2024 (2) TMI 663 - HC - VAT and Sales Tax

Recovery of 22 (twenty-two) different brands of non-duty paid Overseas foreign Liquor - unlawful transport, storage, possession of unregistered non-duty paid Foreign Liquor in contravention of Sections 10, 12, 16, 18(1) of the B.E. Act 1909 read with Rule 118 of W.B. Excise (F.L) Rules 1998 - Commitment of offence punishable under u/s 46A(c), (e) Sec 52 of the said Act - HELD THAT - The petitioner herein has filed documents of the custom office to show valid import of the articles specifically marked Samples Not for Sale - Duty as required has been paid to the Custom Authorities. From the materials on record, it appears that the petitioner and another accused Chhote Prasad have been made accused s in this case, but the Company, Duomo Distribution Pvt. Ltd. AC-120 Prafulla Kanan, Krishnapur Baguiati has not been made an accused. The petitioner admittedly is a director of the said Company, and it is from the company premises that the accused was arrested and the articles seized. The Supreme Court in Dayle De Souza Vs Government of India Through Deputy Chief Labour Commissioner (C) and Anr., 2021 (11) TMI 67 - SUPREME COURT , held Criminal law should not be set into motion as a matter of course or without adequate and necessary investigation of facts on mere suspicion, or when the violation of law is doubtful. It is the duty and responsibility of the public officer to proceed responsibly and ascertain the true and correct facts. Execution of law without appropriate acquaintance with legal provisions and comprehensive sense of their application may result in an innocent being prosecuted. In the present case, a) The company has not been made an accused. b) The petitioner a director of the company has been made an accused. c) The place of seizure and the seized articles on which the case has been initiated, is the registered office of the company. The petitioner has also been arrested from the office of the company - Therefore, in the absence of the company being arraigned as an accused, a complaint against the petitioner is not maintainable - This is in clear violation of Section 46B of the Bengal Excise Act, 1909. Admittedly the company has not been made as an accused - Thus the proceedings in this case being not in accordance with law is an abuse of the process of law. Revision allowed.

Summary

Issues Involved:
1. Quashing of Prosecution Report and Proceedings.
2. Validity of Seizure and Arrest.
3. Requirement of Registration and Duty Payment.
4. Vicarious Liability of Company Directors.
5. Compliance with Legal Provisions.

Summary:

1. Quashing of Prosecution Report and Proceedings:
The petitioner sought the quashing of the prosecution report No. 02/19-20 dated 26.04.2019 and related proceedings under Sections 10/12/16/18(1) of the Bengal Excise Act, 1909, read with rule 118 of West Bengal (Foreign Liquor) Rules, 1998, punishable under Sections 46A(c)(e)/52 of the Bengal Excise Act, 1909. The proceedings were pending before the Learned Chief Judicial Magistrate at Barasat.

2. Validity of Seizure and Arrest:
The prosecution alleged that on 31.10.2018, a raid at the marketing office of the petitioner's company resulted in the seizure of 292 bottles of foreign liquor, which were unregistered and non-duty paid. The petitioner was arrested for unlawful transport, storage, and possession of these bottles.

3. Requirement of Registration and Duty Payment:
The petitioner argued that the seized bottles were samples not meant for sale, supported by declarations and invoices marked "NOT FOR SALE." According to Regulation 118 of the Foreign Liquor Rules, such samples did not require registration. The petitioner also contended that excise duty could not be calculated as the bottles lacked MRP labels.

4. Vicarious Liability of Company Directors:
The petitioner emphasized that under criminal law, vicarious liability does not apply unless the company, a juristic entity, is made a party. The prosecution had not implicated the company, Duomo Distribution Pvt. Ltd., only the petitioner and another individual. This omission rendered the proceedings legally unsustainable.

5. Compliance with Legal Provisions:
The court found that the prosecution failed to comply with Section 46B of the Bengal Excise Act, 1909, which mandates that both the company and its directors be prosecuted for offences committed by the company. Citing the Supreme Court's ruling in Dayle De' Souza Vs Government of India, the court held that the absence of the company as an accused invalidated the proceedings against the petitioner.

Conclusion:
The court allowed the petition, quashing the proceedings in Complaint Case No. 1986 of 2018 and the prosecution report No. 02/19-20 dated 26.04.2019. The proceedings were deemed an abuse of the process of law due to non-compliance with statutory requirements. All connected applications were disposed of, and any interim orders were vacated. A copy of the judgment was directed to be sent to the learned Trial Court for compliance.