2010 (8) TMI 883 - HC - VAT and Sales Tax

Summary

Issues: Application for quashing of proceeding under Bihar Finance Act and Indian Penal Code

Issue 1: Quashing of proceedings under the Bihar Finance Act and IPC
The petitioners, engaged in a paper distribution business, were assessed to pay taxes for certain years, with a significant amount due. After seeking exemption and going through various levels of authority, the Commercial Taxes Appellate Tribunal finally allowed their claim for exemption, setting aside all previous tax demands. Despite no stay order against them, the petitioners were charged under section 409 of the Indian Penal Code and the Bihar Finance Act. The petitioners argued that since the tax demand was set aside, further legal proceedings were an abuse of the legal process. The opposite party did not dispute this but emphasized the need for the petitioners to pay the assessed tax amount. The court acknowledged the right of the petitioners to raise issues during trial but cited precedents where courts should intervene under section 482 of the Criminal Procedure Code if no offense is made out. The court referred to previous judgments to support the quashing of proceedings when no offense is established. Given that the tax demands were already set aside by competent authorities in 2004, the court concluded that allowing the proceedings to continue would be an abuse of the legal process and a waste of judicial time. The court allowed the application and quashed the first information report and the order taking cognizance of the case.

Conclusion
The High Court of Patna, in the judgment delivered by Justice Akhilesh Chandra J., allowed the application for quashing the entire proceeding pending in the court of the Chief Judicial Magistrate, Patna, under the Bihar Finance Act and the Indian Penal Code. The court based its decision on the fact that the tax demands against the petitioners had been set aside by the Commercial Taxes Appellate Tribunal, making further legal proceedings an abuse of the legal process. The court emphasized the need to prevent the accused from undergoing the agony of a trial when no offense is established, citing relevant precedents. The judgment quashed the first information report and the order taking cognizance of the case, highlighting the importance of upholding legal principles and preventing wastage of judicial time.