Police investigation under tax law may continue where the special statute does not exclude it and the FIR alleges penal offences.

Police investigation was not barred merely because the alleged conduct fell within the Maharashtra Value Added Tax Act, 2002, since Section 77 authorises departmental investigation but does not exclude investigation by the regular police, especially where the FIR also disclosed offences under the Indian Penal Code. The FIR was also not liable to be quashed at the threshold for want of detailed allegations against a director or for absence of an assessment order finding tax evasion, because an FIR only sets the criminal law in motion and need not contain exhaustive evidence. The proceedings were permitted to continue, with any absence of material left to be examined at the later stage.

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Issues: (i) Whether an FIR alleging offences under the Maharashtra Value Added Tax Act, 2002 and the Indian Penal Code could be investigated by the police notwithstanding Section 77 of the Maharashtra Value Added Tax Act, 2002. (ii) Whether the FIR was liable to be quashed at the threshold for want of specific allegations against a director and for want of an assessment order finding tax evasion.

Issue (i): Whether an FIR alleging offences under the Maharashtra Value Added Tax Act, 2002 and the Indian Penal Code could be investigated by the police notwithstanding Section 77 of the Maharashtra Value Added Tax Act, 2002.

Analysis: Section 77 of the Maharashtra Value Added Tax Act, 2002 empowers the Commissioner to authorise investigation by an officer subordinate to him, but it does not say that only such departmental officer can investigate and no other agency can do so. The FIR also disclosed offences under the Indian Penal Code, including offences distinct from the tax offences. Where offences under the special statute and the general penal law arise from the same transaction, and the special statute does not exclude police investigation, the regular police are not barred from investigating.

Conclusion: The challenge to police investigation failed, and the contention based on exclusivity of departmental investigation was rejected.

Issue (ii): Whether the FIR was liable to be quashed at the threshold for want of specific allegations against a director and for want of an assessment order finding tax evasion.

Analysis: The FIR only sets the criminal law in motion and is not required to contain all evidentiary details. At the investigation stage, the absence of a detailed role attributed to the director does not justify quashing, particularly when the investigating agency is still to ascertain whether material exists for prosecution. There is also no statutory requirement that an FIR for tax evasion can be registered only after completion of assessment or a formal finding in the assessment order. The proper course, if material is ultimately absent, would be consideration at the stage of charge sheet or discharge.

Conclusion: The request to quash the FIR and the related proceedings at the threshold was rejected.

Final Conclusion: The proceedings were permitted to continue, and the court declined to interfere with the investigation or the FIR.

Ratio Decidendi: Unless a special statute expressly excludes it, police investigation is not barred merely because the alleged conduct also falls within the special statute; an FIR need not contain exhaustive particulars or await completion of assessment before investigation can begin.

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