Case: M. Natarajan Vs. State

25. In the above case, the question was whether the immunity granted under the KVSS 1998 could also cover proceedings under the Kerala Sales Tax Act in respect of the same assessee. The learned Judges again referred in paragraph 15 to Sushila Ranis case as also to Hiralals case and more particularly to the observations made in paragraphs 18 and 27, which we have already quoted above. The learned Judges then proceeded to hold that Hiralals case was distinguished in Sashi Balasubramanians case (cited supra) and held that the transfer of application of Salex Tax Act would not be covered by the immunity under KVSS, 1998. This Court in paragraph 33 observed as under: "33.....an immunity is granted only in respect of offences purported to have been committed under direct tax enactment or indirect tax enactment, but by no stretch of imagination, the same would be granted in respect of offences under the Prevention of Corruption Act. A person may commit several offences under different Acts; immunity granted in relation to one Act would not mean that immunity granted would automatically extend to others. By way of example, we may notice that a person may be prosecuted for commission of an offence in relation to property under the Penal Code as also under another Act, say for example, the Prevention of Corruption Act. Whereas charges under the Prevention of Corruption Act may fail, no sanction having been accorded therefore, the charges under the Penal Code would not." Thus this Court accepted the principle that the immunity could not cover certain other offences than those covered in direct and indirect tax enactments. The Court also accepted that the immunity could not be granted to any other person automatically merely it was granted to a tax- payer who had made declaration under Section 88 of the Finance Act. 26. One other judgment in Master Cables (P) Ltd. Vs. State of Kerala and Anr. (supra) is to be seen at this stage. The concerned Sections 90(1) & (3), Section 91 and Section 87(h) & (j) fell for consideration in this case also. It was declared in paragraph 10 in unequivocal terms in this judgment as follows: "10. What is conclusive is the order passed under sub-section (1) of Section 90 of the Scheme determining the sum payable under the Scheme. The terms "direct tax enactment" or "indirect tax enactment" or "any other law for the time being in force" refer only to those statutes under which the order had been passed. Immunity, as noticed hereinbefore, is in respect of institution of any proceeding for prosecution of any offence under direct tax enactment or indirect tax enactment or from imposition of penalty under any of such enactments. The terms "direct tax enactment" and "indirect tax enactment" have been defined under Sections 87 (h) and 87 (j) of the Scheme, which read as under:87. (h) "direct tax enactment" means the Wealth Tax Act, 1957 (27 of 1957) or the Gift Tax Act, 1958 (18 of 1958) or the Income Tax Act, 1961 (43 of 1961) or the Interest Tax Act, 1974 (45 of 1974) or the Expenditure Tax Act, 1987 (35 of 1987);* * * * * * * *(j) "indirect tax enactment" means the Customs Act, 1962 (52 of 1962) or the Central Excise Act, 1944 (1 of 1944) or the Customs Tariff Act, 1975 (51 of 1975) or the Central Excise Tariff Act, 1985 (5 of 1986) or the relevant Act and includes the rules or regulations made under such enactment;" In paragraph 11, this Court observed: "11. Admittedly, the case of the appellant does not come within the purview thereof. Amplitude of the provisions of the Scheme having been extended only to the enactments made by Parliament. Having regard to the constitutional scheme contained in Article 246 of the Constitution of India, in our opinion, the same cannot be extended to assessment of sales tax under a State Legislation...................." Once this Court had noticed the observations made in Hiralals case and then narrowed the width of the observations expressed in paragraph 27 thereof, we must proceed in terms of the subsequent judgment where the earlier judgment was taken note of. 27. By way of almost a desperate effort Shri K. Subramaniam, learned Senior Advocate then urged that the only offence which could have been alleged against any of the accused was under Section 132 of the Customs Act, 1962, i.e., of making a false declaration. The argument was that since the offence complained of related to the false declaration and false documents, the appellant could be prosecuted only under Section 132 of the Customs Act and not under the offences covered under the Indian Penal Code. Section 132 of the Customs Act is as under: "132. False declaration, false documents, etc. - Whoever makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document in the transaction of any business relating to the customs knowing or having reason to believe that such declaration, statement or document is false in any material particular, shall be punishable with imprisonment for a term which may extend to two years or with fine, or with both." The argument is only to be rejected. It is not at this stage that we would consider the nature of offences under Section 132 of the Customs Act and/or those under the Indian Penal Code, under which the appellant is being charged. However, merely because there may be some overlapping in the two offences, it does not mean that the appellant cannot be tried under the offences covered under the Indian Penal Code. The Court would proceed to decide the question on the basis of the evidence led before it. We must hasten to add that merely because the appellant could be tried nder Section 132 of the Customs Act, it does not mean that he could not be tried for the offence committed under the Indian Penal Code. There is no such provision.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The argument is only to be rejected. It is not at this stage that we would consider the nature of offences under Section 132 of the Customs Act and/or those under the Indian Penal Code, under which the appellant is being charged. However, merely because there may be some overlapping in the two offences, it does not mean that the appellant cannot be tried under the offences covered under the Indian Penal Code. The Court would proceed to decide the question on the basis of the evidence led before it. We must hasten to add that merely because the appellant could be tried nder Section 132 of the Customs Act, it does not mean that he could not be tried for the offence committed under the Indian Penal Code. There is no such provision.In Hiralals case heavy reliance seems to have been placed on the judgment of Sushila Rani (Smt.) Vs. Commissioner of Income Tax & Anr. and of Central Bureau of Investigation, SPE, SIU (X), New Delhi Vs. Duncans Agro Industries Ltd., Calcutta. The learned Judges in their separate but concurrent judgments upheld the challenge and had quashed the proceedings relying on the KVSS 1998. The learned Judges noted the various provisions of the Scheme from Sections 86 to 98. It was also noted that FIR in that case was filed on 6.1.1999, while the certificate under KVSS 1998 was issued on 19.7.1999. Honble Lakshmanan, J. in paragraph 23It is thus crystal clear that the Commissioner of Customs (Adjudication) and Designated Authoritygranted immunity from instituting any proceeding for prosecution for any offence under the Customs Act, 1962, or from the imposition of penalty under the said enactment, in respect of matters covered in the aforesaid declaration made by the declarant. After hearing the case of the GCS, as already noticed, the Collector of Customs, Bombay held that the GCS was liable to pay the customs duty but in view of the activities of the Society and the bona fides of the Society, and considering the charitable and philanthropic activities of the Society, no prosecution was recommended. Moreover, only a token redemption fine of Re.1 was imposed." (Emphasis supplied).In paragraph 25, the learned Judge analyzed the judgment in Sushila Ranis case (supra), which was also under the KVSS 1998. Paragraph 6 and 8 of Sushila Ranis case were quoted by the learned Judge which suggested that once a certificate was granted under section 90 (1), it was absolutely conclusive as to the matter stated and no matter covered could be reopened in any other proceeding under any law for the time being in force. It is probably on the basis of observations in paragraph 6 of Sushila Ranis case, that the learned Judge made the observation in paragraph 27 which we have already quoted in para 13 of this judgment. We may at this stage itself point out that the observations in paragraphs 6 and 8 in Sushila Ranis case seem to have been made only in the pursuance of tax laws. The question of prosecution under some other offences (not under the Indirect Tax Act or the Direct Tax Act) was not there.20. A reference must be made, at this stage, to the judgment of this Court reported in Alpesh Navinchandras case (cited supra) which was again decided by the Division Bench consisting of Honble Lakshman and Kabir, JJ., the judgment was, however, authored by Honble Lakshmanan, J. This was the case of immunity granted under Sections 127H of the Customs Act, 1962, however, the appellant and his brother were preventively detained under COFEPOSA. The detention was challenged on the ground that once the immunity under Section 127H of the Customs Act was granted in respect of customs offences, after settling the taxes finally by the Settlement Commissioner, the preventive detention could not have been ordered by the authorities for the same reasons. The case of Hiralal (cited supra) was relied upon, which is clear from a reading of paras 17 and 46. This Court proceeded to hold in paras 46 and 47 of its judgment asAt the time of hearing, learned counsel for the petitioner relied upon Hira Lal Bhagwati Vs. CBI. According to learned counsel for the respondent the said relied upon case was a case of duty evasion and the appellant therein was booked by Customs Authority and therefore, customs duty was paid under KVS Scheme and further in the criminal proceedings under Sections120B and 420 IPCinitiated by CBI was quashed by this Court. Therefore, it is admitted that the above cited case is different from the present case as in the case in hand the detention order was issued under the COFEPOSA Act against the petitioner with objective to prevent the nefarious activities in future. Therefore, the immunity granted by the Settlement Commission from fine, penalty and prosecution under the provisions of the Customs Act and IPC have no bearing on the order of detention passed under the COFEPOSA Act. Therefore, it is contended that the detention order issued by the detaining authority is very much legal and the same needs to be upheld.47. The Settlement Commission was constituted with the aim and objective of settling the tax evasion issues and by virtue of disclosure by tax offender, they gain immunity from fine/penalty which is otherwise mandatory under the provisions of tax laws. But, such opportunity is only extended totax offenders but not available to habitual smugglers. For the persons involved in smuggling activities, other than the provisions made for the prosecution under the Customs Act, 1962, an equal deterrent is emphasized under the provisions of the COFEPOSA Act, 1974 i.e. provisions for preventive detention. Such preventive detention prohibits smugglers from indulging in further smuggling activities. In the present case the investigation reveals the consistent involvement of the petitioner detenu and his brother, Kamlesh Navinchandra Shah in smuggling activities, therefore, the detaining authority on the basis of evidence placed before him felt it necessary to issue the detention orders in respect of both the detenus in order to prevent them from prejudicial activities in future. Accordingly, the impugned order is justifiable in the eye of the law and the present writ petition deserves to beour opinion, the rigour of the observations made in paragraph 27 in Hiralals case is removed by the observations made in paragraphs 46 and 47 in Alpesh Navinchandra Shahs case. It was contended that the legislature had created a Settlement Commission for generating revenue and had also made provisions for release of the goods on payment of duty and had also made provisions for granting immunity from prosecution under the Customs Act, 1962 under the Penal Code and also under the other Central law and, therefore, it was clear that the intention of the legislature was more on revenue aspect rather than prosecution and punishment aspect or in continuing with multiple litigations. And, therefore, it would be unjust, unfair and unreasonable if a person is made to suffer preventive detention mainly after his application for settlement is allowed to be proceeded with, and after realization of the customs duties not only the goods are ordered to be released but on considering the cooperation extended by him in the settlement proceedings, the Settlement Commission had also granted to him immunity from prosecution under the Customs Act, 1962 as well as under IPC. The reliance there, however, was being made not on KVSS 1998, but on the Scheme under section127H of the Customs Act, 1962which provided the immunity not only from the Customs Act offences but also from the Indian Penal Code and other central enactments. We must hasten to point out that at this juncture itself, the immunity under the KVSS 1998 does not refer to the offences under the Penal Code or under any other central law, but restricts itself under Section 90 (1) only to the offences under the direct tax enactment or indirect tax enactment and as such Section 127H of the Customs Act is much broader than Section 90(1) of Finance Act in its operation.21. The Court then in paragraph 46 of the above case held that the immunity granted by the Settlement Commission under the provisions of Customs Act and IPC had no bearing on the order of detention passed under the COFEPOSA Act. Thus inspite of the broader nature of section 127H of the Customs Act as compared with Section 90(1) of the Finance Act, this Court proceeded to hold that the detention under COFEPOSA Act was "outside the immunity". It was, therefore, clear that the rigour of observations made in paragraph 27 of Hiralals Case was taken away in paragraphs 46 of Alpesh Navinchandra Shahs case.22. It may be noted further that in Hiralals case the learned Judge had specifically found that there was no prima facie material as regards the offences under Sections 120B and 420 of the Indian Penal Code and that was also the reason why the prosecution was quashed. Such is not the ase here. It cannot again be forgotten that in Hiralals case the immunity was granted to thewhereas the appellant in the present case was neither an applicant under Section 90(1) nor was any immunity granted to him specifically. This aspect whether the immunity could be granted and could be enjoyed by any other person than the one who had made a declaration under Section 88 and was granted the immunity was considered in the subsequent judgment of this Court.In the above case, the question was whether the immunity granted under the KVSS 1998 could also cover proceedings under the Kerala Sales Tax Act in respect of the same assessee. The learned Judges again referred in paragraph 15 to Sushila Ranis case as also to Hiralals case and more particularly to the observations made in paragraphs 18 and 27, which we have already quoted above. The learned Judges then proceeded to hold that Hiralals case was distinguished in Sashi Balasubramanians case (cited supra) and held that the transfer of application of Salex Tax Act would not be covered by the immunity under KVSS, 1998. This Court in paragraph 33 observed asimmunity is granted only in respect of offences purported to have been committed under direct tax enactment or indirect tax enactment, but by no stretch of imagination, the same would be granted in respect of offences under the Prevention of Corruption Act. A person may commit several offences under different Acts; immunity granted in relation to one Act would not mean that immunity granted would automatically extend to others. By way of example, we may notice that a person may be prosecuted for commission of an offence in relation to property under the Penal Code as also under another Act, say for example, the Prevention of Corruption Act. Whereas charges under the Prevention of Corruption Act may fail, no sanction having been accorded therefore, the charges under the Penal Code wouldthis Court accepted the principle that the immunity could not cover certain other offences than those covered in direct and indirect tax enactments. The Court also accepted that the immunity could not be granted to any other person automatically merely it was granted to a taxpayer who had made declaration under Section 88 of the Finance Act.