*THE HON'BLE SRI JUSTICE P.S.NARAYANA _Criminal Petition No.6753 of 2007 % 6-4-2010 # Chavva Satya Krishna s/o.Panduranga Rao .. Petitioner Vs. $ The State of A.P. Represented by Public Prosecutor High Court of A.P. Hyderabad and others .. Respondents <GIST: >HEAD NOTE : ! Counsel for petitioner Sri S.Sriramachandra Murthy ^ Counsel for respondents : Additional Public Prosecutor ? CASES REFERRED : 1. 2006 Criminal.L.J. 2839 2. (2007) 2 SCC 181 3. IN THIS REGARD 1977 (P&H) 521 4. 1970 S.T.C. 208 THE HON'BLE SRI JUSTICE P.S.NARAYANA Criminal Petition No.6753 of 2007 Date : 6-4-2010 Between : Chavva Satya Krishna s/o.Panduranga Rao .. Petitioner And The State of A.P. Represented by Public Prosecutor High Court of A.P. Hyderabad and others .. Respondents THE HON'BLE SRI JUSTICE P.S.NARAYANA Criminal Petition No.6753 of 2007 ORDER: 1. This Criminal Petition is filed under Section 482 of the Criminal Procedure Code (hereinafter in short referred to as “Code” for the purpose of convenience) praying for quashing of the charge sheet in C.C.No.613/2007 on the file of II Additional J.F.C.M., Kovvur, West Godavari District and pass such other suitable orders. 2. Sri S.Sriramachandra Murthy, the learned Counsel representing the petitioner had taken this Court through the relevant provisions of the Code and also the relevant provisions of A.P. Value Added Tax Act 2005 (hereinafter in short referred to as “Act” for the purpose of convenience) and would maintain that the said Act being the complete Act by itself and inasmuch as for the illegality if any committed by the assessee in filing returns, specific provisions are there, resorting to the provisions of the Indian Penal Code cannot be sustained. The learned Counsel also specifically pointed out to the offences with which the petitioner had been charged with and would maintain that the complainant though being the statutory authority, had acted beyond the purview of the provisions of the Act aforesaid and if it is to be taken that the complainant to be treated as a private person, such complaint itself cannot be maintained in the light of Section 39 of the Code. The learned Counsel also specifically pointed out to the absence of written consent and would maintain that this is nothing but abuse of process of court and hence the proceedings are liable to be quashed. 3. Per contra, the learned Additional Public Prosecutor would maintain that these are all offences under Indian Penal Code and hence the question of obtaining written consent as contemplated by the provisions of the Act would not arise. The learned Additional Public Prosecutor also would contend that in the light of the specific allegations made in the charge sheet, this is not a fit matter to be interfered with under Section 482 of the Code. 4. Heard the Counsel and perused the contents of the Criminal Petition, the grounds specifically raised therein, the contents of the charge sheet, the challans and the other material placed before this Court. 5. The case of the petitioner is that the petitioner is the proprietor of M/s.Lakshmi Traders doing business in paddy, rice, broken rice etc. The petitioner is an assessee under A.P.G.S.T. Act. After the introduction of the Act aforesaid the petitioner was allotted a new tax index No.280112802. As per the provisions of the Act, the amount levied to be deposited in local Bank on Government challan and the receipt to that effect is to be annexed along with the return. It is also the case of the petitioner that due to busy schedule as usual the petitioner had entrusted the work of withdrawal of the amount from S.B.I. account, Tanuku and to pay the same in S.B.I., Nidadavole to an employee of the firm who is a relative of the petitioner. After due verification later it was found that he did not pay the tax amount in the Bank and on the contrary had produced fake challans of payment. Immediately on coming to know of this fraud, after the notice dated 4-4-2007, the petitioner got the entire amount of Rs.4,47,034/- deposited due as tax with correct challan No.146, dated 9-4-2007. However, not being satisfied the 3rd respondent proceeded to invoke the penal provisions under the Act i.e., Sections 51 and 22(2) of the Act aforesaid. 6. The charge sheet against the petitioner specifies Sections 417, 420 and 471 I.P.C. Four witnesses are shown in the charge sheet in the list of witnesses and the memo of evidence and the short details which may be spoken by the respective witnesses also had been furnished. 7. Section 39 of the Code dealing with Public to give information of certain offences reads as hereunder:- (1) Every person, aware of the commission of, or of the intention of any other person to commit, any offence punishable under any of the following Sections of the Indian Penal Code (45 of 1860) namely, - (i) Sections 121 to 126, both inclusive, and Section 130 (that is to say, offences against the State specified in Chapter VI of the said Code); (ii) Sections 143, 144, 145, 147 and 148 (that is to say, offences against the public tranquility specified in Chapter VIII of the said Code); (iii) Sections 161 to 165A, both inclusive (that is to say, offences relating to illegal gratification). (iv) Sections 272 to 278, both inclusive (that is to say, offences relating to adulteration of food and drugs, etc.); (v) Sections 302, 303 and 304 (that is to say, offences affecting life); [v(a)] Section 364A (that is to say, offence relating to kidnapping for ransom, etc.); (vi) Section 382 (that is to say, offence of theft after preparation made for causing death, hurt or restraint in order to the committing of the theft); (vii) Sections 392 to 399, both inclusive and Section 402 (that is to say, offences of robbery and dacoity); (viii) Section 409 (that is to say, offence relating to criminal breach of trust by public servant, etc.); (ix) Sections 431 to 439, both inclusive (that is to say, offences of mischief against property); (x) Sections 449 and 450, both inclusive (that is to say, offences of lurking house-trespass); and (xii) Sections 498A to 498E, both inclusive (that is to say, offences relating to currency notes and bank notes); shall, in the absence of any reasonable excuse, the burden of proving which excuse shall lie upon the person so aware, forthwith give information to the nearest Magistrate or police officer of such commission or intention. (2) For the purposes of this Section, the term “offence” includes any act committed at any place out of India which would constitute an offence if committed in India. 8. It is not in serious controversy that the offences of Sections 417, 420 and 471 of the I.P.C. are not shown in Section 39 of the Code specified supra. 9. The learned Counsel for the petitioner placed strong reliance on T.Kumar Babu Vs. Girish Sandhi and others [1] wherein the learned Judge at para 7 observed : “Now, it is necessary for this Court to look into the allegations made in the complaint and the provisions of Section 39 Cr.P.C. From a perusal of the complaint as excerpted above, it is clear that the petitioner has not stated anything as to how it attracts the provisions of S.420 I.P.C., and even if it is accepted that it makes out an offence punishable under Section 420 I.P.C., Section 39 Cr.P.C. does not provide any authority to the petitioner- complainant to give information in regard to the offence under Section 420 I.P.C. of certain offences any information by any person, and hence, the Court below is justified in rejecting the complaint insofar as the offence punishable under S.420 I.P.C. is concerned”. 10. It is no doubt not in controversy that the offences with which the petitioner herein had been charged are the offences under the Indian Penal Code - Sections 417, 420 and 471 I.P.C., as already aforesaid. The main allegation is that the petitioner cheated the Government by way of fake challans and thereby committed the offences punishable under Sections 417, 420 and 471 I.P.C. 11. It is also not in any serious dispute that the said amounts due to the Government as tax already had been paid. Section 2 of the Act deals with Definitions. Section 21 of the Act deals with Assessments; Section 22 of the Act deals with Due date for payment of tax; Section 22(2) of the Act specifies : “If any dealer fails to pay the tax due on the basis of return submitted by him or fails to pay any tax assessed or penalty levied or any other amount due under the Act, within the time prescribed or specified therefore, he shall pay, in addition to the amount of such tax or penalty or any other amount, interest calculated at the rate of one percent per month for the period of delay from such prescribed or specified date for its payment. The interest in respect of part of a month shall be computed proportionately and for the purpose, a month shall mean a period of 30 days”. Chapter VIII of the Act deals with Offences and penalties. Section 49 of the Act deals with Penalty for failure to register. Section 50 of the Act deals with Penalty for failure to file a return. Likewise, Section 51 of the Act deals with Penalty for failure to pay tax when due. Further, Section 52 of the Act deals with Penalty for assessment issued for failure to file a return. Section 53 of the Act deals with Penalty for failure to declare tax due. Section 54 of the Act deals with Penalty for failure to use or misuse of TIN and GRN. Section 55 deals with Penalty for issue of tax invoice and for the use of false tax invoices. Section 56 of the Act deals with Penalty for failure to maintain records. Section 57 of the Act deals with Penalty for unauthorized/excess collection of tax. Section 58 of the Act deals with Prosecution for offences and Section 59 of the Act deals with Offences of obstructing the authority. 12. It is pertinent to note that Section 61 of the Act deals with Compounding of offences. It is however brought to the notice of this Court that this provision had not been invoked. Section 62 of the Act is an important provision which deals with Court for prosecution. Sub- Section (1) of Section 62 of the Act specifies that “No court other than the Court of a Magistrate of the first class shall take cognizance of, or try, an offence under the Act”. Sub- Section (2) of Section 62 of the Act specifies that “No prosecution for any offence under the Act shall be instituted except with the written consent of the Commissioner”. It is not in serious controversy that no written consent of the Commissioner had been obtained in this regard. However, it is pertinent to note that the petitioner is not charged with any of the offences under the Act as such, but had been charged with the offences under the Indian Penal Code. The learned Additional Public Prosecutor made elaborate submissions in this regard stating that for want of written consent of the Commissioner, the proceedings cannot be quashed for the reason that the petitioner had not been charged with any of the offence under the Act but the petitioner had been charged with the offences under the Indian Penal Code only. The relevant Rules also had been pointed out and certain submissions further had been made. 13. It is also pertinent to note that Section 53(3) of the Act reads as hereunder : “Any dealer who has under declared tax, and where it is established that fraud or willful neglect has been committed, he shall be liable to pay penalty equal to the tax under declared; besides being liable for prosecution: Provided that before levying penalty under this section, the authority prescribed shall give the dealer a reasonable opportunity of being heard”. The relevant portions of the commentary on “Value Added Tax” by N.K. Ghanshyam Upadhyay, also had been relied on. Further, strong reliance was placed on Rajesh Kumar and others Vs. Dy. CIT and others [2] wherein the Apex Court while dealing with the provisions of the Income-Tax Act 1961 observed : “If an assessee files a return, the same is not presumed to be incorrect. When the assessing officer, however, intends to pass an order of assessment, he may take recourse to various steps including the one of asking the assessee to disclose documents which are in his power or possession. He may also ask third parties to produce documents. Section 136 of the Act by reason of a legal fiction makes an assessment proceeding, a judicial proceeding. The assessment proceeding, therefore, is a part of judicial process. When a statutory power is exercised by the assessing authority in exercise of its judicial function which is detrimental to the assessee, the same is not and cannot be administrative I nature. It stricto sensu is also not quasi-judeicial. The prejudice to the assessee, if an order is passed under Section 142(2-A) of the Act, is apparent on the face of the statutory provision. He has to undergo the process of further accounting despite the audit conducted in terms of Section 44-AB”. 14. Further strong reliance was placed on D Ward, Jullundur Vs. Sohan Singh Dhiman [3] wherein while dealing with the aspect of satisfactory explanation given by assessee for furnishing wrong figures in return and the applicability of doctrine of mens rea for prosecution proceedings after imposition of penalty and while considering whether prosecution will lie in every case when a wrong statement is made, the Division Bench of Punjab and Haryana High Court held : “Section 277 of the Income-tax Act, 1961, lays down that if a person makes a statement in any verification under to the Act, or delivers an account or statement which is false, he may be punished with the penalties as prescribed in the section. The section, however, contains some crucial words in regard to the mens rea of the assessee., viz., “and which he either knows or believes to be false, or does not believe to be true”. The intention of the legislature in incorporating these words in the section is quite obviously that a prosecution would not follow in every case where a wrong statement is made and it will have to be judged as to whether the assessee harboured the required mens rea or not. The assessee explained to the Appellate Assistant Commissioner certain discrepancy not only in his own statement made under Section 342 of the Criminal Procedure Code, 1898, but also by the production of an employee of his factory, who explained in detail the circumstances leading to the mention of wrong figures in the return. The Appellate Assistant Commissioner, however, imposed penalty on the assessee under Section 271/274 on the ground that the assessee had concealed the particulars of his income and had furnished inaccurate particulars thereof. Even after the imposition of penalty the assessee was visited with a complaint under Section 277 of the Act for his prosecution. The trial court after due consideration of the entire material on the record acquitted the assessee of the charge leveled against him.” On appeal to High Court, it was held : “On facts, it was merely a case of negligence on the part of the assessee to have accepted the figures supplied to him by his clerical staff, which figures were incorporated in the return and which the assessee signed and verified as a routine. Therefore, after a penalty was imposed on the assessee, his further prosecution was not called for”. It was also further held that in an appeal against acquittal, the High Court cannot be called upon to reassess the credibility of the evidence when the view taken by the trial court was not shown to be so patently erroneous as to cause miscarriage of justice. 15. Further, strong reliance was placed on Sri Venkateswara Rice Mill Vs. The Special Commercial Tax Officer (Evasions), Guntur and others [4] wherein the Special Commercial Tax Officer inspected the premises of the petitioner’s mill, and found, on verification of the stocks, that the accounts maintained by the petitioner were incorrect and a notice was then issued calling upon the petitioner to show cause why action should not be taken against him by launching a prosecution under Section 31 of the Andhra Pradesh General Sales Tax Act, 1957, for contravention of the provisions of Section 25 of the Act and on the petitioner admitting the offence in writing and offering to get the offence compounded by paying a sum of Rs.1,000/-, a sum of Rs.1,000/- as compounding fee and Rs.3,000/- as tax, were collected from him, it was held that the Special Commissioner Tax Officer had no jurisdiction under Section 32 of the Act to collect Rs.3000/- as tax in addition to the compounding fee of Rs.1000/-. It was further held : “It is only in the case of failure to pay tax or evasion of any tax recoverable under the provisions of the Act that composition of offence is permissible under clause (a) of sub-Section (1) of Section 32. All other cases not covered by clause (a) come within the ambit of clause (b), which says that the prescribed authority may by way of composition accept a sum of money not exceeding Rs.1000/-. As the offence committed by the petitioner was one falling under Section 25, that is, not maintaining true and correct accounts, his case fell within the scope of clause (b), and therefore the Special Commercial Tax Officer had no jurisdiction either under clause (a) or clause (b) of Section 32(1) to collect Rs.3000/- as tax in addition to the compounding fee of Rs.1000/-“ 16. It is no doubt true that the offences with which the petitioner had been charged are offences under the Indian Penal Code. It is also not in serious controversy that a statutory authority who is expected to perform the statutory duties as contemplated by different provisions of the Act, had resorted to this method of setting the Law into motion by giving a report. This Court is not inclined to express any opinion relating to the conduct of the officer concerned since no specific allegations as such had been made as against the said officer in this Criminal Petition. Suffice to state that in all promptness the petitioner paid the amounts and it is also stated that the petitioner is not in any dues at all. When that being so, especially in the light of the provisions of the Act and also Section 39 of the Code referred to above, this Court is of the considered opinion that permitting the further proceedings to be further proceeded with against the petitioner in this regard would not serve any purpose at all. In the light of the same, the proceedings under challenge are hereby quashed. 17. Accordingly, the Criminal Petition is hereby allowed. _________________ Justice P.S.Narayana Date : -4-2010 L.R. copy to be marked : YES / NO AM [1] 2006 Crl.L.J. 2839 [2] (2007) 2 S.C.C. 181 [3] ITR 1977 (P&H) 521 [4] 1970 S.T.C. 208