Quashing of criminal proceedings after VAT penalty compliance where detained goods were released and prosecution served no useful purpose

Where goods are intercepted under the Punjab Value Added Tax Act, 2005, detained for verification, and penalty is imposed for attempted tax evasion, deposit of the penalty and release of the goods may render further criminal prosecution unnecessary. The Punjab & Haryana HC noted that once the VAT penalty order was complied with, continuation of the FIR and related proceedings would serve no useful purpose and would amount to abuse of process of law. On that basis, the criminal proceedings were liable to be quashed after compliance with the penalty order.

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Issues: Whether criminal proceedings arising from interception of goods and imposition of penalty under the Punjab Value Added Tax Act, 2005 could be quashed after the penalty was deposited and the goods were released.

Analysis: The vehicle was checked under Section 51 of the Punjab Value Added Tax Act, 2005, the goods were detained for verification, and penalty was imposed under Section 51(7)(C) for the attempt to evade tax. The penalty amount was deposited and the goods were released. In these circumstances, continuation of the FIR and consequent criminal proceedings was held to serve no useful purpose and to amount to abuse of the process of law.

Conclusion: The criminal proceedings were liable to be quashed after compliance with the VAT penalty order.

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