Quashing of excise prosecution refused where complaint pleaded direct participation and continuing conspiracy to evade duty.

At the quashing stage, a complaint disclosing material facts that, taken at face value, indicate a continuing conspiracy and direct participation in central excise evasion cannot be rejected merely because the accused are directors or a secretary. The Court held that conspiracy may be inferred from pleaded circumstances, that the truth of the allegations need not be tested at that stage, and that liability was not confined to the company where the individuals were alleged to have participated in, conspired in, or abetted the evasion. The absence of a statutory vicarious liability provision did not bar prosecution on these pleaded facts.

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Issues: Whether the criminal process issued against the petitioners was liable to be quashed for want of specific allegations of overt acts or conspiracy, and whether they could avoid liability on the basis that excise duty was primarily payable by the company and that vicarious liability under Section 9AA had not yet come into force.

Analysis: The complaint was read as a whole and was found to contain detailed averments that the petitioners, though directors or a secretary, were part of a continuing scheme to understate assessable value, recover additional amounts under various heads, and thereby evade central excise duty. The Court held that conspiracy may be inferred from the circumstances pleaded and that, at the stage of issuing process, it was not necessary to test the truth of the allegations or to insist on proof of the entire evidence. The argument that only the company could be liable was rejected because the offence under the excise law was punishable with imprisonment and fine, and the petitioners were alleged to have individually participated in, conspired in, or abetted the evasion. The Court further held that the absence of Section 9AA did not bar prosecution on the pleaded facts, since the case was not treated as one resting merely on statutory vicarious liability but on direct participation in a common design.

Conclusion: The petitioners were not entitled to quashing of the proceedings, and the issue was decided against them.

Ratio Decidendi: At the stage of quashing, if the complaint discloses material facts which, taken at face value, reasonably indicate a continuing conspiracy and direct participation in tax evasion, the proceedings cannot be quashed merely because the accused are directors or a secretary, or because statutory vicarious liability provisions are absent.

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