A two-judge bench of the Supreme Court comprising Justice Sanjiv Khanna and Justice Bela M. Trivedi, while overruling an order of the Karnataka High Court has held that the criminal proceedings cannot be quashed on the basis of the fact that stay of demand was granted by the CESTAT.
The Apex Court was considering an appeal by M/S Kavveri Telecom Products Limited &Anr against the impugned order of the High Courtwherein the Courtquashed prosecution under Sections 9 and 9-AA of the Central Excise Act, 1944 on the ground that the Customs, Excise and Service Tax Appellate Tribunal, Bengaluru has granted stay on the recovery of the tax and penalty amount.
The bench observed that it is an accepted and admitted case that the appeal preferred by the respondents is pending before the CESTAT and has not been adjudicated and decided.
“We also examined the stay order which directs the appellant therein, namely, M/s Kavveri Telecom Products Limited, to make pre-deposit of Rs.15 lakhs. Therefore, there is no exoneration or finding on merits by the CESTAT on the subject matter of the criminal complaints. In the said facts, the High Court was incorrect and wrong in quashing the criminal prosecution only on the ground that the tribunal has granted stay, subject to condition of pre-deposit, of the recovery of the tax and the penalty amount,” the Court said.
Allowing the appeal, the Court has clarified that “We, however, clarify that it will be open to the respondents to file an application seeking exemption from personal appearance as well as under Section 309 of the Code of Criminal Procedure, 1973. If any, such applications are filed, the same would be considered and decided in accordance with the law. We have not made any comments in that regard. We also request the CESTAT to take the appeal preferred by the respondents expeditiously.”
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