PROSECUTION

[Vel Murugan]

Dear Experts,

Please make me understand that whether prosecution can be launched against the legal persons i.e. COMPANY / PARTNERSHIP etc. (not in the name of directors/partners)? If yes, in case of conviction by the court, who will serve the imprisonment? I am asking this related to taxation laws but it is okay to get reference from any other laws or judgements under any other laws.

Thanks in Advance

[KASTURI SETHI]

Sh.Vel Murugan Ji,

Answer is yes. In case of conviction, Director/M.D./Partner etc. who is instrumental in evasion of duty/tax and the department has documentary evidence of mala fide intention against that person, will suffer imprisonment.Pl. go through the following circulars word for word :-:(Also peruse those circulars mentioned in the circulars otherwise concept will not be clear.)

Arrest in relation to offences punishable under the Finance Act, 1994 & Central Excise Act, 1944 - Guidelines

Circular No. 201/11/2016-S.T., dated 30-9-2016

Launching of Prosecution under the Central Excise Act, 1944 and Finance Act, 1994 - Revised Guidelines

Circular No. 1009/16/2015-CX., dated 23-10-2015

Prosecution under the Central Excises & Salt Act, 1944 - Guidelines

<$FFor subsequent modifications/developments, see Circular Nos. 30/30/94-CX.6, dated 4-4-1994, and 35/35/94-CX.6, dated 29-4-1994>Circular No. 15/90-CX.6, dated 9-8-1990

[ABHISHEK TRIPATHI]

Dear Vel Ji,

The prosecution will be against the top management or the person involved. For instance, just refer to S. 132(1) of the CGST Act. It says, “Whoever commits, or causes to commit and retain the benefits arising out of, any of the following offences”. That ‘whoever’ cannot be a juridical person and has to be a human being (individual or collective).

[KASTURI SETHI]

Yes, Sir. The querist may also go through the concept of 'lifting the corporate veil' on google.

AI Summary

Criminal liability for tax evasion targets responsible individuals, not corporate entities; imprisonment attaches to persons behind evasion. Prosecution for tax or duty offences is practically directed at the natural persons (directors, managing directors, partners or other individuals) who are instrumental in evasion when documentary evidence of mala fide intent exists; administrative circulars govern arrest and prosecution protocols, and the doctrine of lifting the corporate veil is used to identify the human actors subject to criminal liability.