Special statute governs service tax recovery; criminal proceedings for alleged non-payment were quashed as abuse of process.

Service tax dues governed by the Finance Act, 1994 were treated as falling within a special and complete statutory code for recovery, interest and penalty, so general criminal law could not be used to pursue the same alleged default. Because the disputed amount had already been deposited and no competent authority had determined any further liability in accordance with the statutory procedure, continuation of the FIR and criminal case was held to be an abuse of process. The FIR and consequential criminal proceedings were quashed, while the authority remained free to proceed under the Finance Act if any liability was lawfully determined.

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Issues: Whether criminal proceedings arising out of an FIR for alleged non-payment of service tax could be sustained when the Finance Act, 1994 provided the governing procedure for recovery, interest, and penalty, and the amount had been deposited.

Analysis: The liability asserted in the case related to service tax, a field covered by the Finance Act, 1994, which was treated as a special and complete code for determination and recovery of such dues, including interest and penalty. The amount in dispute had been deposited, and no competent authority had determined any outstanding liability after following the statutory procedure. In such a situation, invocation of the general criminal law for the same default was held to be improper, and continuation of the criminal case was found to amount to abuse of process of court. The reasoning was supported by the principle that where a special statute lays down the governing procedure, the general provisions do not control the field.

Conclusion: The FIR and the consequential criminal proceedings were quashed. The petition succeeded in favour of the petitioner, while the competent authority under the Finance Act, 1994 was left free to proceed in accordance with law if any liability was determined.

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