2022 (12) TMI 234 - HC - VAT and Sales Tax

Court quashes FIR for tax evasion, citing specific VAT Act provisions over general IPC rules.

Deepak Kumar Versus State Of Punjab

The court quashed the FIR registered under Sections 420/120-B IPC and Section 4 of the Punjab Tax on Entry of Goods into Local Areas Act, 2000, against ... Cheating the government and evading tax - bringing furnace oil made from tyres from Haryana and using secret/abandoned passages for the purposes of entry into Punjab in order to evade tax - HELD THAT:- A perusal of the judgments in Pritpal Singh Versus State of Punjab & another [2012 (3) TMI 576 - PUNJAB AND HARYANA HIGH COURT] and Rakesh Kumar Versus State of Punjab & another [2013 (4) TMI 993 - PUNJAB AND HARYANA HIGH COURT] would show that there is no provision for registration of an FIR in such like matters of alleged evasion of tax. The provisions of the Act only provide for mandatory penalty. It is well-settled proposition of law that if a special provision has been made qua a particular subject (in the present case Value Added Tax), the said subject is excluded from the general provisions (in the present case Indian Penal Code). Since the provisions of the VAT Act do not provide for the registration of the FIR and the said Act is a Code in itself, the provisions of the IPC also cannot be invoked. Therefore, quite apparently an FIR could not have been registered against a person who was said to have evaded tax. The FIR No.123 dated 05.12.2013 registered under Sections 420/120-B IPC and Section 4 of Punjab Tax on Entry of Goods into Local Areas Act, 2000 at Police Station City-II Mansa, the report under Section 173(2) Cr.P.C. and all subsequent proceedings arising therefrom are hereby quashed - Petition allowed. Issues Involved:1. Quashing of FIR under Sections 420/120-B IPC and Section 4 of Punjab Tax on Entry of Goods into Local Areas Act, 2000.2. Applicability of VAT Act provisions versus IPC provisions in cases of tax evasion.3. Validity of FIR registration for tax evasion under IPC.Detailed Analysis:Issue 1: Quashing of FIR under Sections 420/120-B IPC and Section 4 of Punjab Tax on Entry of Goods into Local Areas Act, 2000The petitioner sought the quashing of FIR No.123 dated 05.12.2013, which was registered under Sections 420/120-B IPC and Section 4 of the Punjab Tax on Entry of Goods into Local Areas Act, 2000. The FIR was based on allegations that the petitioner, along with others, was involved in evading tax by transporting furnace oil made from tyres from Haryana into Punjab using secret passages. The petitioner argued that no criminal offence was made out under IPC as the VAT Act provisions should apply instead.Issue 2: Applicability of VAT Act provisions versus IPC provisions in cases of tax evasionThe petitioner contended that even if the allegations were true, the case was of a civil nature under the Punjab VAT Act, which provides for penalties for tax evasion, rather than criminal prosecution under IPC. The petitioner was not apprehended at the spot, and the allegations were based on the connivance with the arrested accused. The VAT Act stipulates a penalty of 30% of the value of the goods for carrying articles without genuine documents. The petitioner relied on judgments in Pritpal Singh vs. State of Punjab, Rakesh Kumar vs. State of Punjab, and Subhash Chander @ Subhash Kumar vs. State of Punjab, where it was held that FIR registration is not warranted in tax evasion cases as the VAT Act provides for mandatory penalties.Issue 3: Validity of FIR registration for tax evasion under IPCThe respondent-State argued that an offence was indeed made out, and the investigation revealed that the accused were cheating the Government by evading tax. However, the court referred to previous judgments, emphasizing that the VAT Act is a special statute that excludes the application of general IPC provisions in tax evasion matters. It was reiterated that if a special provision exists for a particular subject, it excludes the general provisions. The court cited the Supreme Court's ruling in Dilawar Singh's case, which held that special statutes like the Prevention of Corruption Act override general provisions of the IPC.Judgment:The court concluded that there is no provision for FIR registration in tax evasion matters under the VAT Act, which provides for mandatory penalties. The VAT Act is a comprehensive code in itself, and its provisions exclude the application of IPC in such cases. Consequently, the registration of the FIR against the petitioner was deemed an abuse of the process of law. The court allowed the petition and quashed FIR No.123 dated 05.12.2013, the report under Section 173(2) Cr.P.C., and all subsequent proceedings arising therefrom.