Criminal Application (APL) No.145 of 2014

10th February, 2015

Petitioner Counsel: Mr. ATUL PANDE
Respondent Counsel: Mr. T.A. MIRZA, Addl. P.P.

JUDGMENT

A. B. Chaudhari, J. :- Rule. Rule is made returnable forthwith. Heard finally by consent of learned counsel for the parties.

2. The applicants, who are Manufacturers, were slapped with the notices of demand for revision of Value Added Tax (VAT).

3. The Sales Tax Department has also lodged FIR in respect of the defaulted payment of VAT under the relevant provisions of the Maharashtra Value Added Tax Act, 2002 as well as Indian Penal Code. The offences were registered against the applicants.

4. It is not in dispute that the liability of VAT was Rs.7,45,45,026/- and the same admittedly has been, by now, paid to the Government. It is also not in dispute that the interest on the unpaid and defaulted amount of VAT amounting to Rs.97,92, 473/- which is at the rate of 15% per annum by way of penalty has also been paid to the Government.

5. Heard Mr.Atul Pande, learned counsel for the applicants and Mr.T.A.Mirza, learned Additional Public Prosecutor for the non-applicant no.1/State.

6. Upon hearing the learned counsel for the parties, we find that there is a Trade Circular dated 24th of July, 2013 which provides guidelines in relation to the institution of prosecution and compounding of offences. Item Nos. 2(b) and 2(c) of Guideline No.3 of the Trade Circular are quoted below.

"(b) In case, where dealer has failed to file return within prescribed time and the departmental authority has issued a show-cause notice for prosecution, then, the offence may be compounded at the request of the dealer subject to the condition that the dealer has filed the return for the period under default along with payment of tax due as per return and late fee.

(c) In cases, where complaint has already been filed before the Judicial Magistrate, then such offences shall be compounded subject to the grant of permission by the concerned Judicial Magistrate."

7. Perusal of the above guidelines in the Trade Circular show that the prosecution if instituted is required to be compounded in such cases where the compliance is made.

8. Apart from the above Trade Circular, what we find is that the applicants have admittedly paid the entire dues of Value Added Tax plus interest by way of penalty of 15% per annum. The charge of interest by way of penalty at 15% per annum is certainly on a higher side compared to the market rate of interest for working in the business or the manufacturing. What we find is that the honest citizens, businessmen or the manufacturers have been making clarion call for reduction of the rate of the en-number of taxes levied for the last few years but to no use. Thus, they have been subjected to excruciating wait for reduction of the multiple number of taxes so also the heavy rates at which the taxes are being charged. After payment of multiple types of taxes at prevailing rates, a little net income remains with them and that is certainly a matter which requires a re-look at the entire tax structure. The multiple number of taxes and their rates have created miasma and trepidation amongst this class of honest citizens. It must be remembered that there are ups and downs in the business and commerce but rate of tax does not go down. In addition, there is a threat of penal interest being charged plus prosecution instead of building 'trust'.

9. Be that as it may, we think the very purpose of lodgment of FIR stands served and at any rate Mr.Atul Pande, learned counsel for the applicants, has fairly stated that henceforth the applicants/manufacturers would take full care not to make default in payment of taxes though the same are on a higher side at present.

10. In view of the above discussion and in the light of the present atmosphere where everybody is willing to deliver, we think there is no point in keeping hanging sword on the applicants in the form of FIR or charge sheet for violation of payment of VAT. We, therefore, pass the following order.

ORDER

Criminal Application (APL) No.145 of 2014 is allowed.

FIR dated 23rd of October, 2013 vide No.270 of 2013 for the offence punishable under Sections 406, 409 of the Indian Penal Code and under Section 74(2) of Maharashtra Value Added Tax Act, 2002 is quashed and set aside.

No order as to costs.

Application allowed.