Department cannot file FIR under provisions of IPC for alleged non-payment of Service tax

CA Bimal Jain

Department cannot file FIR under provisions of IPC for alleged non-payment of Service tax as the Finance Act being a special and complete Code prevails over general provisions of IPC

Ajay Kumar Sandhu (the Appellant) committed irregularity by not paying Service tax amount of Rs. 1,05,705/-. Later on demand being put up by the Department, the Appellant had deposited the whole amount. However, alleging non-payment of Service tax of Rs. 1,05,705/-, the Department filed FIR against the Appellant under Section 406 of the Indian Penal Code (IPC).

The Hon’ble High Court of Punjab and Haryana relying upon the judgment of Hon’ble Supreme Court in the case of Jeewan Kumar Raut Vs. Central Bureau of Investigation [2009 (7) SCC 526], held that the Finance Act is a special and complete Code in itself and therefore, would prevail over the general provisions of IPC. When Service tax law itself provides for adjudication, interest and penalty for default in payment of Service tax, the Department’s action in registering FIR was abuse of process of the Court. Since the Appellant had agreed to pay demand, if any, still arising under Service tax law, continuation of criminal proceedings would amount to further abuse of process of the Court. Therefore, FIR was quashed accordingly.