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Judgment
G.M. Akbar Ali, J.—By consent of both sides, the matter is taken up for final hearing.
The petition is filed seeking a direction to call for the records in C.C. Nos. 21 and 22 of 2009 on the file of the learned Judicial Magistrate, Mahe
under Sections 49(2)(a) of Puducherry General Sales Tax Act, Rules 14 and 16 of the CST (Pondicherry) Rules read with 193, 409, 468 Indian
Penal Code and quash the same.
The Petitioners are the partners of Surya Service Station, a retail outlet of Petrol, Diesel and Petroleum products at Palloor, Mahe, Union
Territory of Pondicherry. They are registered under Pondicerry General Sales Tax Act 1967, under the Central Sales Tax Act 1957 and under the
Puducherry Value Added Tax Act 2007. They are liable for Commercial Tax for the total and taxable turn over. The partnership firm (hereinafter
referred as ""Firm) filed a return of annual turn over in Form-A-1 for the year 2000-2001 and also for the year 2001-2002.
For the year ended upto 31.3.2001, the Firm reported a total and taxable Turnover of Rs. 4,18,85,213.56 with tax due of Rs. 50,25,809.52.
For the year ended up upto 31.3.2002, a taxable turnover of Rs. 4,32,53,519.15 with tax due of Rs. 51,90,422.28 was filed.
On placement of relevant returns and books of accounts and also the ''C'' forms the Commercial Tax Officer, Mahe accepted the returns and
books of accounts and passed an Assessment Order 0n 5.1.2005 for both the assessment years.
However, acting on a tip off, the Respondent, Commercial Tax Officer, Mahe obtained Form C declaration from M/s Hindustan Petroleum
Corporation, Chennai on 29.12.2008. The Form ""C"" would reveal that the firm had purchased the petrol, diesel and petroleum products for the
value of Rs. 7,78,30,704.92 for the year 2000-2001 and for Rs. 7,38,74,437.58 for the year 2001-2002.
Therefore, the Respondent found the actual purchase and turn over was not shown by the Petitioners in their returns. A huge unexplained
difference of Rs. 3,47,03,278.26 for the year 2000-2001 and a sum of Rs. 2,29,34,144.31 was the difference and thereby they have suppressed
the purchase and sale with a view to defraud the Government.
The Respondent had filed a detailed complaint for the offence punishable under Rule 14 and 16 of CST (Pondicherry) Rules 1967 and Section
49 (2) (a) of the Pondicherry General Sales Tax Act 1967 read with Section 81 of the Puducherry Value Added Tax Act 2007 and also under
Sections193, 409, 468 read with 34 of Indian Penal Code.
The learned Judicial Magistrate at Mahe had taken cognizance of the complaint in C.C. Nos. 21 and 22 of 2009. Aggrieved by which, the
partners of the Firm have preferred the present petitions u/s 482 Code of Criminal Procedure to quash the proceedings on the following grounds:
The assessment was finalised and the order was passed on 5.1.2005. As per Section 18(1) of the Pondicherry General Sales Act 1967
(hereinafter referred to Act 1967), proceedings for escape turn over shall be initiated within five years from the order to which the tax relates.
Therefore, the Respondent ought to have initiated proceedings on or before 31.3.2007. Therefore, it is barred by limitation.
The ""C"" Form is issued while purchasing a product from other States and
it is not a property within the meaning of Section 409 of Indian Penal Code and there is No. question of criminal breach of trust.
4 The allegation that the returns were submitted with incorrect particulars will not attract forgery and there is No. question of attracting an offence
u/s 468 of Indian Penal Code.
4 Similarly, an offence u/s 193 Indian Penal Code would not be attracted as the Petitioner had not furnished wrong returns.
The assessment order was passed on 5.1.2005 and subsequently, Pondicherry General Sales Tax Act itself was replaced by the Puducherry
Value Added Tax Act, 2007. Therefore, the Respondent cannot invoke the provisions of Section 49 (2) (a) of the Act 1967 as the same was
repealed.
Invoking Section 81 of Puducherry Value Added Tax Act 2007 is not correct as the said provision is not a substantive provision and it is only
repeal and savings provision.
The complaint is not maintainable u/s 52(2) of the Act 1957.
Reiterating the above grounds, Mr. R. Yasod Vardhan, learned senior counsel for the Petitioner would submit that the Respondent has invoked
the offences under the Indian Penal Code only to get over the point of limitation and the Respondent is not an authorised officer to file a complaint
invoking the provisions of Indian Penal Code. The learned senior counsel pointed out that when Act 1967 itself is repealed, filing a complaint under
the repealed act is not maintainable.
The learned senior counsel further submitted that taking cognizance by the Magistrate without following the provisions of Section 200 Code of
Criminal Procedure is not legal and the Respondent is not empowered under the Act to file a private complaint invoking criminal offences.
The learned Counsel relied on a decision reported in Jeewan Kumar Raut and Another Vs. Central Bureau of Investigation,
Countering the arguments, Mr. T.P. Manoharan, the learned Special Public Prosecutor for Pondicherry would submit that the Petitioners have
defrauded the Government by suppressing the total turn over of more than Rs. 3 crores per year and therefore, appropriate action has been taken
by the Respondent. He further submit that petroleum products carry tax added prices and the Petitioners having sold the products along with tax
and have collected the tax and in breach of trust, they have not shown the correct account.
The learned Special Public prosecutor would further submit that by filing forged ""C"" forms and incorrect returns, the Petitioners have
committed the alleged offences for which they are liable to be prosecuted. The provisions of Act 1967 and the provisions of the Act 2007 are
similar and therefore, invoking the provisions of the General Sales Tax Act 1967 is proper. The learned Special Public Prosecutor relied on the
following case laws:
i) K. Ashoka Vs. N.L. Chandrashekar and Others,
ii) National Small Industries Corporation Ltd. Vs. State (NCT of Delhi) and Others,
iii) Dy. Chief Controller of Imports and Exports Vs. Roshanlal Agarwal and Others,
Heard and perused the materials available on record.
The Petitioners are the partners in the firm which deals with petrol products. The petroleum products particularly petrol and diesel are
subjected to administer pricing mechanism of the Ministry of Petroleum and Natural Gas and the price charged on their sales are inclusive of
taxes. Therefore, the total turn over of petroleum sales are subjected for sales tax. The firm is registered under the Pondicherry General Sales Tax
Act 1967 (Act of 1967) under the Central Sales Tax Act of 1956 (Act of 1956)and after the repeal of Act 1967, under the Puducherry Value
Added Tax 2007 (VAT 2007).
The Petitioners have filed return for the annual turn over for the year 2000-2001 and 2001-2002 before the Commercial Tax Officer, Mahe.
They have also produced the books of accounts to determine the total and taxable turn over and to assess the tax due. Accordingly, for the year
2000-2001 a sum of Rs. 4,18,85,213.56 was shown as taxable turn over and the tax was assessed at Rs. 50,25,809.52.
Similarly, for the year 2001-2002 a sum of Rs. 4,32,53,519.15 was shown as taxable turn over and the tax was fixed at Rs. 51,90,422.28.
Admittedly, the assessment order was passed on 5.1.2005.
According to the complainant, he obtained Form C declaration from M/s. Hindustan petroleum Corporation Limited from where the firm has
purchased Petroleum Products. The form ""C"" for the year 2000-2002 would reveal the total purchase of 7,78,30,704.92 and for the year 2001-
2002 the value was Rs. 7,38,74,437.58.
Therefore, the commercial tax officer found a huge difference of a sum of Rs. 3,47,03,278.26 for the year 2000-2001 and Rs.
2,29,34,144.31 for the year 2001-2002. According to the complainant, these two amounts are liable for tax and the firm as well as the partners
had concealed the turn over of Petroleum Products for the year 2001-2002 resulting in evasion of sales tax and thus committed the offence
punishable u/s 49(2)(A) of Act 1967 r/w Section 81 of Act 2007.
The complainant has further alleged that the firm had committed an offence of fabricating false evidence as defined u/s 192 of Indian Penal
Code punishable u/s 193 of Indian Penal Code R/W 34 Indian Penal Code. The complainant had also alleged that the firm has committed criminal
breach of trust which is punishable u/s 409 Indian Penal Code, cheating and forgery for an offence u/s 468 Indian Penal Code.
What is challenged before this Court is that the complainant cannot invoke the penal offences and cannot prosecute for an offence
under the repealed Act of 1967. However, the complainant has stated that the complaint is not barred by limitation as it is a continuing offence and
he is also authorised to initiate proceeding u/s 63 of Act 2007.
The Pondicherry General Sales Tax Act 1967 was in vogue governing the assessment proceedings of the Petitioner''s firm for the year 2000-
2002. It is admitted that the firm has filed its turn over and an assessment order has also been passed by the Respondent as early as 5.1.2005.
The Puducherry Value Added Tax Act 2007 came into force with effect from 3.12.2007. u/s 81 of the Act, the Pondicherry General Sales
Tax Act 1967 (Act 6 of 1967) was repealed. However, any action or proceedings already initiated under the repealed Act was saved by the
saving clause.
Chapter IV of Act 9 of 2007 deals with assessment. Section 30 which is corresponding to Section 18 of the old Act deals with assessment of
escaped turn over. Section 30 reads as follows:
Assessment of escaped turnover:
(1) Where, for any reason, the whole or any part of turn over of business of a dealer has escaped assessment to tax, the Assessing Authority may,
subject to the provisions of Sub-section (3), at any time within a period of five years from the expiry of the year to which the return under this Act
relates, determine to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover after making
such enquiry as it may consider necessary and after giving the dealer a reasonable opportunity to show cause against such assessment.
(2) Where, for any reason, the whole or any part of the turnover of business of a dealer has been assessed at a rate lower than the
rate at which it is assessable, the Assessing Authority may, at any time within a period of five years from the expiry of the year to which the return
under this Act relates, re-assess the tax due after making such enquiry as it may consider necessary and after giving the dealer a reasonable
opportunity to show cause against such re-assessment.
(3) In making an assessment under Sub-section (1), the Assessing Authority may, if it is satisfied that the escape from assessment is due to non-
disclosure of assessable turnover by the dealer, direct the dealer to pay, in addition to the tax assessed under Sub-section (1), a penalty of double
the amount of the tax so assessed.
Provided that No. penalty shall be imposed under this section unless the dealer affected has had a reasonable opportunity of showing cause against
such imposition.
(4) The powers under Sub-section (1) or Sub-section (2) may be exercised by the Assessing Authority even though the original order of
assessment, if any, passed in the matter has been the subject matter of an appeal or revision.
(5)In computing the period of limitation for assessment or re-assessment under this section, the time during which the proceedings for assessment
or re-assessment remained stayed under the orders of a Civil Court or other Authority shall be excluded.
Chapter VIII deals with offences and penalty. Section 59 of the New Act is corresponding to Section 49 of the old Act. Sub Clause (2) (a) of
Section 59 reads as follows:
Offences and Penalties:
(1)...
(2) Any person who,
(a) wilfully submits an untrue return, or, not being already an Assessee under this Act, fails to submit a return as required by the provisions of this
Act or the Rules made thereunder.
The maximum punishment for submitting an untrue return is upto six months or a fine of Rs. 3,000/-.
Therefore, if there is a turn over which escaped assessment prior to 3.12.2007, Section 18 of the Act 6 of 1967 is applicable. However, there
is a limitation of five years for the assessing authority to determine the escaped assessment and assess the tax payable on such turn over. The five
years expire from the year to which the return relates to, i..e, if the return is filed for the year 2000-2001, the five years expire on March 2006.
Likewise for the year 2001-2002, the period expires on March 2007.
The person or the firm who files an untrue return can be prosecuted for an offence u/s 59 (corresponding to 49 of the old Act), but the
maximum punishment is six months. u/s 468 of the Code of Criminal Procedure, the limitation for taking cognizance is one year, if the offence is
punishable with imprisonment for a term not exceeding one year and the period shall commence from the date of the offence.
Therefore, if it is found that the Assessee has not shown the correct turn over, Section 18 of the old Act or Section 30 of the new Act will
come into play for an assessment on the escaped turn over subject to limitation of five years. For an offence u/s 49 of the old Act, corresponding
to Section 59 of the new Act for filing an untrue return, a criminal prosecution can be launched provided within a period of one year from the date
of the commencement of the offence.
u/s 63 of the New Act, No. court shall take cognizance of an offence under the Act or Rules except with the previous sanction of the
Commissioner. Therefore, the previous sanction of the Commissioner is required to launch a prosecution only for any offence under the Act or
Rules.
The penal offences are not included. Section 193 of Indian Penal Code deals with punishment for false evidence. Section 193 Indian Penal
Code reads as follows:
Punishment for false evidence: Whoever intentionally gives false evidence in any stage of a judicial proceeding, or fabricates false evidence for
the purpose of being used in any stage of a judicial proceeding, shall be punished with imprisonment of either description for a term which may
extend to seven years, and shall also be liable to fine;
and whoever intentionally gives or fabricates false evidence in any other case, shall be punished with imprisonment of either description for a term
which may extend to three years, and shall also be liable to fine.
Section 409 Indian Penal Code deals with criminal breach of trust by public servant, banker, merchant or agent. Section 468 deals with an
offence of forgery for the purpose of cheating. The offences under the penal code are distinct from the offence mentioned in both the Old and New
Act.
For an escaped turnover, a distinct provision is given under the Act and for filing untrue returns and a distinct offence is made under the Act.
If any assesse escapes any turn over, an assessment can be imposed for the escaped turn over subject to five years limitation. A criminal
prosecution can be launched for filing untrue returns subject to one year limitation.
In the present case, the Respondent had found out that the firm and its partners have filed an untrue return and the same is found out
only on 29.12.2008, much after the period of five years. Therefore, the prosecution either u/s 49 of the Old Act or 59 of the New Act is barred by
limitation.
Now let us see whether the Respondent has made out a case for an offence u/s 193, 409 and 468 Indian Penal Code. To constitute an offence
u/s 193 of I.P.C. there must be an intension to give false evidence in a judicial proceedings.
Likewise, to invoke an offence u/s 409 I.P.C. there must be entrustment of a property to attract criminal breach of trust. To attract an offence
u/s 468 Indian Penal Code a forgery has to be established as defined u/s 363. The grievance of the complainant is that the Petitioners have not
disclosed the actual turn over for a particular taxable period. The filing of an untrue return will attract only an offence under the provisions of the
Act 6 of 1967.
By invoking offences u/s 193, 409 and 468 Indian Penal Code,the complainant cannot launch a prosecution to avoid the period of limitation to
initiate criminal proceedings.
Mr. T.P. Manoharan, learned Additional Public Prosecutor relied on a decision reported in National Small Industries Corporation Ltd. Vs.
State (NCT of Delhi) and Others, wherein the Apex Court has held as follows:
The object of Section 200 of the Code requiring the complainant and the witnesses to be examined, is to find out whether there are sufficient
grounds for proceeding against the accused and to prevent issue of process on complaints which are false or vexatious or intended to harass the
persons arrayed as accused (See Nirmaljit Singh Hoon v. State of W.B) Where the complainant is a public servant or court, Clause (a) of the
proviso to Section 200 of the Code raises an implied statutory presumption that the complainant has been made responsibly and bona fide and not
falsely or vexatiously. On account of such implied presumption, where the complainant is a public servant, the statute exempts examination of the
complainant and the witnesses, before issuing process.
However, considering the facts of the case, the above decision is not applicable to the case on hand.
He also relied on a decision reported in Dy. Chief Controller of Imports and Exports Vs. Roshanlal Agarwal and Others,
The High Court has gone to the extent of saying that as the Deputy Chief Controller of Imports and Exports had not been examined as a
witness the procedure prescribed by Section 200 Code of Criminal Procedure had not been followed and, therefore, the order passed by the
Magistrate taking cognizance of the offences was illegal. With respect, we find it difficult to comprehend the aforesaid reasoning of the High Court.
Section 6 of the Imports and Exports (Control) Act provides that No. court shall take cognizance of any offence punishable u/s 5 except upon a
complaint in writing made by an officer authorised in this behalf by the Central Government by a general or a special order. That the Deputy Chief
Controller of Imports and Exports had been so authorised by the Central Government is not in dispute. Proviso(a) to Section 200 Code of
Criminal Procedure lays down that if a public servant acting or purporting to act in the discharge of his official duties has made the complaint in
writing, the Magistrate need not examine the complainant and the witnesses. In view of the twelfth clause of Section 21 Indian Penal Code which
provides that every person in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty
by the Government shall be a public servant, the Deputy Chief Controller of Imports and Exports is a public servant. It is also not the case of the
accused-Respondents that the Deputy Chief Controller of Imports and Exports is not a public servant. The complaint was filed by him in discharge
of his official duty. The learned Magistrate was, therefore, fully justified in taking cognizance of the offences without recording the statement of the
complaint.
He also relied on K. Ashoka Vs. N.L. Chandrashekar and Others, ,wherein the Hon''ble Supreme Court has held as follows:
It is now a well-settled principle of law that the High Court in exercise of its inherent jurisdiction u/s 82 of the Code may quash a criminal
proceeding inter alia in the event the allegations made in the complaint petition even if they are taken at their face value and accepted in their
entirety does not disclose commission of a cognizable offence. Some of the principles which would be attracted for invoking the said jurisdiction
have been laid down in Indian Oil Corpn v. NEPC India Ltd are
(i) A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety,
do not prima facie constitute any offence or make out the case alleged against the accused For this purpose, the complaint has to be examined as a
whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of
the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint.
ii) A complaint may be also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been
initiated with malafides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.
iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with
abundant caution.
iv) The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the
complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the
complaint is warranted only where the complainant is so bereft of even basic facts which are absolutely necessary for making out the offence.
v) A given set of facts may make out: (a) purely a civil wrong: or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A
commercial transaction or a contractual dispute apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal
offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a
commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the
criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or note.
However, in my considered view initiation of criminal proceedings for a time barred escaped turnover and invoking penal provisions are
nothing but abuse of process of law and No. offence could be made out even the entire allegation is taken to be true on its face value.
Section 81 of the Act 9 of 2007 is not applicable as the proceedings were not initiated and pending when the old Act was repealed. The entire
complaint is misconceived and such prosecution is nothing but abuse of process of law.
Therefore, the proceedings are liable to be quashed.
In the result, the criminal original petition is allowed and the proceedings in C.C. Nos. 21 and 22 of 2009 on the file of the learned Judicial
Magistrate, Mahe are hereby quashed.