Criminal breach of trust in VAT defaults can justify denial of anticipatory bail despite parallel tax and IPC proceedings.

A dealer who collects VAT for remittance to the State may, on a prima facie view, be treated as entrusted with government money, so retention of the tax collected can attract criminal breach of trust under the IPC. Substantial and prolonged non-payment, coupled with repeated failures to file returns and meet statutory obligations, was treated as sufficient material to deny anticipatory bail. The Court also accepted that prosecution under the VAT Act and the IPC can proceed simultaneously, and the bailable nature of the VAT offences did not displace the non-bailable IPC allegations. On that basis, anticipatory bail was refused.

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Issues: Whether anticipatory bail should be granted when the applicant is alleged to have defaulted in payment and disclosure of VAT and is also prosecuted under the Indian Penal Code, and whether simultaneous prosecution under the VAT Act and the Indian Penal Code is permissible.

Analysis: The allegations disclosed substantial tax arrears extending over several years and showed repeated lapses in filing returns and discharging statutory obligations. The offences under the VAT Act were treated as bailable, but the Court focused on the non-bailable IPC allegations. It held that, for a dealer collecting tax and required to deposit it with the Government, a prima facie principal-agent relationship arises and the retained tax money can attract the ingredients of criminal breach of trust. The Court also treated simultaneous prosecution under the VAT Act and the Indian Penal Code as maintainable, following the settled position relied upon before it.

Conclusion: Anticipatory bail was declined, as the applicant was not entitled to protection in view of the prima facie material, the magnitude and duration of the default, and the maintainability of prosecution under both statutes.

Ratio Decidendi: A dealer who collects tax for remittance to the State may, on a prima facie view, be treated as entrusted with government money so as to attract criminal breach of trust, and large unexplained VAT defaults can justify refusal of anticipatory bail despite parallel proceedings under the tax statute.

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