2011 (6) TMI 723 - HC - VAT and Sales Tax

Whether the petitioners have defrauded the Government by suppressing the total turnover of more than 3 crores per year and therefore appropriate action has been taken by the respondent? Held that - 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81 of the Act 9 of 2007 is not applicable as the proceedings were not initiated and pending when the old Act was repealed.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.

Summary

Issues Involved:
1. Limitation period for initiating proceedings for escaped turnover.
2. Applicability of Section 409 IPC regarding criminal breach of trust.
3. Applicability of Section 468 IPC regarding forgery.
4. Applicability of Section 193 IPC regarding false evidence.
5. Applicability of repealed provisions of the Pondicherry General Sales Tax Act, 1967.
6. Applicability of Section 81 of the Puducherry Value Added Tax Act, 2007.
7. Maintainability of the complaint under Section 52(2) of the Central Sales Tax Act, 1956.

Detailed Analysis:

1. Limitation Period for Initiating Proceedings for Escaped Turnover:
The petitioners argued that the assessment order was passed on January 5, 2005, and as per Section 18(1) of the Pondicherry General Sales Tax Act, 1967, proceedings for escaped turnover must be initiated within five years from the relevant order. Therefore, the respondent should have initiated proceedings by March 31, 2007, making the current proceedings barred by limitation. The court agreed with this argument, stating that the limitation period for determining escaped turnover expired in March 2006 for the year 2000-01 and March 2007 for the year 2001-02.

2. Applicability of Section 409 IPC Regarding Criminal Breach of Trust:
The petitioners contended that the C form is not a property within the meaning of Section 409 IPC, and hence, no criminal breach of trust could be established. The court found that there was no entrustment of property to attract the criminal breach of trust under Section 409 IPC.

3. Applicability of Section 468 IPC Regarding Forgery:
The petitioners argued that the allegation of submitting incorrect returns does not constitute forgery under Section 468 IPC. The court concurred, noting that the grievance of the complainant pertained to non-disclosure of actual turnover, which falls under the provisions of the tax laws rather than forgery.

4. Applicability of Section 193 IPC Regarding False Evidence:
The petitioners claimed that they did not furnish wrong returns, and thus, Section 193 IPC, which deals with false evidence, was not applicable. The court agreed, stating that to constitute an offense under Section 193 IPC, there must be an intention to give false evidence in judicial proceedings, which was not the case here.

5. Applicability of Repealed Provisions of the Pondicherry General Sales Tax Act, 1967:
The petitioners argued that since the Pondicherry General Sales Tax Act, 1967, was repealed and replaced by the Puducherry Value Added Tax Act, 2007, the respondent could not invoke the provisions of the repealed Act. The court held that the prosecution under the old Act was barred by limitation and that invoking the repealed provisions was not maintainable.

6. Applicability of Section 81 of the Puducherry Value Added Tax Act, 2007:
The petitioners contended that Section 81 of the Puducherry Value Added Tax Act, 2007, is not a substantive provision but a repeal and savings provision. The court agreed, stating that Section 81 was not applicable as the proceedings were not initiated and pending when the old Act was repealed.

7. Maintainability of the Complaint Under Section 52(2) of the Central Sales Tax Act, 1956:
The petitioners argued that the complaint was not maintainable under Section 52(2) of the Central Sales Tax Act, 1956. The court found that the respondent was not authorized to file a complaint invoking the provisions of the Indian Penal Code and that the complaint was misconceived and an abuse of the process of law.

Conclusion:
The court concluded that the initiation of criminal proceedings for a time-barred escaped turnover and invoking penal provisions were an abuse of the process of law. The proceedings in C.C. Nos. 21 and 22 of 2009 were quashed, and the criminal original petition was allowed.