Madras High Court
M. Natarajan vs State Represented By Inspector Of ... on 3 October, 2005
Equivalent citations: 2006(197)ELT476(MAD)
Author: S.R. Singharavelu
Bench: S.R. Singharavelu
ORDER S.R. Singharavelu, J.
1. The Criminal Revision Petition is preferred against the order passed by the learned Principal Special Judge for CBI Cases, Chennai in Crl. M.P. No. 146 of 2005 in C.C. No.6 of 2004, dated 18.04.2005. The Criminal Original Petition is filed to quash the proceedings in C.C.No.6 of 2004, on the file of Principal Special Judge for CBI Cases (VIII Addl.), Chennai.
2. The brief facts mentioned in the Crl. O.P., which can also be applied in the Revision Case, are as follows:-
One Dr. S. Balakrishnan (3rd accused) purchased a Lexus car, which was sent by ship to Madras in July 1994. Yogesh Balakrishnan (4th accused), who is the son of 3rd accused, delivered certain documents for getting clearance of the said car from the Customs Department. One of the said documents was the letter dated 08.09.1994 of 1st accused, the present petitioner, who is the publisher of a magazine called "TAMIlARASI", which was commenced in the year 1992. The 1st accused is also the author of bi-monthly magazine "PUDIYA PARVAI", which was commenced in the year 1993. One Baskaran (2nd accused) was assisting the petitioner/1st accused, and he was also in-charge of the said publications. Allegation of criminal conspiracy among the above said four accused in getting customs clearance for the importing of Toyata car, under the condition of transfer of residence to India for permanent settlement, was made on the footing that they produced forged fabricated invoice dated 13.07.1993 showing undervalue of the car and also wrongly mentioning that the car was purchased in the year 1993, so as to fulfil the condition precedent for importing the said car.
3. There was also a letter said to have been given by the petitioner/1st accused, on the basis of which 'Foreign Inward Remittance certificate" (FIRC) was obtained by Accused Nos.1 to 4, with the connivance of 5th accused, the Manager of the bank, and also some other customs officials regarding whom prosecution was not instituted and only departmental action was mooted. If the correct year of the purchase of car, namely, 1994 was mentioned, that would be a deviation of the condition precedent for importing the said car. Therefore, it was wrongly mentioned as if it was purchased in the year 1993; forged invoice dated 13.07.1993 for undervaluing the car was said to have been issued; FIRC was also obtained by production of a letter dated 08.09.1994. Thus, the clearance of the car was made on 08.04.1994 by knowing fully well that the car was not purchased in the year 1993, that the original cost of the car was more than the declared value that the FIRC was obtained on wrong representation and that the importer Dr. Balakrishnan produced forged document, causing wrongful loss of Rs.4 lakhs to the Government of India by way of customs duty.
4. Based upon the above allegation, case was registered on 22.04.1998 against Accused Nos.3 to 5 and the customs officials. But before ever charge sheet was filed on 30.01.2004, materials were gathered indicating the above involvement of 1st and 2nd accused and therefore, charge sheet was directed against them also. The case was posted in the month of April, 2004 for receiving copies by the accused. Balakrishnan (3rd accused) did not appear in court and therefore, non-bailable warrant was pending against him in the above case of C.C.No.6 of 2004 on the file of the learned Principal Special Judge for C.B.I. Cases, Chennai. In the meantime, 4th accused, the son of 3rd accused, filed Crl.M.P.No.301 of 2004 for return of the passport and that was dismissed, against which revision in Crl.R.C.No.1563 of 2004 was filed on 11.04.2005, in which direction was issued by this Court to split up the case against 3rd accused, against whom NBW was pending, and to proceed and dispose of the case against others, within a time-frame. Subsequently, the trial commenced, in which 22 witnesses were examined; 82 documents were marked on the side of the prosecution. The case stood posted on 05.09.2005 for examination of Defence Witnesses. It is, in the meantime, 1st accuse filed discharge application in Crl.M.P.No.146 of 2005, on the file of the learned Principal Special Judge for CBI cases, Chennai, which was dismissed on 18.04.2005, finding that the relief of "KVSS" is to be considered only in the course of trial of the case and declined to give any finding with respect to the discharge; against which, the petitioner preferred this Revision Case, besides, subsequently filing Crl.O.P.No.21636 of 2005 for quashing. Simultaneously, on 02.05.2005, 1st accused filed W.P.215 of 2005, on the file of Supreme Court, wherein a direction was issued on 13.05.2005 for early disposal of this Revision Case as well as the direction to 1st accused to move for stay, before the High Court. On such direction, in Crl.M.P.No.3565/2005, this Court dismissed the stay petition filed by 1st accused, on 24.05.2005. Thus, the Revision Case and the Crl. O.P. were filed.
5. The contention of the learned counsel for the petitioner is three fold;
(1) petitioner has no role with respect to the production of documents for clearance of the car;
(2) the concept that while framing charges, materials found in documents under section 173 of the Criminal Procedure Code alone are to be looked into, is erroneous, in view of the observation made by the Supreme Court in Sushila Rani v. CIT and CBI v. Dunkans Agro Industries Ltd., Calcutta ;
(3) under section 239 of the Criminal Procedure Code, accused shall be given an opportunity of being heard.
6. Learned counsel for the petitioner drew my attention to the various provisions of Finance Act 2/98 and more particularly, section 86 in Chapter IV of the special enactment and also to the Kar Vivad Samadhan Scheme of 1998 (KVSS) which was framed with effect from 01.09.1998 under the Rules of the said Act; which also provides for Form of Declaration to settle customs duty. Thus, according to Rule 3(1)(b) of the Rules, 3rd accused filed declaration in Form -1B, under section 88 of the said Act. On 27.02.1998, the customs Department issued Certificate of Intimation under section 90(1) of the Act, determining the amounts under section 88(f) of the said Act, as Rs.2,84,325/-, which was remitted by 3rd accused, on 18.03.1999. This final settlement was arrived at between the parties as against the arrears of tax of Rs.5,68,649/-. It is, in spite of this compromise, to the dismay of this petitioner, he was charge sheeted under sections 420, 467, 471, 120B, IPC and under Section 13(2) and 13(1)(d) of Prevention of Corruption Act and the case was taken on file in C.C.No.6 of 2004, on the file of the learned Principal Special Judge for CBI cases, Chennai; and to the utter dismay of this petitioner, action already mooted against the Customs Department officials for alleged connivance with this petitioner was dropped with a suggestion that departmental action could be proceeded against them. It is, therefore, this petitioner preferred Crl.M.P.No.146 of 2005 in C.C.No.6 of 2004, on the file of the learned Principal Special Judge for CBI cases, Chennai, under section 239 Cr.P.C. stating that the filing of final report is in gross violation of "KVSS" and that it is contrary to the observations made in Heeralal Harilal Bhagwati v. CBI, New Delhi .
7. Learned Public Prosecutor, at the outset, relied upon the decision in M/s. Bhaskar Industries Ltd. v. Bhiwani Denim & Apparels Ltd., and contended that the Crl.O.P. filed under section 482 of Criminal Procedure Code as well as the Revision Case filed under section 239, Criminal Procedure Code, cannot co-exist simultaneously. A reading of the observation made in the above judgment makes the Revision Case maintainable, and on which also arguments was advanced by the learned counsel for the petitioner. Without going into the technicalities of the matter, even if either quashable or dischargeable points are available on the side of the petitioner, remedy in the appropriate proceedings may be given, and if such remedy is not available in either of the cases, then both have to be dismissed.
8. The learned Public Prosecutor immediately cited the decision of the Supreme Court in State of Orissa v. Debendra Nath Padhi (2004 (8) Supreme 568 which overruled the decision in the case of Sushila Rani and Dunkans Agro Industries Ltd. stated supra.
9. After referring to various case laws including the above cited cases, it was decided in the above cited decision in Devendranath Padhi's case that at the stage of framing of charge, material as produced by the prosecution alone is to be considered and not the one produced by the accused. In that case, it was contended on behalf of the State that the contention made in Satish Mehra v. Delhi Administration and another, , runs counter to the views expressed by this Court, in large number of decisions, which amounts to upsetting well settled legal propositions and making nugatory amendments made in Code of Criminal Procedure from time to time and would result in conducting a mini trial at the stage of framing of charge or taking cognizance. It was observed that such a course would not only be contrary to the object and the scheme of the Code, but would also result in total wastage of the court time because of conducting of two trials, one at the stage of framing charge and the other after the charge is framed. In that case, reliance was also placed on behalf of the accused on some observations made in Minakshi Bala .v. Sudhir Kumar and Ors., , to the effect that in exceptional cases, the High Court can look into only those documents which are unimpeachable and can be legally translated into relevant evidence is misplaced for the purpose of considering the point in issue in these matters. Actually, in that case, it was held that once charges are framed under section 240, Cr.P.C. the High Court in its revisional jurisdiction would not be justified in relying upon documents other than those referred to in Sections 239 and 240 Cr.P.C; nor would it be justified in invoking its inherent jurisdiction under section 482 Cr.P.C. to quash the same, except in those rare cases, where forensic exigencies and formidable compulsions justify such a course. It was further observed by adding that in such exceptional cases, the High Court can look into only those documents which are unimpeachable and can be legally translated into relevant evidence. Finally, after considering the entire arguments, it was decided in Debendra Nath Padhi's case as follows:
"23. As a result of aforesaid discussion, in our view, clearly the law is that at the time of framing charge or taking cognizance the accused has no right to produce any material. Satish Mehra's case holding that the trial court has powers to consider even materials which accused may produce at the stage of Section 227 of the Code has not been correctly decided".
10. By relying upon the above judgment, the learned Public Prosecutor would argue that as per section 239 Cr.P.C. only materials under section 173 Cr.P.C. can be looked into and no other evidence produced on the side of the accused could be canvassed. Thus, the learned Public Prosecutor put an embargo upon the consideration of "KVSS" in which final settlement was arrived at between the parties regarding the arrears of customs duty. Let us now see in detail about the applicability of KVSS Scheme, which according to petitioner will enable him to get discharge from the prosecution. In case it could not form any basis for discharge or quash, then however unimpeachable it be, no useful purpose would thereby flow to petitioner.
11. Before ever testifying the utility of KVSS Scheme in favour of petitioner, the chance of statutory exclusion under section 95 of the Act shall have to be dealt with. Section 95 of the said Act provides exclusion of the provisions of the Scheme to certain categories and 95(iii) provides that the provisions of such Scheme do not apply to any person in respect of whom prosecution for any offence punishable under Chapter IX or Chapter XVII of the Indian Penal Code, the Foreign Exchange Regulation Act, 1973. the Prevention of Corruption Act, 1988, or for the purpose of enforcement of any civil liability has been instituted on or before the filing of the declaration.
12. Learned counsel for the petitioner further submitted that this exception clause may not be applicable against the petitioner, because no prosecution was instituted before filing of the declaration by 3rd accused which was done in this case on 18.01.1999; as first information report in this case was registered on 22.04.1998; charge sheet was filed on 17.03.2004. If only the statutory exclusion under section 95 of the Act is not applicable, then it can be further gone to the aspect of utility of the said Scheme to support the case of discharge of the petitioner.
13. Earnest endeavour was made on the side of the State that "KVSS" could not be applied in certain cases as provided under section 95 of Finance Act 2 of 1998. Section 95(ii) of Kar Vivad Samadhan Scheme Rules runs as follows:-
95(ii) in respect of tax arrear under any indirect tax enactment,-
(a) in a case where prosecution for any offence punishable under any provisions of any indirect tax enactment has been instituted on or before the date of filing of the declaration under Section 88, in respect of any tax arrear in respect of such case under such indirect tax enactment;
(b) in a case where show cause notice or a notice of demand under any indirect tax enactment has not been issued;
(c) in a case where no appeal or reference or writ petition is admitted and pending before any appellate authority or the High Court or the Supreme Court or no application for revision is pending before the Central Government on the date of declaration made under Section 88;
14. Section 95(iii) of Kar Vivad Samadhan Scheme runs as follows:
(iii) to any person in respect of whom prosecution for any offence punishable under Chapter IX or Chapter XVII of the Indian Penal Code (45 of 1860), the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985), the Terrorist and Disruptive Activities (Prevention) Act, 1987 (28 of 1987), the Prevention of Corruption Act, 1988 (49 of 1988), or for the purpose of enforcement of any civil liability has been instituted on or before the filing of the declaration or such person has been convicted of any such offence punishable under any such enactment".
15. True, this provision of the Scheme shall not apply to any person in respect of whom prosecution for any offence punishable under Chapter IX or Chapter XVII of IPC, etc., has been instituted on or before filing of the declaration, etc. In this case, the first information report was registered on 22.04.1998 and the charge sheet was filed on 30.01.2004 and the declaration was made on 18.01.1999. It is incorrect on the part of the learned Public prosecutor to say that the registering of a case on the basis of first information report made, amounts to institution of prosecution.
16. What is institution of prosecution, as held in Assistant Collector of Customs, Bombay .v. L.R. Meclwani is as follows:
"Prosecution would mean an initiation or starting of proceeding of criminal nature in a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute which creates the offence and regulates the procedure".
17. It has been held in Balkishan .v. State of Maharashtra that the mode of initiating prosecution by submitting a report under section 173 read with clause (b) of 190 of the Code is not, therefore, available to an officer of the Railway Protection Force, etc. The only mode of initiating prosecution of the person against whom he has successfully completed the inquiry, is by making a complaint under Section 190(1)(a) of CrPC to the Magistrate empowered to try the offence.
18. The learned counsel also relied upon section 154 CrPC and other connected provisions under Chapter XII of the said Code. Those provisions deal only with the investigation by the concerned police officer. Even under section 170 CrPC, if, upon an investigation, it appears to the officer in charge of the police station that there is sufficient evidence or reasonable ground, such officer shall forward the accused to the Magistrate upon a police report and request the Magistrate to take cognizance of the offence and to try the accused or commit him for trial. It is at that stage only, there can be institution of prosecution before a court of law making the accused to undergo the process of prosecution. Even as per section 225 CrPC, in every trial before a Court of Session, the prosecution shall be conducted by a Public Prosecutor and under section 226 CrPC, it is stated that when the accused appears or is brought before the Court in pursuance of a commitment of the case under section 209, the prosecutor shall open his case by describing the charge brought against the accused and stating by what evidence he proposes to prove the guilt of the accused. Under section 244 CrPC also it is stated that when, in any warrant case instituted otherwise than on a police report, the accused appears or is brought before a Magistrate, the Magistrate shall proceed to hear the prosecution and take all such evidence as may be produced in support of the prosecution.
19. A conjoint reading of all these provisions would only go to show that institution of prosecution can be done only before the court of law making the accused liable for the punishment at the hands of the court after proving the evidence against him. The evidence was collected in the process of investigation and even though investigation may lead to institution of prosecution, the materials gathered against the petitioner in order to substantiate the guilt has to be placed before the Magistrate with a request to take cognizance of the case and it is at that stage when the offence was taken cognizance of there becomes the institution of prosecution. It is in this view of the matter, registering an first information report on 22.04.1998 cannot be termed as institution of prosecution as provided under section 95 of the Finance Act 2 of 1998. It is only the filing of charge sheet on 17.03.2004 that may amount to initiation of prosecution. Declaration was made on 18.01.1999. If only declaration precedes initiation of prosecution, then there will be immunity. In this case, declaration precedes charge sheet. So, section 95 of the said Act gets excluded and is not applicable to the present facts of the case. Therefore, the utility point of the KVSS Scheme can be gone into, so that it can be found that the said Scheme can be successfully relied on or cannot be done so by the petitioner for the purpose of quashing or discharging.
20. After having made it clear that there is no statutory exclusion under section 95 of the Act and that section 95 of the Scheme is not going to act against the petitioner in excluding him from availing the benefits of the Scheme, then it was argued that as per section 91 of the said Act, there is immunity of prosecution available in favour of the petitioner. It was further contended by the learned counsel for the petitioner that if this material of "KVSS" in the final settlement arrived at between the parties was taken into consideration, then there shall be a discharge.
21. Learned counsel for the petitioner has drawn my attention to various provisions of the Finance Act 2 of 1998 and the "KVSS" framed thereunder. That scheme was dealt with in Chapter IV of the said Act and sections 88, 90 and 91 of the said Act are to be looked into. Section 88, provides settlement of tax payable and according to which, where any person makes, on or after the 1st day of September 1998 but on or before 31st day of December 1998, a declaration to the designated authority, in respect of tax arrear then, notwithstanding anything contained in any direct tax enactment or indirect tax enactment or any other provision of any law for the time being in force, the amount payable under Scheme by the declarant shall be determined.
22. Section 90 of the said Act provides time and manner of payment of tax arrears, according to which, within sixty days from the date of receipt of the declaration under section 88 of the said Act, the designated authority shall, by order, determine the amount payable by the declarant and grant a certificate in such form to the declarant, setting forth therein the particulars of the tax arrears towards full and final settlement of tax arrears. If those amount is paid, then according to section 91 of the said Act, immunity upon prosecution is granted.
23. Section 91 of the said Act provides that a designated authority shall grant immunity from instituting any proceedings for prosecution for any offence under any direct tax enactment or indirect tax enactment, or from the imposition of penalty under any of such enactments, in respect of matters covered in the declaration under section 88 of the said Act.
24. In order to support the above contention, reliance was placed on Hiralal's case. In that case also, there was allegation of cheating of the Government of India in terms of evasion of customs duty and by concealment of facts and that Customs Duty Exemption Certificate was obtained in respect of MRI and Lithotripsy machines and by violating the provisions of "actual-user" condition as per import-export policy and Customs Notification during the year 1987-88, despite acknowledging the fact that the customs duty has been paid by the appellants to the Customs Department and settled under KVSS 1998. Although there was demand of duty of Rs.2 crores under section 28 of the Customs Act, 1962, considering the charitable and philanthropic activities of Gujarat Cancer Society (GCS), no prosecution was recommended and only a token redemption fee of Re.1 was imposed. In that case also, a Certificate of full and final settlement of tax arrears in respect of KVSS, 1998 was issued to the GCS on 19.07.1999. However, a case was registered against the appellants on 06.01.1999 by alleging that the appellants, in conspiracy with the Director of Gujarat Cancer and Research Institute (GCRI) had cheated the Government of India in evasion of customs duty. A charge sheet was prepared for the commission of offence under section 120-B read with 420 IPC. Upon the charge sheet, cognizance was taken and summons were issued. Appellants were furnished copies of the charge sheet. In the meantime, they preferred special criminal application before the High Court of Gujarat, seeking quashing of first information report. Appellants also filed an application under section 482 Cr.P.C. read with Article 227 of the Constitution of India seeking an appropriate direction, quashing the first information report. Learned single Judge of the High Court of Delhi, dismissed the said petition. Hence, two appeals were preferred by way of special leave petitions.
25. It was argued that by theory of estoppel, by having accepted the claim of appellants on the basis of KVSS, it is not permissible for the respondents now to turn around and take a different stand in prosecuting them. It was further argued that the complaint filed against the appellants is unsustainable and that the appellants are reputed persons, who had never contemplated committing any violation of law or thought of taking any undue advantage of the exemption Notification under the Customs Act.
26. Learned counsel for the petitioner relied upon Sushila Rani's case , and Dunkans Agro Industries Ltd., and urged that the alleged criminal liability stood compounded on a settlement with respect to the civil issues and, therefore, the FIR was erroneously issued and was totally unwarranted.
27. On behalf of the State, it was contended in that case that settlement under "KVSS" would only protect the individual from prosecution under the taxation statute which is a limited protection and limited to the proceedings under the taxation statute only and it cannot be the ground and basis for quashing the criminal proceedings. In short, it was argued by the State that the Scheme gives immunity only from prosecution under the relevant taxing statute and not for any offence under the Indian Penal Code. It was held in para 15 of the judgment of Hiralal's case that the said Scheme seeks to provide a quick and voluntary settlement of tax dues outstanding as on 31.03.1998, both in various direct tax enactments as well as indirect tax enactments by offering waiver of a part of the arrear taxes and interest and providing immunity against institution of prosecution and imposition of penalty. After having gone through the Scheme and the Certificate issued by the Customs authority, it was held in Hiralal's case that GCS is immuned from any criminal proceedings pursuant to the certificates issued under the said Scheme and the appellants are being prosecuted in their capacity as office bearers of the GCS and in that circumstance, the Government has not suffered any financial loss and the complaint filed against the appellants was held as unsustainable.
28. Learned counsel drew my attention to the following portion of the judgment in its para 27 (Hiralal's case) upon considering Sushila Rani's case.
"On a reading of the judgment in the case of Sushila Rani, it is clear to us that if an assessee takes the option under this Scheme, he obtains immediate immunity under any proceeding under any and all laws in force. As such the present proceedings initiated under Section 120-B read with Section 420 of the Indian Penal Code are bad and ought to have been quashed with immediate effect".
29. To my notice, the following further observation made in that case was also drawn:-
"The learned single Judge has not appreciated the fact that the continuance of the proceedings in the instant case would only tantamount to driving the appellants to double jeopardy when they had been honourably exonerated by the Collector of Customs and the GCS of which one of the appellants was granted amnesty under KVSS, 1998".
30. It was further pointed out in para 30 of the said judgment, which runs as follows:-
"...The true fact and import of the Kar Vivad Samadhan Scheme, 1998, in our view, is that once the said Scheme is availed of and all the formalities complied with including the payment of the duty, the immunity granted under the provisions of the Customs Act, 1962 also extends to such offences that may prima facie be made out on identical allegations i.e. of evasion of customs duty and violation of any notification issued under the said Act".
That is why in para 31 of the said judgment, it was held that there was no prima facie case made out in respect of the alleged offence under section 120-B read with 420 IPC and therefore, the charge sheet and the process issued thereunder were quashed. By relying upon this Scheme, learned counsel for the petitioner contended that there shall be a discharge of the petitioner from the criminal proceedings and those proceedings are to be quashed.
31. Insisting upon the aspect that the "KVSS" cannot be refused to be considered under the pretext of contents of section 239 CrPC as if only documents filed under section 173 CrPC by the police can be looked into and that no other evidence or material on the side of the accused be considered, learned counsel for the petitioner pointed out that even under section 239 CrPC, the Magistrate can discharge the accused, if he considers the charge against him is groundless, only after giving the prosecution and the accused an opportunity of being heard.
32. Thus, according to the learned counsel for the petitioner, what is stated by the learned Public Prosecutor as if under section 239 CrPC only documents of police under section 173 CrPC alone are to be looked into is erroneous. What is required is to consider documents filed under section 173 CrPC along with the representation to be made by the prosecution as well as the accused, after giving them an opportunity of being heard.
33. However, as held in the case of Minakshi Bala's case , forensic exigencies formidable compulsions legally translatable materials into relevant evidence may have to be looked into, in the event of those elements are available in the representation made by the accused, after giving him an opportunity. In this connection, reliance was also placed upon the decision reported in State of Haryana and Ors. .v. Bhajan Lal and Ors. and founded in para 102(6) which provides the categories of cases by way of illustration wherein held that such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. One such category is as follows:-
"Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party".
34. Thus the law is well settled that under section 482 CrPC, the express legal bar engrafted either in the Code or in the concerned Act, providing efficacious redress for the grievance of the aggrieved party is available, then an order under section 482 CrPC can be well founded upon that legal bar. Thus the legal bar and the constituent element that gives rise to such bar can be looked into not as of evidence on the side of defence but as a bone of contention of the representation made by the accused and which representation was made by availing an opportunity of being heard, as provided under section 239 CrPC itself. Thus not exactly the evidence on the side of the accused need be looked into but the forensic exigencies and formidable compulsions and the legally translatable material relevant to the issue have to be considered and refusal to consider the same may amount to miscarriage of justice and in fact, there is a legal command to consider those aspects. It is therefore the "KVSS" can be looked into and if it provides some immunity against the prosecution now launched against this petitioner, then those benefits will enure to the accused. Thus, the crux of the question is whether "KVSS" is applicable to the present facts of the case or not, and if not applicable, how the present case is different from the facts in issue of Hiralal's case.
35. The immunity of prosecution as provided under section 91 of the said Act will be available at the hands of the designated authority for any offence under direct tax enactment or indirect tax enactment or from the imposition of penalty in any of such an enactment, in respect of matters covered under the declaration under Section 88 of the said Act.
36. In this context, it is worthy to mention Sections 88 and 91, which are as follows:
88. Settlement of tax payable:- Subject to the provisions of this Scheme, where any person makes, on or after the 1st day of September 1998 but on or before 31st day of December 1998, a declaration to the designated authority, in respect of tax arrear then, notwithstanding anything contained in any direct tax enactment or indirect tax enactment or any other provision of any law for the time being in force, the amount payable under Scheme by the declarant shall be determined, the rates specified hereunder namely...
91. Immunity from prosecution and imposititon of penalty in certain cases:- The designated authority shall, subject to the conditions provided in section 90, grant immunity from instituting any proceeding for prosecution for any offence under any direct tax enactment or indirect tax enactment, or from the imposition of penalty under any of such enactments, in respect of matters covered in the declaration under section 88.
37. A reading of section 88 provides settlement of tax payable and it would show that a declaration to the designated authority between 01.09.1998 and 31.12.1998 in respect of tax arrears will make him entitle to determination of rate of tax specified thereunder; and that would be with the non-obstante clause against anything contained in any direct tax enactment or indirect tax enactment or any other provision of law for the time being in course. But such phraseology was not used in section 91 and what it provided is only immunity from instituting any prosecution for any offence for any direct tax enactment or indirect tax enactment or such other enactment. That is also in respect of matters covered under the declaration under section 88.
38. Thus, it is clear that the immunity is only to offence under enactment of direct or indirect tax or "any of such enactment"; thereby meaning that the enactment shall be relating to tax. Thus, the immunity is only against offences found in the enactment of taxation. Immunity does not extend to offences under IPC, which is not "such enactment" as covered under section 91; that being not an enactment under taxation. Thus, even in respect of matters covered under in the declaration under section 88, there cannot be an immunity from offences excepting that are mentioned in the tax enactment. Section 87(h) of KVSS, 1998 defines "direct tax enactment" which reads as follows:-
"87(h) "direct tax enactment" means the Wealth Tax Act, 1957 (27 of 1957) or the Gift Tax Act, 1958 (18 or 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)".
Section 87(j) of KVSS, 1998 defines "indirect tax enactment", which reads as follows:
"87(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".
39. Learned counsel for the petitioner submitted that if the provision of law is so admitted as claimed by the learned Public prosecutor, then there cannot be absolving of offences of Indian Penal Code, subsequent to the compromise and final settlement made under "KVSS", as found in Hiralaal's case. As a matter of fact, in Hiralal's case, FIR was filed on 06.01.1999 and the certificate under "KVSS" was issued to the appellants on 19.07.1999 and it was held-
"It is a well established principle of law that the matter which has been adjudicated and settled need not be dragged into the Criminal Courts unless and until the act of the appellants could have been described as culpable. The true fact and import of the Kar Vivad Samadhan Scheme, 1998, in our view, is that once the said Scheme is availed of and all the formalities complied with including the payment of the duty, the immunity granted under the provisions of Customs Act, 1962 also extends to such offences that may prima facie be made out on identical allegations i.e. of evasion of customs duty and violation of any Notification issued under the said Act".
40. It was further observed as follows:-
"The grant of immunity by the Designated Authority (KVSS-98) 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 declaration made by the declarant, the decision of the Collector not to recommend prosecution and to impose only a token fine of Re.1 only show that the Customs Authorities were satisfied that there was no intention to evade the customs duty. GCS is immune from any criminal proceedings pursuant to the certificate issued under KVSS. The appellants are being prosecuted in their capacity as office-bearers of GCS. As the customs duty has already been paid, the Central Government has not suffered any financial loss. Moreover, as per KVSS, 1998, whoever is granted the benefit under the said Scheme is granted immunity from prosecution for any offence under the Customs Act, 1962 including the offence of evasion of duty. In the circumstances, the complaint filed against the appellants is unsustainable....
In the instant case, under the said law which prevails in the field i.e. the Customs Act, 1962 the appellants have been wholly discharged and GCS granted immunity from prosecution. It is a well established principle of law that the matter which has been adjudicated and settled need not be dragged into criminal courts unless and until the act of the appellants could have been described as culpable. The true fact and import of KVSS,1998 is that once the said Scheme is availed of and all the formalities complied with including the payment of the duty, the immunity granted under the provisions of the Customs Act, 1962 also extends to such offences that may prima facie be made out on identical allegations i.e. of evasion of customs duty and violation of any notification issued under the said Act.
In the present case, there is no prima facie case made out in respect of the alleged offence under Section 120-B read with Section 420 IPC and, therefore, the charge sheet and the process issued thereunder has to be quashed. To bring home the charge of conspiracy within the ambit of Section 120-B IPC, it is necessary to establish that there was an agreement between the parties for doing an unlawful act. It is difficult to establish conspiracy by direct evidence. The ingredients of Section 420 IPC are also not made out. There is no reason as to why the appellants must be made to undergo the agony of a criminal trial".
41. In that case, the case of the petitioner was settled, the tax liability was determined on 10.02.1999 by the designated authority and the certificate of full and final settlement was issued on 19.07.1999. Despite the statement of settlement having been filed under section 88 of the Act of 1998, an FIR was lodged and the case was registered on 06.01.1999 on the basis of which later on, a charge sheet was also submitted. On the one hand, final settlement was made after determining the tax liability on the premise that the appellants were neither convicted nor criminal proceedings were pending relating to any offence under Chapter IX and XVII IPC. Yet the criminal proceedings were initiated, which was apparently against the very spirit of the Scheme promulgated under Finance Act 2 of 1998.
42. To mention again, offences founded upon the declaration under section 88, as found in the statute was interpreted in Hiralal's case and the above said term was given an extension so as to include other offences that may prima facie be made out on identical allegations i.e. of evasion of customs duty and violation of any notification issued under the said Act. Now, in this case, the wrong statement that the car was of the year 1993 and the incorrect particulars and statements given in order to obtain FIRC cannot be said that they are upon as allegations identical to the offences mentioned in section 91. In other words, they cannot get the immunity extended by Hiralal's case; as in that case, it was held that the immunity extends to offences that may prima facie be made out on identical allegations i.e. evasion of customs duty and violation of any notification. As the above allegations made in this case are not directly for evasion of customs duty etc., and as they are made for wrong importing and wrong clearance of the car, the extended immunity in the Hiralal's case may not be available in this case.
43. Again in Hiralal's case, the materials attracting the offences under section 420 IPC were founded only upon the statement of declaration under section 88. But in this case, it is not so. This is evident from the following Police Report under section 173 CrPC.
"During the year 1994 A1 to A5 and approver Smt. R. Bhavani, in the aforesaid capacities, conspired at Chennai and other places to cheat the Government of India and to commit act of criminal misconduct and in furtherance of the said criminal conspiracy A1 and A2 fraudulently and dishonestly, fabricated documents for the purpose of clearing the imported Lexus Car which was imported by A3 and A4, fraudulently and dishonestly, in order to take advantage of the Transfer of Residence provision and pay less customs duty, knowing very well that the said car was manufactured in the year 1994, misdeclared the same as if it was manufactured in the year 1993 and in pursuance of the said conspiracy Smt. Sujarith Sundarrajan, A5, misused and abused her official position or by illegal means, as Branch Manager, Indian Bank, Abhiramapuram, Chennai issued a Foreign Inward Remittance Certificate to the effect that the Lexus Car which was imported would be released by the Customs Department on the basis of same, knowing very well that the Current Account No.872 of M/s. Tamilarasi Publications did not receive any foreign remittances which is one of the pre-conditions for paying the customs duty under Transfer of Residence Provision, thereby caused a wrongful loss of Rs.1,06,20,472/- and corresponding wrongful gain to themselves....
On 07.09.1994, Shri Yogesh Balakrishnan (A4), fraudulently and dishonestly, handed over the following documents to Shri Janaki Raman of M/s. Samba Sivam & Co., Chennai for getting the car cleared by fabricating documents relating to the issue;
a) Xerox copy of Passport No.L-659853 in the name of S. Balakrishnan,
b) Xerox copy of Invoice No. LEX 00077 dated 13.07.1994 in favour of Dr. S. Balakrishnan for British Pounds 21405 (this figure is altered figure as the actual cost of vehicle in British Pound 23905) issued by M/s. Lexus, UK.
c) Xerox copy of Bill of Entry dated 06.08.1994.
d) Blank signed Declaration Form.
e) First Registration Certificate purported to have been issued by London Central Vehicle Registration Office....
The original sale invoice pertaining to the purchase of Lexus car issued by M/s. Toyoto of UK bearing No. LEX 00077 dated 13.07.1994 was replaced and substituted with another photo copy of fabricated invoice by changing the date to 13.07.1993 instead of 13.07.1994 for the purpose of clearing the car under Transfer of Residence provision, otherwise the Car cannot be cleared under Transfer of Residence provisions by Shri Yogesh Balakrishnan (A4) in connivance with Shri Natrajan (A1), Shri Bhaskaran (A2) and Shri Balakrishnan (A3)...."
44. Even in the issuance of Foreign Inward Remittance Certificate, mis-declaration of the car that it was manufactured in the year 1993 and other statement of declaration excluding that under section 88 of Finance Act 2/88, was made by 1st accused also so as to formulate a prosecution. This was found in following lines even in the petition under section 227 CrPC filed by 1st accused in Cr.M.P.No.146 of 2005 in C.C.6 of 2004.
"The prosecution case is that during the year 1994 A1 to A5 and approver Smt. R. Bhavani, in the aforesaid capacities, conspired at Chennai and other places to cheat the Government of India and to commit act of criminal misconduct and in furtherance of the said criminal conspiracy A1 and A2, fraudulently and dishonestly, fabricated documents for the purpose of clearing the imported Lexus Car which was imported by A3 and A4, fraudulently and dishonestly, in order to take advantage of the Transfer of Residence provision and pay less customs duty, knowing very well that the said car was manufactured in the year 1994, misdeclared the same as if it was manufactured in the year 1993 and in pursuance of the said conspiracy Smt. Sujaritha Sundarrajan, A5, misused and abused her official position or by illegal means, as Branch Manager, Indian Bank, Abhiramapuram, Chennai issued a Foreign Inward Remittance Certificate to the effect that the Lexus Car which was imported would be released by the customs and thereby caused a wrongful loss of Rs.1,06,20,472/- and corresponding wrongful gain to themselves".
45. The contents of declaration under section 88 may be found in the columns of statutory Form-1B, wherein, besides name, status and address of the declarant, the other substantive particulars required are the Commissionerate of Central Excise/Customs where assessed or from where a show cause/demand notice issued regarding tax arrears, the reference number of the same along with description of seizure of goods and the pendency of the departmental appeal and other remarks; with the amount of tax arrears and the balance amount payable as on the date of declaration. These are the only materials which could be found in Form I-B declaration under section 88 of the Act while alone is protected under section 91 of the said Act. But if there is a basis for prosecution away from the above materials, that prosecution has no immunity as per section 91.
46. Thus, it is evident in this case and more particularly against the petitioner (1st accused) that there are other statements made outside the declaration of statement under section 88; and those statements are based for commission of offence under section 120-B read with 420 IPC. They all relate to clearance of car. They do not have any connection with the declaration of statement made under section 88 forming part of the subject matter of the customs duty. As a matter of fact, the letter dated 08.09.1994 of 1st accused indicates that a sum of Rs.12 lakhs remitted by their purchase creditors relate to the remittance made by their foreign buyers. This letter dated 08.09.1994 of 1st accused was the basis for issuance of Foreign Inward Remittance Certificate. The case of the prosecution is that the material found in the above letter of 1st accused is nothing but misrepresentation and false representation and that the falsity of which will be established in the course of trial. The petitioner has also relied upon certain other remittances made on the next day of the above letter, in and by which, cash was shown to have been remitted from Indian buyers. Thus, prima facie misrepresentation made in the above letter by 1st accused is established.
47. To sum up, even if the immunity was extended as provided in Hiralal's case to other offences that may prima facie be made out on identical allegations i.e. evasion of customs duty and violation of any notification issued under the said Act, the present facts of the case may not cover such extended immunity. This is so because allegations of false representations in issuance of FIRC and other statements falsely made as if the car was manufactured in 1993 are all matters directly connected to the clearance of the car, i.e. to say wrong import; and not to evasion of customs duty. If the allegations in this case are ultimately only for evasion of customs duty and it is in that process only, some notifications were violated, then the immunity extended in Hiralal's case may be applied. Again it is a matter to be seen only in the course of trial as to the purport of the statements made. It is another important point to see as to whether the statements and annexures to declaration under section 88 are alone based for the prosecution. In other words, in the absence of annexures to declaration under section 88 in Form I-B, it may not be very much clear as to whether the prosecution against the petitioner is founded on statements of accounts made elsewhere apart from the declaration under section 88. This can be made clear only in the course of trial. Since the tax was compromised, one cannot say that all the allegations made in the prosecution are only for evasion of customs duty and violation of any notification. In what way issuance of FIRC will have connection of customs duty is made not known. Production of supporting documents, which were found false on the side of prosecution, in order to wrongly obtain FIRC has a direct bearing upon the wrong import instead of bearing with the evasion of customs duty. It is in this view of the matter, the facts of the case are different from that in Hiralal's case. It is the paramount duty of the petitioner to demonstrate how he is entitled for application of section 91 of the Act. One easy endeavour is to make it available of all the annexures and statements in Form I-B under section 88 and showing that they are alone the rock bottom for prosecution and nothing else. That has not been done. Thus it becomes a triable point.
48. For the aforesaid reasons, both the criminal revision petition and criminal original petition are dismissed.