IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 09TH DAY OF JANUARY 2019 BEFORE THE HON’BLE MR. JUSTICE JOHN MICHAEL CUNHA WRIT PETITION NO.41098 OF 2016(GM-RES) BETWEEN:
SRI SANTHOSH SUVARNA S/O SRI SRINIVASA SUVARNA AGED ABOUT 36 YEARS R/A SHABARIGIRI NILAYA MEENA KALIYA, PANAMBUR MANGALURU-575010 (BY SRI: ARUNA SHYAM M, ADVOCATE) AND:
THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, HEADQUARTERS SERVICE TAX CELL MANGALORE CENTRAL EXCISE AND SERVICE TAX COMMISSIONERATE 7TH FLOOR, TRADE CENTER BUNTS HOSTEL ROAD MANGALURU-575003 (BY SRI: K V ARAVIND, ADVOCATE) ... PETITIONER ... RESPONDENT THIS WRIT PETITION IS FILED UNDER ARTICLES 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ENTIRE PROCEEDINGS ON THE FILE OF THE PRINCIPAL CIVIL JUDGE (SENIOR DIVISION) AND CHIEF JUDICIAL MAGISTRATE, MANGALURU DAKSHINA KANNADA WHICH IS PRODUCED AND MARKED AS ANNEXURE-A; GRANT AN INTERIM ORDER TO STAY THE ENTIRE PROCEEDINGS ON THE FILE OF THE PRINCIPAL CIVIL JUDGE (SENIOR DIVISION) AND CHIEF JUDICIAL MAGISTRATE, MANGALURU DAKSHINA KANNADA WHICH IS PRODUCED AND MARKED AS ANNEXURE-A.
THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R In a proceeding initiated by the Assistant Commissioner of Central Excise, Mangaluru(respondent herein), the petitioner herein was arrested on 22.08.2014 and was produced before the Principal Civil Judge(Sr. Dn.) and Chief Judicial Magistrate, Mangalore with remand application. In the remand application, it was alleged that the petitioner herein being the Managing Director of M/s. Global Earth Exports, Shipping & Logistic Private Limited, Mangalore collected service tax amounting to more than Rs.50.00 lakhs and failed to pay the same for more than six months, which is punishable under Sections 89(1) (ii) read with Section 90 of the Finance Act, 1994 and thereby he has contravened the provisions of Sections 67, 68 and 70 of the Finance Act, 1994 r/w Rule 6 and 7 of Service Tax Rules, 1994. The petitioner sought for bail and was enlarged on bail subject to conditions. Thereafter, the proceedings have been pending on the file of the respondent.
2. The petitioner has invoked the jurisdiction of this Court under Article 226 of the Constitution of India r/w Section 482 Cr.P.C. to quash the entire proceedings in C.No.IV/06/14/2014-
15 SIV CELL dated 22.08.2014 on the file of Principal Civil Judge(Sr.Dn.) and CJM, Mangalore, Dakshina Kannada, on the ground that the offences alleged against the accused are cognizable in nature and the Magistrate has no jurisdiction to take cognizance of the alleged offences without prior authorization under Section 155 Cr.P.C., Further it is contended that the Finance Act mandates previous sanction of the Chief Commissioner of Central Excise for initiation of the proceedings under Section 89 of the Finance Act. Section 91 of the Finance Act empowers the Commissioner of Central Excise by general or special order to authorize any officer of Central Excise, not below the rank of Superintendent of Central Excise to arrest such person.
3. Sri. Vinayak R. representing Sri. *Aruna Shyam.M, as counsel for the petitioner submits that the arrest of the petitioner is illegal. By virtue of the proceedings pending on the file of Principal Civil Judge(Sr.Dn.) and Chief Judicial Magistrate, Mangalore, Dakshina Kannada, the petitioner herein is prosecuted without prior sanction as mandated under Section 89(4) of the Finance Act, 1994 and hence, the proceedings initiated against the petitioner have resulted in an abuse of process of the Court.
4. Learned counsel for the respondent has countered the argument and would submit that the petitioner is arrested under the provision of Section 91 of the Finance Act pursuant to the powers conferred on the Commissioner of Central Excise, Mangaluru, therefore, there is no illegality in the arrest of the petitioner. Having regard to the allegations made against the petitioner, the petitioner has prima-facie committed the offence punishable under section 89 (1) (d) of the Finance Act. It is a *Corrected vide Court Order dated 14.02.2019 cognizable offence. Because of non-cooperation of the petitioner in the investigation, the respondent was constrained to invoke the provision of Section 91 of the Finance Act, 1994. Therefore, there is no reason to quash the proceedings.
Considered the submissions and perused the records.
5. According to the respondent, the petitioner herein is involved in commission of the offence punishable under section 89 (1) (d) of the Act. Section 89 (1) (d) of the Act is a punishing section which provides that any person who collects any amount as service tax, but, fails to pay the amount so collected to the credit of the Central Government beyond a period of six months from the date on which such payment become due, shall be punishable in the case of an offence specified therein, where the amount exceeds Rs.50.00 lakhs as on the date of commission of the alleged offence with imprisonment for a term which may extend to seven years. Therefore, the submission of the learned counsel for the petitioner that the proceedings initiated against the petitioner without prior authorization under Section 155 of Cr.P.C. is not tenable and the said contention is accordingly rejected.
6. However, insofar as, continuation of the proceedings before the learned Magistrate is concerned, as per the submission of the learned counsel for the respondent, the respondent was constrained to invoke section 91 of the Finance Act solely on account of the alleged non-cooperation of the petitioner. Undisputedly, the petitioner who was arrested and produced before the Magistrate is already enlarged on bail. In the absence of any prosecution having been launched, there is no reason to keep the said proceedings pending before the Magistrate. However, as per the provisions of the Act, as and when the offence under section 89 of the Act is said to have been committed, the authorities are first required to adjudicate the case and determine the liability and thereafter take a decision to launch prosecution against the petitioner. In the instant case, such a stage has not yet arisen. Hence, reserving liberty to the respondent to initiate appropriate prosecution, if required, depending on the outcome of the adjudication proceedings, the case pending on the file of the learned Magistrate in C.No.IV/06/14/2014-15 SIV CELL is directed to be closed.
Petition is allowed in terms of the above order.
Sd/- JUDGE *mn/-