Penalty and punishment for same offence :
Article 20(2) of Constitution of India provides that no person can be prosecuted and punished twice for the same offence.
In Shiv Dutt Rai Fateh Chand v. UOI (1983) 53 STC 289 (SC) = AIR 1984 SC 1194= (1984) 145 ITR 664 (SC), it was observed that the word ‘offence’ as mentioned in Article 20 relates to persons who are charged with a crime before criminal court. – – It does not include ‘penalty’ levied under tax laws imposed by departmental authorities. A penalty imposed by tax authorities is only a civil liability.
In Maqbool Hussain v. State of Bombay AIR 1953 SC 325 = 1953 SCR 730 reproduced in 1983 (13) ELT 1284 (SC Constitution Bench) that proceedings before revenue authorities are in the nature of administrative enquiries. These are different from the proceedings in a criminal court where the enquiry is on the basis of evidence tendered on oath. – . – Proceedings before adjudicating authority is not ‘prosecution’ and the order of confiscation is not a ‘punishment’. – . – Hence simultaneous punishments through departmental adjudication and prosecution in a court of law would not amount to double punishment for the same offence and is not hit by Article 20(2) of the Constitution. Thus, these two types of punishments are independent of each other and both can be imposed simultaneously. In other words, a person can be prosecuted in criminal court and at the same time penalty can be imposed by departmental authorities for the same offence – quoted with approval in Director of Enforcement v. MCT M Corporation (P.) Ltd. AIR 1996 SC 1100 = 1996 AIR SCW 636 = 88 Comp Cas 449 = (1996) 2 SCC 471 also followed in Assistant Collector of Customs v. L R Malwani – 110 ELT 317 (SC 5 member bench) – similar views in Tiwari Kanhayalal v. CIT – (1975) 100 ITR 5 (SC) * State of Karnataka v. Sir Janakusa J Bakale 1999(113) ELT 375 (SC 3 member bench) * Thomas Dana v. State of Punjab AIR 1969 SC 375 = 110 ELT 63 (SC 5 member bench) * Standard Chartered Bank v. Directorate of Enforcement (2006) 67 SCL 2 = 197 ELT 18 (SC 3 member bench) * Bharjatiya Steel Industries v. CST (2008) 11 SCC 514 = 13 VST 514 (SC).
In P. Jayappan v. S.K. Perumal, First ITO – AIR 1984 SC 1693 = 1984 Supp SCC 437 = 19 Taxman 1= 149 ITR 696 (SC), it was held that pendency of reassessment proceedings cannot act as bar to the institution of criminal prosecution. The criminal court has no doubt to give due regard to the result of departmental proceedings and in appropriate case, it may drop the criminal proceedings in light of an order passed in departmental adjudication. However, the decision in departmental adjudication is not binding on the criminal court and the criminal court has to judge the case independently on the evidence placed before it. (In this case, it was also observed that even if penalty is upheld in departmental adjudication, conviction in criminal court for the same offence will not automatically follow) – followed in Madura Chit and Investments (P.) Ltd. v. ITO – (1995) 83 Taxman 85 (Mad HC).
In KTMS Mohammed v. UOI – 75 Comp Cas 321 = 65 Taxman 130 = AIR 1992 SC 1831 = (1992) 3 SCC 178 = 197 ITR 196 = 1992 AIR SCW 2062 (SC), it was held that though criminal court has to judge the case independently, there is no legal bar to give due regard to departmental proceedings. – . – If the departmental authority absolves the party, the very basis of prosecution may be nullified. – . – Criminal case may be kept pending at the discretion of magistrate.