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2009 DIGILAW 718 (KER)

P. Abdul Nazar v. State Of Kerala

2009-08-03

C.T.RAVIKUMAR

body2009
Judgment :- Whether an assessee firm under the Kerala General Sales Tax Act, 1963 and its partners be indicted under Section 420 of the Indian Penal Code alleging degradation and certain other allied questions that would decide the fate of Crime No.630/2004 of the Manjeri Police Station and all subsequent proceedings, as against the petitioner, crop up for consideration in this case. These questions arise in the following factual matrix: 2. The petitioner was one of the three partners of Gokulam Enterprises, a registered firm, under the K.G.S.T Act. Crime No.630/2004 of the Manjeri police station was registered against the firm and three of its partners, including the petitioner, based on Annexure B complaint filed by the Sales Tax Officer, Manjeri. Annexure-A F.I.R was registered pursuant to Annexure B complaint. The petitioner, the other partners and the firm are now facing indictment under Section 420 I.P.C. The allegation incorporated in the Annexure-A F.I.R is to the effect that the accused persons with the common intention to defraud failed to remit sales tax to the tune of about 103 lakhs in time, for the year 2002-03 and thus committed the alleged offence. It is also stated therein that the Annexure B complaint is appended there with. It also carries an averment that the third accused/petitioner herein had retired from the partnership with effect from 21.01.03 and the partnership was re-constituted. It is further alleged that actual amounts were not shown in form No.18 declaration submitted by the firm. In essence, the complaint is that a false return has been filed by the firm and thereby they have committed fraudulent evasion of taxes and committed the alleged offence under Section 420 of the Indian Penal Code. The above Crl.M.C has been filed with the prayer to quash Annexure-A F.I.R and all subsequent proceedings. 3. I have heard Sri.Babu S.Nair, counsel for the petitioner and also the learned Public Prosecutor. 4. The counsel for the petitioner contended that the K.G.S.T Act is a self-contained Code and it provides procedures as to how penalty is to be imposed in case of tax evasion. It also enumerates the offences under the Act. Chapter VIII of the Act deals with the offences and penalties. In the case of evasion of tax, Section 45A (1) of the Act would come into play. It also enumerates the offences under the Act. Chapter VIII of the Act deals with the offences and penalties. In the case of evasion of tax, Section 45A (1) of the Act would come into play. It provides for imposition of penalty by the officers and authorities, authorized on that behalf under the Act. Section 46 of the Act speaks of the consequences of submitting an untrue return. It is an offence triable by the Magistrate and a fine to the extent of Rs.25,000/-can be imposed upon conviction. That apart, it is contended that even if the entire allegations in Annexure-B complaint are taken at its face value, they would not constitute an offence under Section 420 of the Indian Penal Code. It was further contended as follows:- A bare perusal of Section 420 would reveal that to bring an action under that section, it has to satisfy certain ingredients. Firstly, there must be the act of cheating. Secondly, there must be a dishonest inducement to deliver property. Going by Annexures A and B, the allegation is that the firm has failed to show true amounts in form No. 18 declaration and thereby committed fraudulent evasion of tax. Thus, the averments incorporated in Annexures A and B fall much short to constitute the offence under Section 420 of the Indian Penal Code. The petitioner had admittedly, retired from the partnership prior to the filing of declaration in form No.18. In the totality of the circumstances, at any rate, the petitioner cannot be prosecuted under Section 420 of the I.P.C. Annexure -A F.I.R and all further proceedings based on the same, are liable to be quashed as against the petitioner. 5. The learned Government Pleader on the other hand strenuously urged for the sustenance of the charge under Section 420 as against the petitioner. However, he was unable to convince me as to how, on the basis of the facts admitted and obtained in this case, a prima facie case for commission of the offence under Section 420 would lie against the petitioner. 6. A perusal of the provisions under the K.G.S.T Act would reveal that for plucking and also for penalising tax evasion it contained specific provisions. Degradation may invite penal proceedings under the K.G.S.T Act. However, to bring it under Section 420 of the Indian Penal Code and to prosecute every such delinquent assessee would wreck havoc. 6. A perusal of the provisions under the K.G.S.T Act would reveal that for plucking and also for penalising tax evasion it contained specific provisions. Degradation may invite penal proceedings under the K.G.S.T Act. However, to bring it under Section 420 of the Indian Penal Code and to prosecute every such delinquent assessee would wreck havoc. To attract the said section there must be a deception which must precede the fraudulent or dishonest inducement. Annexure-B complaint or Annexure-C F.I.R carries no such allegations to constitute an offence under Section 420 of the Indian Penal Code and, as noticed hereinbefore, they contain only allegation of filing of false return and consequential evasion of tax. There can be no doubt that if the allegations incorporated in a complaint/F.I.R do not constitute an offence, it would be an abuse of process of court and miscarriage of justice to prosecute a person based on such a complaint. In short, I when that prosecution against the petitioner based on Annexure-C F.I.R is undeserving. There is yet another reason for the same. The fact that the petitioner had retired from the partnership with effect from 21.1.03 is specifically stated in Annexure-B complaint itself. If a partner of a firm has resigned from it, then, there is no justification to prosecute him for the lapse of the firm committed after his resignation. It is also noteworthy that, admittedly, the notice for imposition of penalty under Section 45 A of the K.G.S.T Act was issued only against accused Nos.4 and 5. In short, the petitioner was not proceeded against alleging evasion of tax under the Act. 7. In the totality of the circumstances, I am of the view that the petitioner cannot be prosecuted based on Annexure-B complaint and Annexure-A F.I.R. Accordingly, Annexure-A F.I.R, in so far as it relates to the petitioner in Crime No.630/2004 of the Manjeri Police Station is quashed and needless to say that no proceedings based on Annexure-A F.I.R shall be continued against the petitioner. Accordingly, the Crl.M.C is allowed.