1979 (3) TMI 181 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether partners of a registered dealer can be prosecuted for failure to comply with a demand made by the Commissioner under the Bengal Finance (Sales Tax) Act, 1941, without the registered dealer being made an accused?
2. Whether the cognizance of an offence under section 22(1)(b) of the Act was barred by limitation in the case where the offence was committed between 1965 and 1972, but cognizance was taken in 1976?

Analysis:

The judgment before the High Court of Calcutta involved the petitioners, partners of a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, seeking to quash proceedings against them in a Metropolitan Magistrate's court. The police had submitted a challan against the petitioners for failing to deposit a security deposit of Rs. 15,000 within the stipulated time, leading to an alleged offence under section 22(1)(b) of the Act. The petitioners contended that since the registered firm had not been made an accused, the partners could not be prosecuted. The Court agreed, emphasizing that the firm should have been made an accused, and without it, the partners could not be held liable for the alleged violation of the Commissioner's order. The Court also noted that the offence was a completed one when the registered dealer failed to comply with the demand, making it a non-continuing offence. Thus, the cognizance taken by the Magistrate was illegal and without jurisdiction, being barred by limitation under the Code of Criminal Procedure.

The judgment further delved into the definition of a dealer under the Act, highlighting that a registered dealer is distinct from a person applying for registration. In this case, the registered firm was the entity to whom the demand was made, and the petitioners were partners of this registered firm. The Court opined that partners could not be vicariously liable for the firm's offence without the firm being an accused. Additionally, the Court rejected the argument that failure to deposit the security deposit was a continuing offence, citing the provisions of the Code of Criminal Procedure to support the finding that cognizance was indeed barred by limitation. The judgment ultimately quashed the proceedings against the petitioners, upholding their contentions and ruling in their favor.

In conclusion, the High Court of Calcutta held that partners of a registered dealer cannot be prosecuted for non-compliance with a demand under the Sales Tax Act without the registered dealer being made an accused. The Court also determined that the cognizance of the offence in question was barred by limitation, as it was a completed offence and not a continuing one. The judgment emphasized the importance of correctly identifying the accused party in legal proceedings and ensuring compliance with procedural limitations to maintain the integrity of the justice system.