2023 (6) TMI 188 - HC - VAT and Sales Tax

Availment of irregular Input Tax Credit (ITC) - evasion of tax - forged and fabricated invoices against bogus purchases to credit bogus ITC - grant of registration certificate only for resale of nuts and bolts and HR sheets but illegal trading in iron and steel also done - HELD THAT - Section 57 of the Act provides for imposition of penalty for issuance of false invoice. Section 58 of the Act provides for imposition of penalty for using a false registration number. A perusal of both the above provisions leaves no manner of doubt that the allegations levelled in the FIR in question are squarely covered and fall under the exclusive purview of the Act - It would be pertinent to note here that the Act is a complete Code in itself and there is no provision provided in the Act for the registration of an FIR. The Act only provides for imposition of penalty in case there is any contravention of its provisions. Since the Act is a special law, principle of generalia specialibus non derogant would apply, meaning thereby, it would operate in exclusion to the general law i.e. the IPC. A Coordinate Bench of this Court in Pritpal Singh Vs. State of Punjab 2012 (3) TMI 576 - PUNJAB AND HARYANA HIGH COURT , while relying upon a judgment of Hon'ble Supreme Court in Dilawar Singh's case 2005 (11) TMI 502 - SUPREME COURT held that the provision of the Act are sufficient and equipped to deal with the matter where an attempt is made to evade the Tax and the registration of FIR in such like matter is totally an abuse of the process of law. This Court has no hesitation to hold that continuation of criminal proceedings arising out of the FIR would be nothing but an abuse of process of the process of law - Petition allowed.

Summary

Issues involved:
The petitioner seeks quashing of FIR under Sections 177/201/420/465/467/468/471/120-B of IPC registered at Police Station Division No. 5 Civil Line, Ludhiana City along with subsequent proceedings.

Summary:

Issue 1: Allegations under IPC vs. VAT Act
The petitioner argues that the FIR is an abuse of process of law as the allegations are related to VAT evasion, falling under the Punjab VAT Act, 2005. The petitioner contends that the Act is a complete code, and any contravention should be dealt with under the Act, not the IPC.

Issue 2: Double jeopardy and penalty imposition
The petitioner asserts that the assessment order directing payment of tax has already been issued, and continuing with the FIR proceedings would amount to double jeopardy. The petitioner argues that penalty under the Act should be the appropriate course of action.

Issue 3: Legal precedent and exclusivity of VAT Act
Citing legal precedents, the petitioner emphasizes that the provisions of the VAT Act are sufficient to address tax evasion matters, and registering an FIR is an abuse of the legal process. The Act being a special law, it should prevail over general laws like the IPC.

Issue 4: Assessment order and abuse of legal process
Considering the assessment order imposing tax liabilities on the petitioner, the Court concludes that continuing with the criminal proceedings from the FIR would be an abuse of the legal process. Consequently, the Court allows the petition and quashes the FIR along with all related proceedings.