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2017 (4) TMI 876 - GUJARAT HIGH COURT

2017 (4) TMI 876 - GUJARAT HIGH COURT - TMI - Quashing of FIR - case of Revenue is that the applicant evaded the tax liability of ₹ 24,96,72,373/by preparing false record, the goods were exported outside the State of Gujarat, and thereby, evading the Value Added Tax payable to the State of Gujarat - offence punishable under Sections 177, 406, 409, 419, 420, 465, 468, 471, 474, 477(A) and 120B of the Indian Penal Code and Sections 85(1) (b)(c)(e)(f)(g) and 85(4) of the Gujarat Value Added T .....

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effect like the one under the Information Technology Act, then it makes all the difference. Once the special provisions having the overriding effect do cover a criminal act and the offender, he gets out of the net of the Indian Penal Code. - It cannot be said, by any stretch of imagination, that Section 85 of the Gujarat Value Added Tax Act, 2003 covers the offences punishable under Sections 177, 406, 409, 419, 420, 465, 468, 471, 474, 477 and 120B of the Indian Penal Code. - Reliance w .....

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t in accordance with law in support of the prosecution case before the chargesheet is filed - application rejected - decided against applicant. - CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE FIR/ORDER) NO. 8925 of 2017 - Dated:- 10-4-2017 - MR. J.B.PARDIWALA, J. FOR THE APPLICANT : MR ND NANAVATY, SENIOR ADVOCATE FOR NANAVATY ADVOCATES, ADVOCATE FOR THE RESPONDENT : MR MITESH AMIN, PP WITH MS SHRUTI PATHAK, APP ORAL JUDGMENT 1 By this application under Section 482 of the Code of Criminal .....

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Information Report came to be lodged at the Gandhidham 'A' Division Police Station by the respondent No.2 serving as the 'Inspector of Commercial Tax', inter alia, alleging that the applicant evaded the tax liability of ₹ 24,96,72,373/by preparing false record, the goods were exported outside the State of Gujarat, and thereby, evading the Value Added Tax payable to the State of Gujarat. 3 Mr. N.D. Nanavaty, the learned senior counsel appearing for the applicant submitted th .....

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e case of Sharat Babu Digumati vs. Govt. of NCT of Delhi [(2017) 2 SCC 18] and the another of the Punjab and Haryana High Court in the case of M/s. Mahalakshmi Spinners Ltd vs. State of Haryana [2007 Cri. L.J. 429]. 5 On the other hand, this application has been vehemently opposed by Mr. Mitesh Amin, the learned Public Prosecutor appearing on behalf of the State respondent. 6 Mr. Amin would submit that there is nothing in the statute i.e. the Value Added Tax Act, which provides the investigation .....

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tigation. He submits that the allegations levelled against the applicant herein and the other coaccused are very serious. The tax evasion is to the tune of ₹ 24 Crore and odd. He pointed out that many documents have been forged for the purpose of evasion of the tax liability. He submits that the investigation is at a very crucial stage and the police should be permitted to complete the same in accordance with law. 7 Having heard the learned counsel appearing for the parties and having cons .....

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chases goods; (b) knowingly furnishes a false return where the amount of tax, which could have been evaded if the false return had been accepted as true, exceeds ₹ 1000; (c) knowingly produces before the Commissioner, false tax invoice, bill, voucher, cashmemorandum, declaration, certificate or other document for claiming deduction or tax credit, the value of which exceeds ₹ 1000 (d) fails to pay tax as per the returns filed by him; (e) knowingly keeps or produces false account; (f) .....

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being registered in contravention of section 21; or (b) fails without sufficient cause to furnish any information required by section 26; or (c) fails to surrender his certificate of registration as provided in subsection (9) of section 27; or (d) fails without sufficient cause to furnish any returns as required by section 29 by the date and in the manner prescribed; or (e) without reasonable cause, contravenes any of the provisions of section 31; or (f) fails without sufficient cause, when dir .....

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ents contained in section 67 or 68, (j) issues to another registered dealer tax invoice, retail invoice, bill or cash memorandum with the intention to defraud the Government revenue or with the intention that the Government may be defrauded of its revenue, shall, on conviction, be punished with imprisonment for a term which may extend to one year and with fine of rupees twenty thousand. (3)Subject to the provision of section 97, if any Government servant discloses any particulars referred to in .....

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e is a continuing one under any of the provisions of these subsections, shall, on conviction, be punished with daily fine which shall not be less than rupees five hundred during the period of the continuance of the offence, in addition to the punishments provided under this section. (6)Where a dealer is guilty of an offence specified in subsections (1) and (2), the person to be the manager of the business of such dealer under section 65 shall also be deemed to be guilty of such offence, unless h .....

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g contained in the Code of Criminal Procedure, 1973, all offences punishable under this Act or the rules shall be cognizable and bailable. 11 Section 88 of the Act is with regard to the investigation of offences. It reads as under: 88. Investigation of offences. (1)Subject to such conditions as may be prescribed, the Commissioner may authorise either generally or in respect of a particular case or class of cases any officer or person subordinate to him to investigate all or any of the offences p .....

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e Indian Penal Code. However, from the record, it can clearly be seen that in addition to the offences which are common in both the statute, the F.I.R. is also registered for certain offence under Sections 406, 409, 420, 465, 468, 471, 474, 477(A) and 120B of the Indian Penal Code. 13 A similar question fell for consideration before the Supreme Court in the case of State of West Bengal (supra). In the said case, under the West Bengal Sales Tax Act, a provision was made that the investigation und .....

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ct, 1994 treating as F.I.R. The registration of the said F.I.R. came to be challenged before the Calcutta High Court. The Calcutta High Court holding that the investigation could not have been carried out by anyone except the Bureau of Investigation, as constituted under the said Act, quashed and set aside the proceedings. The State of West Bengal went in appeal before the Supreme Court. The Supreme Court, while setting aside the judgment of the Calcutta High Court, has observed in paras 16, 17, .....

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owers the State government to constitute a Bureau of Investigation for discharging the functions referred to in subsection (3) thereof. It empowers the Bureau to carry on the investigation or hold enquiry into any case or alleged or suspected case of evasion of tax or malpractice created thereof and send a report of it to the Commissioner. A reading of Section 7 makes it clear that creation of Bureau of Investigation for the purpose of discharging the function envisaged in subsection (3) which, .....

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ducted by the Bureau there is no inhibition to pass over the investigation to the regular police. 18. If the view of the learned single judge gets approval it would lead to startling consequences. The consequences of such an interpretation would be that if the person who commits the offence under Section 88 of the Act also commits other serious offences falling under Indian Penal Code as part of the same transaction neither the regular police nor any special police force nor even the Central Bur .....

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s of the opinion that investigation has to be conducted by the Bureau then also there was no need to quash the FIR. Any way we take the view that as offences under the Indian Penal Code are also involved, efficacious investigation can be conducted by entrusting it to the police investigating agency. Inherent powers of the High Court as recognised in Section 482 of the Code are reserved to be used "to give effect to any orders under the Code, or to prevent abuse of the process of any court o .....

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the present case are almost identical to the one with the facts of the case which were before the Supreme Court in the case of State of West Bengal (supra). Not only that, but in the present case, Section 88 does not provide that the investigation shall be carried out only for the offences of the Value Added Tax Act. In that view of the matter, the present case, even on facts, is squarely covered by the judgment of the Supreme Court in the case of State of West Bengal (Supra). 15 The Supreme Co .....

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e of Institute of Chartered Accountants of India vs. Vimal Kumar Surana and another [(2011) 1 SCC 534], the Supreme Court considered the question whether the provisions contained in Sections 24, 24A and 26 of the Chartered Accountants Act, 1949 would operate as a bar against the prosecution of a person who is charged with the allegations, which constitute an offence or offences under other laws, including the Penal Code. The Supreme Court, while taking the view that a person can be charged under .....

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er Section 28, which may ultimately result in imposition of the punishment prescribed under Section 24 or subsection (2) of Section 24A, 25 or 26 and such member or non member or company can also be prosecuted for any identified offence under the IPC. 21 The object underlying the prohibition contained in Section 28 is to protect the persons engaged in profession of chartered accountants against false and untenable complaints from dissatisfied litigants and others. However, there is nothing in th .....

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n is a person other than he or such other person really is (Section 416 IPC), then he can be charged with the allegation of cheating by personation and punished under Section 419 for a term which may extend to 3 years or with fine or both. If a person makes any false document with the intent to cause damage or injury to the public or to any person, or to support any claim or title, then he can be prosecuted for an offence of forgery (Section 463) and can be punished under Section 465 with impris .....

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67 or with such intent, in his possession any such seal, plate or other instrument, knowing the same to be counterfeit then he is liable to be punished with imprisonment for life or with imprisonment which may extend to 7 years. He shall also be liable to fine. 23 The provisions contained in Chapter VII of the Act neither define cheating by personation or forgery or counterfeiting of seal, etc. nor provide for punishment for such offences. If it is held that a person acting in violation of Secti .....

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g in view the settled law that if there are two possible constructions of a statute, then the one which leads to anomaly or absurdity and makes the statute vulnerable to the attack of unconstitutionality should be avoided in preference to the other which makes it rational and immune from the charge of unconstitutionality. That apart, the Court cannot interpret the provisions of the Act in a manner which will deprive the victim of the offences defined in Sections 416, 463, 464, 468 and 471 of his .....

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me offence. 17 I have to my advantage a decision of the Punjab and Haryana High Court rendered in the case of Sharanjit Singh vs. State of Punjab [Criminal Miscellaneous Application No.29107 of 2013 decided on 21st December 2013]. In the said case also, the contention on behalf of the Bank was that the provisions of the VAT Act and the Indian Penal Code cannot be invoked simultaneously, in respect of the same offence. A learned Single Judge of the High Court, while rejecting such contention, obs .....

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there is no reason why, for the commission of such offence alone, proceedings under the IPC would not be maintainable against the petitioner. 18 In taking the aforesaid view, the learned Single Judge relied upon the decision of the Supreme Court in the case of Institute of Chartered Accountants of India (supra) referred to above. 19 Let me now deal with the two decisions relied upon by Mr. Nanavaty, in support of his submissions. 20 In Sharat Babu(supra), the appellant therein and others were a .....

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of the I.T. Act which reads as under: 81. Act to have overriding effect.The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. The Supreme Court, thereafter, proceeded to observe as under: 28. Having noted the provisions, it has to be recapitulated that Section 67 clearly stipulates punishment for publishing, transmitting obscene materials in electronic form. The said provision read with Section 67A an .....

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provisions will have their play and significance, if the alleged offence pertains to offence of electronic record. It has to be borne in mind that IT Act is a special enactment. It has special provisions. Section 292 of the IPC makes offence sale of obscene books, etc. but once the offence has a nexus or connection with the electronic record the protection and effect of Section 79 cannot be ignored and negated. We are inclined to think so as it is a special provision for a specific purpose and .....

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notwithstanding anything inconsistent therewith contained in any other law. The Delhi Rent Control Act, 1958 also contained nonobstante clauses. Interpreting the same, the Court held: When two or more laws operate in the same field and each contains a nonobstante clause stating that its provisions will override those of any other law, stimulating and incisive problems of interpretation arise. Since statutory interpretation has no conventional protocol, cases of such conflict have to be decided i .....

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each a nonobstante clause, providing that certain provisions would have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force ... . This Court resolved the conflict by considering the object and purpose of the two laws and giving precedence to the Banking Companies Act by observing: It is, therefore, desirable to determine the overriding effect of one or the other of the relevant provisions in these two Acts, in a given case, on much broad .....

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Rent Act must hold the field and be given full effect despite anything to the contrary contained in the Slum Clearance Act. 29. In Talchar Municipality v. Talcher Regulated Market Committee [(2004) 6 SCC 178], the Court was dealing with the question whether the Orissa Municipal Act, 1950 or Orissa Agricultural Produce Markets Act, 1956 should apply. Section 4(4) of the 1956 Act contained a nonobstante clause. In that context, the Court opined: The Act, however, contains special provisions. The .....

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ri Sangh v. M.P. Electricity Board, 2004(2) S.C.T. 277: (2004) 9 SCC 755). 30. In Ram Narain (supra), the Court faced a situation where both the statutes, namely, Banking Companies Act, 1949 and the Displaced Persons (Debuts Adjustment) Act, 1951 contained nonobstante clause. The Court gave primacy to the Banking companies Act. To arrive at the said conclusion, the Court evolved the following principle: 7. … It is, therefore, desirable to determine the overriding effect of one or the othe .....

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and Section 32 of Sick Industrial Companies (Special Provisions) Act, 1985, observed as follows: Where there are two special statutes which contain non obstante clauses the later statute must prevail. This is because at the time of enactment of the later statute, the Legislature was aware of the earlier legislation and its non obstante clause. If the Legislature still confers the later enactment with a non obstante clause it means that the Legislature wanted that enactment to prevail. If the Leg .....

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We have also referred to Section 79 and 81 of the IT Act. Once the special provisions having the overriding effect do cover a criminal act and the offender, he gets out of the net of the IPC and in this case, Section 292. It is apt to note here that electronic forms of transmission is covered by the IT Act, which is a special law. It is settled position in law that a special law shall prevail over the general and prior laws. When the Act in various provisions deals with obscenity in electronic .....

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investigation, inquiry, trial, etc. according to the provisions of the Code. Subsection (2) of Section 4, however, specifically provides that offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, tried or otherwise dealing with such offences. 23. TOHO being a special Act and the matter relating to .....

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the respondent upon completion of investigation and upon obtaining remand of the accused from time to time, was required to file a police report, it was precluded from doing so by reason of the provisions contained in Section 22 of TOHO. The Supreme Court, ultimately, took the view that the High Court had fallen into error in taking the view that although the charge had not been made out under Section 67 of the I.T. Act, yet the police could have proceeded under Section 292 of the Indian Penal C .....

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