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2013 (2) TMI 365 - HC - Central ExciseConcealment and subsequent levy of penalties - complaint filed and summoning orders - Held that - The assessment order which formed the basis of the registration of the complaint against the petitioners has been set aside in appeal vide order dated 18.5.2005 in these circumstances, continuation of criminal proceedings against the petitioners, on the basis of assessment order, which has already been set aside, would be nothing but an abuse of process of law. Once the finding of concealment and subsequent levy of penalties under section 271(1)(c) of the Act has been struck down by the Tribunal, AO has no other alternative except to correct his order under section 154 of the Act as per the directions of the Tribunal. See K.C.Builders and another versus ACIT 2004 (1) TMI 7 - SUPREME COURT . Thus Complaint dated 7.7.2000 as well as subsequent proceedings arising therefrom including summoning order quashed.
Issues:
1. Quashing of complaint and summoning order under Section 482 of the Code of Criminal Procedure, 1973. 2. Validity of criminal proceedings under Section 9 and 9AA of the Central Excise Act, 1944. 3. Interpretation of legal precedents regarding concealment of income and penalties. 4. Impact of Tribunal and Apex Court orders on criminal proceedings. Detailed Analysis: 1. The petitioners sought the quashing of a complaint and summoning order under Section 482 of the Code of Criminal Procedure, 1973. The complaint was based on an assessment order dated 18.11.1998, which was later set aside in appeal on 21.3.2000. The petitioners argued that since the assessment order forming the basis of the complaint had been overturned, the criminal proceedings against them should be quashed. Legal counsel relied on the case law precedent of 'K.C.Builders' and 'Gupta Constructions Co.' to support their argument that if penalties have been set aside, the prosecution cannot proceed. The High Court judge noted that the petition deserved dismissal after hearing arguments from both parties. 2. The validity of the criminal proceedings under Section 9 and 9AA of the Central Excise Act, 1944 was questioned in the case. The initial assessment order directed the petitioners to deposit penalties, which were later challenged and overturned by the Tribunal in 2000. The Tribunal upheld the classification claimed by the Company, leading to the quashing of penalties and demands. Subsequent appeals and orders from higher judicial forums favored the petitioners, ultimately resulting in the dismissal of the complaint and summoning order based on the assessment order. 3. The interpretation of legal precedents regarding concealment of income and penalties played a crucial role in the judgment. The court referenced the 'K.C.Builders' case where the Tribunal's decision to set aside penalties led to the conclusion that there was no concealment in the eyes of the law, rendering the prosecution illegal. Similarly, in 'Gupta Constructions Co.', the Supreme Court held that if penalty proceedings are set aside, the basis for launching prosecution against the assessee is nullified. These precedents were pivotal in determining the abuse of the legal process in the case at hand and the subsequent quashing of the criminal proceedings. 4. The impact of Tribunal and Apex Court orders on criminal proceedings was significant in this case. The Tribunal's decision to quash penalties and demands, upheld by higher judicial forums, including the Apex Court, influenced the High Court's judgment to quash the complaint and summoning order. The court highlighted that the assessment order, which formed the basis of the criminal complaint, had been set aside by superior courts, making the continuation of criminal proceedings an abuse of the legal process. Consequently, the petition was allowed, and the complaint along with subsequent proceedings were quashed to put an end to the litigation.
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