Tax evasion prosecution cannot continue after merits-based exoneration on the same facts, as it amounts to abuse of process.

Criminal prosecution based on alleged tax evasion cannot be sustained where the adjudicating tribunal, on the same facts, has found that the documents were genuine and that no intention to evade tax was proved. Although adjudication and criminal proceedings may generally proceed independently, continuation of prosecution becomes an abuse of process when the identical allegations have been rejected on merits and the exoneration is substantive rather than technical. The criminal proceedings were therefore liable to be quashed.

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Issues: Whether criminal proceedings based on alleged tax evasion could continue after the adjudicating tribunal had, on merits, held that there was no tax evasion on the same set of facts.

Analysis: The criminal case and the VAT adjudication arose from the same transaction and the same allegation of use of fake documents to evade tax. The adjudicating tribunal had quashed the penalty on merits and recorded a finding that the vehicle was accompanied by proper and genuine documents and that there was no intention to evade tax. The governing principle is that while adjudication and criminal prosecution may proceed independently, continuation of criminal prosecution is not justified where the identical allegations have been rejected in adjudication on merits and the exoneration is not merely technical.

Conclusion: The criminal proceedings could not be allowed to continue and were liable to be quashed.

Ratio Decidendi: Where the adjudicating authority, on the same facts and allegations, exonerates a person on merits and holds that no contravention is made out, continuation of criminal prosecution on those identical facts amounts to abuse of process and is impermissible.

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