Allowed

U. Varadaraya Nayak v. State of Karnataka

Karnataka HC30 Nov 2016CRL.P/3958/2016

Case brief

AI extract

What is this about?

In a criminal petition, the High Court of Karnataka quashed pending criminal proceedings instituted forIPC offences related to tax assessment disputes. The court held that since the tax liability was settled through payment, the criminal case, being merely an offshoot of the civil liability, no longer survived.

What did the court decide?

The proceedings pending in C.C.No.67/2003 on the file of the II Additional Senior Civil Judge and Chief Judicial Magistrate, Mangalore, stands quashed.

U. Varadaraya Nayak Vs State of Karnataka — Cheque Dishonour | Karnataka HC (2016)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 30^TH DAY OF NOVEMBER 2016

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BEFORE

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THE HON’BLE MR. JUSTICE ANAND BYRAREDDY

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CRIMINAL PETITION No.3958 OF 2016

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BETWEEN:

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U. Varadaraya Nayak, Son of U. Vittappa Nayak, Aged about 69 years, No.8.1.86/12, Vadirajay Nagar, Kambla, Mangalore – 575 003.

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U. Vijaya Nayak, Wife of U. Venkataraman Nayak, Aged about 62 years, No.8.1.86/13, Vadirajay Nagar, Kambla, Mangalore – 575 003.

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U. Mangala Nayak, Wife of U. Lakshminarayana Nayak, Aged about 62 years, No.8.1.86/14, Vadirajay Nagar,

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Kambla, Mangalore – 575 003. …PETITIONERS

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(By Shri Prakash Shenoy P., Advocate)

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AND:

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State of Karnataka, [represented Mangalore North Police Station, Inspector of Police] Mangalore – 575 001.

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The Commercial Tax Department, (represented by its Deputy Commissioner of Commercial Taxes – Assessment-II) Mangalore – 575 001.

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…RESPONDENTS

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(By Shri Chetan Desai, Government Pleader)

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This Criminal Petition filed under Section 482 code of Criminal Procedure, 1973, praying to 1) quash the further proceedings in C.C.No.67/2003 pending on the file of II Additional Senior Civil Judge and Chief Judicial Magistrate, Mangalore. 2) Quash the complaint dated 18.4.2000 vide Annexure-A and consequently the FIR dated 28.4.2000 registered in Crime No.96/2000 by the respondent police vide Annexure-B and also the charge sheet dated 16.6.2003 field in C.C.No.67/2003 pending on the file of II Additional Senior

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Civil Judge and Chief Judicial Magistrate, Mangalore vide Annexure-C.

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This Criminal Petition coming on for Admission this day, the court made the following:

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O R D E R

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Heard the learned counsel for the petitioners and the learned Government Pleader.

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The petitioners are said to be engaged in the grocery

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business in partnership under the name and style of M/s. Shantheri Kamakshi Traders, Port Road, Kudroli, Mangalore, since the year 1990. It is a firm registered under the Karnataka Sales Tax Act, 1957 and Central Sales Tax Act, 1956. Their firm had reported a gross turnover for the year 1996-97 under the Karnataka Sales Tax Act, to the tune of Rs.34,54,670/-. The firm claimed total deduction of Rs.34,28,290/- against the said gross turnover and returned a net turnover for the said period at Rs.26,380/- and paid a tax of Rs.528/-. Similarly, for the years 1997-98, the firm had returned a total turnover and taxable turnover of Rs.49,93,873/- and nil respectively.

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The respondent No.2 – Deputy Commissioner of

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Commercial Tax, Assessment II, Mangalore, had rejected the above declaration of the turnovers for the year 1996-97 and passed an exparte order dated 31.08.1999 determining the total and taxable turnover at Rs.1,45,64,861/- and Rs.1,11,36,571/respectively for the year 1996-97. The tax assessed for the said period was Rs.4,44,936/- and a penalty amount of Rs.6,60,000/was levied under Section 12(4) of the KST Act, 1957. Thus, the total amount of tax and penalty payable for the year 199697 was in a sum of Rs.11,04,936/-. Aggrieved by the said order, an appeal was preferred before the Joint Commissioner of Commercial Taxes (Appeals), Mangalore, who in turn upheld the order of the second respondent.

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It transpires that the petitioners in the meanwhile, had returned a gross total turnover of Rs.49,93,873/- for the year 1997-98 and had claimed exemption from the said turnover and thereby reported a nil turnover for the said year. However, Respondent No.2 – Deputy Commissioner of Commercial

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Taxes, rejected the above turnover and passed an exparte assessment order for the year 1997-98 and levied a tax of Rs.1,99,994/-. The penalty levied for 1997-98 amounted to Rs.2,82,000/-. Thus, the total tax and penalty payable for the year 1997-98 stood at Rs.4,81,994/-. Being aggrieved by the said order, they preferred a second appeal in respect of the assessment for the year 1996-97 before the Karnataka Appellate Tribunal. The Appellate Tribunal had by its order dated 29.08.2000 in STA No.38 and 39/2000, set aside the order of

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the First Appellate Authority and remanded the case back to the Assessing Authority.

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When the second appeal was pending before the Karnataka Appellate Tribunal, Respondent No.2, without waiting for the outcome of the appeal, had filed a criminal complaint dated 18.04.2000 before the first respondent and an FIR in Crime No.96/2000 came to be registered against the petitioners for offences punishable under Sections 465, 468,

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470, 471, 472, 474, 420 and 34 of the Indian Penal Code, 1860 in respect of both the assessment years 1996-97 and 1997-98.

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On the basis of the complaint, a charge-sheet was filed

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without any proper investigation before the Court of the Senior Civil Judge and CJM, Mangalore. The Trial Court framed charges against the petitioners in a case which was now registered as C.C.No.67/2003. In the meanwhile, the Assessing Authority took up the remand case as above for the years 199697 along with the assessment for the year 1997-98 and passed

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an exparte order, again determining the taxable turnover at Rs.83,08,522/- and the tax payable at Rs.3,31,814/- for the year 1996-97.

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Being aggrieved by this, again an appeal was filed before the First Appellate Authority in respect of both the years 199697 and 1997-98. Again, the First Appellate Authority upheld the order passed by the Assessing Authority in respect of the years 1996-97 and 1997-98. An appeal was preferred before the Karnataka Appellate Tribunal for the second time, in respect

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of both the years, in Appeals STA Nos.1276 & 1277/2011. The Karnataka Appellate Tribunal, by a judgment dated 18.10.2012, set aside the orders of the First Appellate Authority for both the years and remanded the cases back to the Assessing Authority. This time around, the Assessing Authority accepted the directions issued by the Karnataka Appellate Tribunal and issued a demand notice of Rs.528/- for the year 1996-97 and Rs.6,268/- for the year 1997-98. These amounts were said to have been paid by the petitioner on 24.01.2013. Therefore, the matters reached a quietus insofar as the liability of the petitioners to pay tax is concerned, by such payment.

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However, the criminal case which had been instituted,

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lingers on and the petitioner is before this court questioning the pendency of the criminal case.

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Given the above facts and circumstances and the sequence of events, the criminal case would no longer survive for consideration, as it is only an offshoot of the liability that

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arises under the Karnataka Sales Tax Act which has been now settled by the payment of the tax ultimately found due from the petitioners.

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Accordingly, the petition is allowed. The proceedings pending in C.C.No.67/2003 on the file of the II Additional

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Senior Civil Judge & CJM, Mangalore, stands quashed.

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Sd/-

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JUDGE

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U. Varadaraya Nayak v. State of Karnataka

Case brief

What is this about?

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U. Varadaraya Nayak v. State of Karnataka

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