observations of the Court

The High Court observed that the law governing the quashing of criminal proceedings under Section 528 of the BNSS (Section 482 of the Cr.P.C.) was well-settled. Relying on landmark precedents of the Supreme Court, the Court noted that the inherent power to quash an FIR, charge-sheet, or criminal case must be exercised sparingly, with utmost circumspection, and only in the rarest of rare cases.

The Court held that at the stage of considering a quashing petition, it was not permitted to conduct a mini-trial, evaluate the truthfulness of the allegations, or meticulously examine the evidentiary value of witness statements, as such matters fell strictly within the domain of the trial court.

Tested on these established legal principles, the High Court found that the allegations against the petitioner were neither patently absurd nor inherently improbable. The Court noted that the charge-sheet rested on concrete material, including departmental data, statutory returns, bank account details, and witness statements, which prima facie established that the petitioner, in collusion with the co-accused, engaged in fraudulent transactions to cause wrongful loss to the State exchequer.

The Court rejected the principal contention of the petitioner that the dispute was purely fiscal and exclusively governed by the Chhattisgarh Value Added Tax Act, 2005. It held that the mere availability of civil, commercial, or fiscal remedies under a special statute did not bar criminal prosecution under the Indian Penal Code if the allegations prima facie disclosed elements of deception, forgery, and cheating.

Furthermore, the Court deemed the absence of statutory reassessment proceedings under Section 22 of the VAT Act immaterial, clarifying that the prosecution was not based on a mere tax deficiency but on a systematic mechanism of generating bogus invoices to illicitly claim input tax credit.

Addressing the issue of the eleven-year delay in completing the investigation, the Court observed that mere delay could not ground the quashing of a case when cognizable offences were otherwise made out. The Court noted that the timeline was sufficiently explained by the prosecution, as the final report recorded that the petitioner had absconded from the State of Chhattisgarh and was only apprehended in Pune, Maharashtra, in the year 2025.

Finally, the Court observed that the petitioner’s pleas—including the claim that a co-accused was the actual mastermind and that the tax liability had been subsequently discharged—constituted matters of defence involving disputed questions of fact and mixed questions of law, which could only be adjudicated during the trial upon appreciation of evidence.

The Court held, "In the considered opinion of this Court, the present case does not fall within any of the well-recognized categories warranting exercise of extraordinary jurisdiction for quashing criminal proceedings at the threshold. The allegations cannot be said to be so absurd, inherently improbable or patently frivolous that no prudent person could ever reach a conclusion that an offence is made out. On the contrary, the charge-sheet discloses a factual foundation which requires examination by the trial Court."

The High Court concluded that the present case did not fall within any of the exceptional categories warranting judicial interference at the threshold. It held that interfering at this stage would amount to stifling a legitimate prosecution before the evidence could be tested in accordance with the law.

Consequently, the High Court found no merit in the petition and dismissed the same, thereby refusing to quash the FIR, the chargesheet, the order taking cognizance, and the order framing charges.

"Quashing of FIR/charge-sheet/criminal proceeding is permissible only where defence material is unimpeachable, completely rules out prosecution case, remains unrefuted, and continuation of trial would amount to abuse of process. All conditions must be cumulatively satisfied; otherwise, matter must proceed to trial", the Court observed.

The Court, however, clarified that its observations were confined solely to the disposal of the present petition and would not be construed as an expression of opinion on the merits of the case. The trial court was directed to proceed independently and decide the matter strictly in accordance with the law, based on the evidence adduced before it. No order was made as to costs.

Cause Title: Nishant Sahu v. State of Chhattisgarh [Neutral Citation:2026:CGHC:23915-DB]

Appearances:

Petitioner: Advocate Atul Kumar Kesharwani

Respondent: Government Advocate Soumya Rai

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