Special fiscal statute bars IPC prosecution where VAT evasion and false invoices are specifically punishable under the VAT Act.

Where alleged VAT evasion, false invoices, bogus input tax credit and misuse of registration particulars were specifically penalised under the Punjab VAT Act, 2005, the special fiscal statute operated as a complete code and prevailed over the Indian Penal Code under the principle of generalia specialibus non derogant. The High Court held that resort to general criminal prosecution for the same conduct was impermissible and an abuse of process, especially where an assessment order had already been passed. The FIR and consequent criminal proceedings were quashed.

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Issues: Whether the FIR alleging VAT evasion and misuse of registration particulars could be sustained under the Indian Penal Code when the same conduct was specifically covered by the Punjab VAT Act, 2005 and whether continuation of the criminal proceedings was an abuse of process.

Analysis: The allegations in the FIR arose entirely from alleged evasion of VAT, issuance of false invoices, bogus input tax credit and misuse of VAT registration particulars. The statutory scheme of the Punjab VAT Act, 2005 provided specific penalties for issuance or use of false invoices and for misuse of registration numbers under Sections 57 and 58. The Act was treated as a complete code for such contraventions and, being a special law, it prevailed over the general provisions of the Indian Penal Code by application of the principle of generalia specialibus non derogant. The assessment order already stood passed against the petitioner, reinforcing that the dispute was one arising under the special fiscal regime.

Conclusion: The FIR and the consequent criminal proceedings were not sustainable and were quashed.

Final Conclusion: Where alleged VAT evasion is expressly dealt with by the special fiscal statute, resort to criminal prosecution under the general penal law is impermissible and amounts to abuse of process.

Ratio Decidendi: When the alleged misconduct is specifically penalised under a special fiscal enactment that operates as a complete code, prosecution under the general criminal law for the same conduct is barred.

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