In a significant ruling that could have broad implications for legal professionals, the Jharkhand High Court has held that advocates and tax practitioners cannot be held liable for verifying the authenticity of documents provided by their clients during the registration of firms. The decision was delivered by Justice Anil Kumar Choudhary while granting anticipatory bail to tax practitioner Satya Prakash Singh in the case Telco P.S. Case No. 104 of 2018 (G.R. No. 2027 of 2018).
Background of the Case
Satya Prakash Singh, a 48-year-old advocate and established tax practitioner, was accused of facilitating the registration of a proprietary firm, P.K. Traders, using allegedly fake and vague documents. The case, registered under Sections 406, 420, 468, 471, and 120B of the Indian Penal Code, along with provisions of the Jharkhand Goods and Services Tax (JGST) Act, alleged that the fraudulent registration enabled significant tax evasion.
The petitioner contended that he had acted in good faith, facilitating the GST registration for his client, and that it was not within his professional duties to independently verify the authenticity of the documents provided. He further clarified that he had no involvement in the misuse of Input Tax Credit (ITC), which was the primary allegation against the co-accused.
Key Legal Issues Addressed
1. Responsibility of Advocates in Verifying Documents:
The court considered whether a legal practitioner or tax consultant is obligated to verify the authenticity of documents submitted by clients for procedural matters like GST registration.
2. Professional Integrity vs. Criminal Liability:
The bench examined whether an advocate could be held criminally liable for alleged fraudulent actions of clients, particularly when there is no evidence suggesting direct involvement or benefit derived from the alleged fraud.
Observations of the Court
Justice Choudhary, in granting anticipatory bail, noted,
“It is neither the duty nor the responsibility of the petitioner to verify the documents which were furnished by his client to him. As an advocate and tax practitioner, the petitioner has acted within his professional capacity.”
The court also took into account that Satya Prakash Singh had cooperated during the investigation and had undertaken to continue cooperating, including providing necessary documentation and ensuring his availability for further inquiry.
Decision of the Court
After hearing arguments from Mr. Amit Kumar Das, counsel for the petitioner, and Mr. Pankaj Kumar, representing the State, along with Mr. Ranjan Kumar, counsel for the complainant, the court concluded that the case did not warrant custodial interrogation. It granted anticipatory bail to Satya Prakash Singh on the following conditions:
– Deposit of ₹50,000 as cash security.
– Furnishing bail bonds worth ₹25,000 with two sureties of like amount.
– Cooperation with the investigation, including providing a copy of his Aadhaar card and ensuring his mobile number remains unchanged during the pendency of the case.
