M. NATARAJANversusSTATE BY INSPECTOR OF POLICE, SPE, CBI, ACB CHENNAI

                       , [2008) 7 S.C.R. 1000                        >'



                          M. NATARAJAN                                        '-t


                                  V.
      STATE BY INSPECTOR OF POLICE, SPE, CBI, ACB
                          CHENNAI
            (Criminal Appeal No. 834 of 2008 etc.)
B                           MAY 7, 2008
         [P.P. NAOLEKAR AND V.S. SIRPURKAR, JJ.]

         Penal Code, 1860 - ss. 102 B rlw s. 420, 467 and 471 -
c Evasion of custom duty by one of the accused - By producing
  fabricated documents - Appellant-accused alleged to have
  helped in preparation of some fabricated documents -
  Prosecution under the provisions of /PC - Petitions for
  discharge and quashing of criminal proceedings filed by
D
  appellant-accused- Dismissal of by courts below- On appeal,        r
  plea that the evader of the duty having entered final settlement
  in terms of Kar Vivad Samadhan Scheme, 1998, earned
  complete immunity from the transaction and no one could be
  prosecuted - Held: Criminal proceedings not liable to be
  quashed against the appellant-accused - Immunity under the
E Scheme refers to only direct and indirect tax enactments and
  not to the offences under /PC - Merely because the accused
  had been tried uls 132 of Customs Act, it does not preclude
  trial for offences under /PC - Finance Act (No.2), 1998 - Kar
  Vivad Samadhan Scheme, 1998 - Customs Act, 1962 - s.
F 132.
                                                                     .    '




        A charge-sheet was filed against the appellant-
  accused and five other accused, u/s. 120 B r/w s. 420, 467,
  471 IPC. Prosecution case was that accused No. 3 sent a
  car from England to India. Accused No. 4, in order to take
G
  advantage of Transfer of Residence Scheme used
  fabricated documents for clearance of the car. Appellant-
  accused had helped in preparation of the fabricated
  doc.uments. Appellant-accused filed a discharge
H                               1000
    1002       SUPREME COURT REPORTS              [2008] 7 S.C.R.


A   Commissioner of Income Tax 2004 (2) SCC 731; Duncans             "
    Agro Industries Ltd. Calcutta v. Commissioner of Central
    Excise, New Delhi 2006 (7) SCC 642; Alpesh Navinchdnara
    Shah v. State of Maharashtra and Ors. 2007 (2) SCC 777-
    referred to.
B       2. It is not correct to say that the only offence which           .I.

  could have been alleged against any of the accused was            .,.
  under Section 132 of the Customs Act, 1962, i.e., of making
  a false declaration, since the offence complained of,
  related to the false declaration and false documents and
c the appellant could be prosecuted only under Section 132
  of the Customs Act and not under the offences covered
                                                                                t-
  under IPC. Merely because there may be some
  overlapping in the two offences, it does not mean that the
  appellant cannot be tried under the offences covered
D under IPC. The Court would proceed to decide the
  question on the basis of the evidence led before it. Merely        1'
  because the appellant could be tried under Section 132
  of the Customs Act, it does not mean that he could not be
  tried for the offence committed under the IPC. There is no
E such provision. [Para 27] (1023-H; 1024-A,B,E,-F]
         CRIMINALAPPELLATE JURISDICTION: Criminal Appeal
    No. 834 of 2008.
       From the final Judgment and Order dated 3.10.2005 of
F the High Court of Judicture at Madras in Criminal Revision Case
  No. 538 of 2005.                                                    ••
                                WITH
           Criminal Appeal No. 835 of 2008.
G        K. Subramaniam, R. Jayaseelan, E.C. Agrawala, Mahesh
    Agarawal, Rishi Agrawala, Gaurav Goel, Amit Kumar Sharma
    and Ashutosh Garg for the Appellant.
                                                                          'l
         Vikas Singh, ASG, Vikas Sharma. Ranjana Narayan, B.K.
    Prasad and V. K. Verma for the respondent.
H
               M. NATARAJAN v. STATE BY INSPECTOR OF POLICE,                1003
                  SPE, CBI, ACB CHENNAI [V.S. SIRPURKAR, J.]

                    The J~dgment of the Court was delivered by                      A

                    V.S. SIRPURKAR, J. 1. Leave granted.
                     2. The challenge in these appeals is to the common
               judgment of the learned Single Judge of the Madras High Court
     j
               whereby the High Court has dismissed the Criminal Revision           B
               Case No.538 of2005 and Criminal O.P. No.21636 of2005 filed
               by the appellant herein.

                    3. Following facts will highlight the controversy involved.

                     4. One Dr.S. Balakrishnan, purchased the Toyota Lexus          c
               Car which was sent by Ship to Madras Port in July, 1994. His
               son Yogesh Balakrishnan presented certain documents for
               getting clearance of the said car from the Customs Department.
               One such document was a letter dated 8.9.1994 authored by
               the appellant herein Shri M. Natarajan who is the publisher of a
                                                                                D
               magazine called "Tamilarasi" which publication had commenced
               in the year 1992. He is also the author of bi-monthly magazine
               "Pudiya Paarvai" which surfaced in the year 1993. One Baskaran
               was said to be assisting the appellant being the incharge of
               these publications. The said letter dated 8.9.1994 wf)ich was
                                                                                E
               used by accused Yi5gesh _Balkrishnan was authored by the
               appellant and addressed to the Manager, Indian Bank,
               Abiramapuram, Madras on behalf of Tamilarasi publication to
               the following effect:
                    "We invite reference to the various remittances made by         F
     ' ~            our purchase creditors on 22.6.94 into our account, and
                    would like to inform you that a sum of Rs.12 lacs remitted
                    relates to the remittances made by our Foreign buyers of
                    our weekly and fortnightly magazines.
                    Kindly issue a Foreign Inward certificate for this sum of G
                    Rs.12 lacs."
         ,..        On the basis of this letter the Foreign Inward Certificate,
~              as sought for by the appellant, was issued by the bank. Ultimately
 '
1              the said car was cleared and was allowed to be imported.
                                                                                    H
     1004 .     SUPREME COURT REPORTS                    [2008] 7 S.C.R. .


 A              5. A First Information Report came to be lodged at the .
       ·instance of Central Bureau of Investigation, Chennai for offences
          under Sections 120B read with Section 420, 468, 471 IPC and
         Section .13(2) read with Section 13(1)(d) of the Prevention of
         Corruption Act. In that First Information Report, four accused
~ B were arrayed, they being, (i) Shri S. Senthivef, Commissioner
         of Customs (Reid.), Chennai, (ii) Shri Hariharan, former Asst!.
         Collector Customs, Chennai, (iii) Shri Raja Manoharan, Former
        ·Apprising Officer, 'customs, Chennai and (iv) Shri Bafakrishnan.
          ft was suggested in the report that in the year 1994 the four
.c        accused persons entered into a criminal conspiracy in Chennai
          fo cheat the Department' of Customs, Government of India in
          the matter of assessment of duty on a car imported by fourth
          accused and in pursuance of the said conspiracy, the fourth
          accused, in connivance with Accused Nos.1 to 3 imported
        · Toyata lexus Car CS 300 of engine capacity 3000 CC bearing
   0
          Engine No.2320283150 and Chassis No. JT 153-Jse. 7...:
          000727250 and had sought customs clearance under the
          condition of transfer of residence to India for permanent
        "settlement by producing forged and fabricated invoice
 . E LEX00077 dated 13.7.1993.showing the value of ?21405 as if
       · the car was purchased in 1993 for that value. In pursuance of
          this conspiracy A 1 to A3 fraudulently and dishonestly abused
       . their· official position and cleared the car on 8.9.1994 after
       . allowing 19% depreciation on the cost of the car, knowing fully
          well that firstly the car was not purchased in the year 1993 and
   F the original cost of the car was more than the declared value
          and further that the importer was producing forged docu'ments
          and thereby had caused wrongful loss of Rs.4 fakhs to the
          Government of India by way of customs duty. On the basis of
          this the inves_tigation was started by the CBI.              ·
   G. ·.
           s:      Ultimately, however, the charge-sheet was fifed against
    · . the present appellant and the four other accused, namely, (i)
          Shri V. Bhaskaran, ·(ii) Shri S. Bafakrishnan, (iii) Shri Yogesh    ...
          Bafakrishnan and (iv) Smt.Sujaritha Sundarajan. In the chaige-
          sheet it was stated that the first accused (appellant herein) was
   H
           M. NATARAJAN v. STATE BY INSPECTOR OF POLICE,                 1005
              SPE, CBI, ACS CHENNAI [VS. SIRPURKAR, J.)

           Director of Tamilarasi Publication, the second accused was a          A
           private individual and authorized signatory to operate the current
           account of M/s.Tamilarasi Publication, the third accused was a
           private individual, the fourth accused was also a private
           individual and the fifth accused was the Branch Manager, Indian
           Bank, Abiramipuram Branch, Chennai and Smt.R. Bhavanai,               8
~          Approver was working as the Assistant Manager, Indian Bank,
           Abiramipuram, Chennai in the year 1994. In the charge-sheet it
           was stated that the accused had conspired to cheat the
           Government of India and to commit act of criminal misconduct
           and in furtherance of the conspiracy, the appellant and the           c
           second accused fabricated documents for the purpose of
           clearing the imported Lexus Car which was imported by the
           third and fourth accused in order to take advantage of the
           provisions of Transfer of Residence and pay less customs duty,
           though they fully knew that the car was manufactured in the year
                                                                                 D
           1994 which was mis-declared to be manufactured in the year
    "''    1993 and in pursuance of the said conspiracy, the fifth accused
           misued and abused her official position as the Branch Manager
           of the Indian Bank, issued the Foreign Inward Remittance
           Certificate to the effect that the Lexus Car which was imported
           would be released by the Customs Department on the basis of           E
           the same, knowing very well that the Current Account No.872 of
           M/s.Tamilarasi had not received any foreign remittance, though
           it was one of the pre-condition that only foreign remittances could
           be used for payment of customs duty, thereby the accused had
           caused loss to the Customs Department of Rs.1,06,20,472/-. It         F
•· 'f      was suggested further that third accused had fraudulently and
           dishonestly imported the Lexus Car by ship while the fourth
           accused Yogesh Balakrishna has handed over five documents
           to Shri Janaki Raman of Mis.Samba Sivam & Company,
           Chennai for getting the car cleared. It was further stated in the     G
           charge-sheet that the original sale invoice of the car dated
           13. 7 .1994 was replaced and substituted with another photocopy
      r'   of fabricated invoice by changing the date to 13. 7 .1993 for the
           purposes of clearing the car under the provisions of Transfer of
           Residence since otherwise the car could not be cleared under          H
-        1006      SUPREME COURT REPORTS                    [2008] 7 S.C.R.


    A    the said provisions This was done by the fourth accused in
         connivance with the first accused. It was suggested that the
         assessment of the car was done on the basis of the fabricated
         documents. Thi.; assessment was made on Oost Insurance
         Freight value wh: ~h suggested that consignmentwas imported
     B directly by the manufacturer to the country of the buyer as a new
         car. It was further suggested that the third accused falsely
         declared and showed that the car was one year old, when in
         fact, it we:.s not. He had also filed a false affidavit that the car
         was in use for more than one year before he came to India for
     c permanent settlement. The accused had also filed fake First
         Registration Certificate showing the first registration on
         15.7.1993 whereas the car itself was manufactured in March,
          1994. It was, therefore stated that Accused Nos.1 to 4 had
         submitted documents for the clearance of the car imported by
         the third and fourth accused knowing them to be false documents
      0
         for taking advantage of the provisions of Transfer of Residence        ,J
                                                                                1
         scheme. It was clarified ti .at for taking advantage of the scheme
         of Transfer of Residence, the Customs duty has to be paid in
         foreign exchange or otherwise it should be through an account
      E where there is foreign inward r.emittances and for this purpo~e
         the Branch Manager of the Bank in which the account lies has
         to issue a certificate mentioning that the concerned account is
          receiving or had received foreign remittances. While the
          appellant herein and second accused Shri Balakrishnan very
         well knew that the Current Account bearing No.872 at Indian
      F Bank, Abiramipu'ram, Chennai did riot receive any foreign               ¥    '
          inward remittance, got a false certiticate issued by Smt.Sujarita
          Sudararajan, the fifth accused, Branch Manager 0fthe bank on
          the basis of a false letter presented by the first accused and on
          the basis of that the Branch Manager had issued foreign inward
      G remittance certificate dated 8.9.1994 to the effect that the Lexus
          Car can be cleared from the Customs. She had also directed
          her Assistant Manager Smt.Bhaval)i to modify the certificate
          and issue the same to Shri M. Natarajan, appellant and Shri
          Bhaskaran, s~cond accused. Thus the 1;ertificate was used by
    . ti the four accused persons (A 1. to A4) for the purposes of clearing
               M. NATARAJAN v. STATE BY INSPECTOR OF POLICE,            1007
                  SPE, CBI, ACB CHENNAI [VS. SIRPURKAR, J]
"'('
               the imported car, knowing fully well that the Current Account   A
               No.872 did not receive any foreign exchange remittance.
                     7. The charge-sheet, therefore, went to show that the acts
               of accused Nos.1 to 5 constituted offences punishable under
               Section 120B IPC read with Sections 420, 467, 471 IPC and
                                                                                 B
t
               Section 13(2) read with Section 13(1 )(d) of the Prevention of
     .~
               Corruption Act, 1988. It was pointed out further that the other
               accused persons named in the FIR, who were government
               officials, were not sent for trial as the Departmental action for
               major penalty was recommended against them. It was further
               pointed out that Smt.Bhavani, original Accused No.6 was         c
               granted tender of pardon by the 2nd Metropolitan Magistrate,
               Egmore, Chennai while fifth respondent was already dismissed
               from service and as such no sanction order was required under
               the law.
                                                                                 D
                      8. This charge-sheet was filed on 30th January, 2004 and
     't
               the case was posled in the month of April, 2004 for receiv;;1g
               copies by the accused. The case was split up as Non Bailable
               Warrant was pending against the third accused and had
               remained unexecuted. The trial commenced against the other
                                                                                 E
               accused in which 22 witnesses were examined, 82 documents
               were marked and the case stood posted for 5.9.2005 for
               examination of the Defence Witnesses. However, in the
               meantime, the present appellant filed a discharge application
               vide Criminal M.P. No.146 of 2005 on the file of the learned
               Principal Special Judge for CBI Cases, Chennai. This Criminal F
    ,. .,      M.P. was dismissed on 18.4.2005 against which order a
               Revision Petition being Criminal Revision No.538 of 2005 came
               to be filed. Besides this the appellant also filed a Criminal
               Original Petition being Criminal O.P. No.216~6 of 2005 for
               quashing the proceeding under trial. It seems that the appellant G
               had approached this Court also and this Court had issued a
               direction on 13.5.2005 for the early disposal of the Criminal
          Jl
                Revision Petition. The High Court ultimately came to decide
               and dispose off the Criminal Revision Petition as well as
               Criminal Original Petition by a common judgment which is H
    1008      SUPREME COURT REPORTS                    [2008] 7 S.C.R.


A impugned before us.
          9. In the application for discharge as also in the Revision
    Petition before the High Court as well as in the Criminal O.P.,
    the contention of the appellant was firstly that he had no role
    with respect to the production of documents for clearance of
B   the car, secondly in a scheme, namely, Kar vivad Samadhan
    Scheme, 1998 (KVSS) floated vide Finance Act No.2 of 1998                  ~




    which commenced from 1.9.1998, it was clearly provided that if
    a tax-payer settles his dues regarding the direct and indirect
    taxes and once a final settlement is arrived at in pursuance of
c   the scheme and once the payment is made as per the settlement,
    the tax-payer earns a complete immunity in respect of the
    transaction which includes the prosecution from all or any of the
    offences. It was pointed out that third accused in pursuance of
    Rule 3(1)(b) of the Rules had filed a declaration in Form 1-B
D   under Section 88 of the Finance Act and the Customs
                                                                                   ,
    Department had issued a certificate of intimation under Section        i
    90(1) of the Finance Act and determined the tax under Section
    88(f) of the Act as being Rs.2,84,325/- which was remitted by
    the third accused on 18.3.1999. This final settlement was arrived
E   at between the parties as against the original claim arrears of
    tax of Rs.5,68,649/-. In short, the appellant prayed that in respect
    of the transaction in question no prosecution could have been
    launched against the third accused or for that matter any other
    accused. For this the appellant relied on the reported decisions
F   of this Court in Central Bureau of Investigation, SPE, SIU (X),
    New Delhi v. Duncans Agro Industries Ltd., Calcutta [(1996) 5
    SCC 591] and Sushi/a Rani (Smt.) v. Commissioner of Income
                                                                           .           '

    Tax & Anr. [(2002) 2 SCC 697] and Hira Lal Hari Lal Bhagwati
    v. CBI, New Delhi [(2003) 5 SCC 257].
G       10. As against this, it was argued before the learned Single
  Judge by the Public Prosecutor that firstly the Revision Petition
  under Section 239 Cr.P.C. could not co-exist with the Criminal
  Original Petition under Section 482 of the Cr.PC. It was secondly
  suggested that the law laid down by this Court in Duncans Agra's         "'
H case and Sushi/a Rani's case (supra) was no more a good law
            M. NATARAJAN v. STATE BY INSPECTOR OF POLICE,                1009
               SPE, CBI, ACS CHENNAI [V.S. SIRPURKAR, J.]

            because of the decision of this Court in State of Orissa v. A
            Debendra Nath Padhi [(2005) 1 SCC 568]. It is also suggested
            by the Public Prosecutor that for the purposes of framing charges
            under the provisions of Cr. P.C. what may be seen is the material
            produced by the prosecution in charge-sheet and no other
            material. It was, therefore suggested by the learned Public B
        "   Prosecutor that the court could not have looked into the KVSS,
            1998 to find out as to whether there was an absolute immunity
            to the tax-payer and other granted by that scheme and whether
            the appellate court utilized the alleged immunity.

                  11. Learned Single Judge went into the details of the          c
            scheme. In that the learned Judge considered Sections 88, 90,
            91 and 95 of the KVSS 1998 and also referred to the case law
            cited and posed before him a question in the following words:
    ~            "Thus the crux of the question is whether "KVSS" is
                                                                             0
                 applicable to the present facts of the case or not, and if
                 not applicable, how the present case is different from the·
                 facts in issue of Hiralal's case."
                  In short the learned Judge came to the conclusion that it is
            permissible to look into the KVSS 1998 though it was not the         E
            part and parcel of the charge-sheet and for that purpose in order
            to decide as to whether the prosecution was legally launched or
            not and could continue or not, the court could look into the KVSS
            1998. For this, the learned Judge relied on the decision of this
I   i
            Court in State of Haryana & Ors. V Bhajan Lal & Ors. [1992           F
            Supp (1) sec 335) and more particularly on the following
            observations regarding the circumstances under which
            interference under Section482 Cr. P.C. was possible:
                 "Where there is an express legal bar engrafted in any of
                 the provisions of the Code or the concerned Act (under G
                 which a criminal proceeding is instituted) to the institution
                 and continuance of the proceedings and/or where there is
                 a specific provision in the Code or the concerned Act,
                 providing efficacious redress for the grievance of the
                 aggrieved party."                                             H
    1010       SUPREME COURT REPORTS                   [2008] 7 S.C.R.


A        In our opinion, the learned Judge was right in examining
    the KVSS 1998 to decide whether it provided complete immunity
    from the prosecution since that was the mainstay of appellants
    attack against the prosecution.
       12. The learned Judge then undertook the detailed                  .,.
B examination of the KVSS 1998 as also the case law and came
  to the conclusion that the acts complained of against the
  appellant were outside the declaration statement under Section
  88 made by third accused. The acts complained of in the charge
  sheet did not have any connection with the declaration of
c statement (by accused no. 3) and the letter dated 8.9.1994 which
  was the basis for iss:iance of Foreign Inward Remittance
  certificate amounted to misrepresentation and false
  representation and it had no connection with the scheme
  whatsoever and as such the learned Judge came to dismiss
                                                                          i'
D the Revision Petition as well as Criminal O.P. under Section
  482 Cr.P.C.
         13. It is on this background that we have to proceed to
    decide the present appeals.
E         14. Shri K. Subramaniam, Senior Advocate, appearing
    on behalf of tt:ie appellant very heavily relied on the decision in
    Hiralal's case (supra). He pointed out that the law laid down in
    Duncans Agro's case and Sushi/a Rani's case (supra) was
    reiterated in Hirala/'s case, more particularly in para 27 thereof.
    Para 27 reads as under:                                                 r '
F
           "On a reading of the judgment in the case of Sushi/a Rani,
           it is clear to us that if an assessee takes the option under
           this scheme, he obtains immediate immunity under any
           proceeding under any and all laws in force. As such the
G          present proceedings initiated under Section 1208 read
           with Section 420 of the lrdian Penal Code are bad and
           ought to have been quashed with immediate effect"
          Learned counsel points out that the observations made in
    this paragraph and more particularly the user of the terms "unde~
H
            M. NATARAJAN v. STATE BY INSPECTOR OF POLICE,                1011
               SPE CBI, ACS CHENNAI [V.S. SIRPURKAR, J]

            any and all laws in force" would go to suggest that the concerned A
            accused earns an absolute immunity for the prosecution of all
            the offences including under Sections 1208 and 420 IPC which
            were also alleged against the appellant herein in the present
            case. Learned counsel further very painstakingly took us through
~           the provisions of KVSS 1998 as engrafted in the Finance Act B
     ""'    and invited our attention to Sections 90, 91 and 95 of the same
            which are the relevant sections. It was further contended that
            the criminal act complained of against the appellant was so
            inextricably connected with the Customs transactions that it had
            to be held a part and parcel of the same and, therefore, all and    c
            every prosecution related to the customs transaction not only
            against the person who had made the declaration but also
            against each and every person connected with the transaction
            were covered in the immunity provided under Section 91 of the
            Act. Our attention was further invited to the judgment of this Court
    ' '/"                                                                        D
            in K. C. Builders & Anr V Assistant Commissioner of Income
            Tax [(2004) 2 SCC 731] and also Duncans Agro Industries
            Ltd. Calcutta V Commissioner of Central Excise, New Delhi
            [(2006) 7 sec. 642]. Learned counsel also relied on the
            judgment of this Court in Alpesh Navinchdnara Shah v State
            of Maharashtra & Ors. [(2007) 2 SCC 777] where this Court E
            had reiterated the law laid down in Hiralal's case.

                   1?. As against this Shri Vikas Singh, learned Additional
            Solicitor General very carefully sifted the facts. He firstly
     ·-(    suggested that.at this stage the court should not interfere in the F
            matter as the trial was complete and only the judgment had to
            be delivered. He then points out that the act complained of
            against the appellant is an independent offence inasmuch as
            he had made a false representation to the bank, knowing it to
            be false. He had known that there were no foreign remittances
                                                                                G
            in Account No.872 of M/s.Tamilarasi and that his request for
            issuance of certificate to that effect was totally unfounded. On
            the basis of this letter, a certificate which was essentially false
            came to be issued by the B.ranch Manager and, therefore, this
            act is independent offen~e. though ultimately the said certificate
                                                                                H
    1012      SUPREME COURT REPORTS                  [2008] 7 S.C.R.


A had been used by the third accused for getting the clearance of
  the car. Our attention was invited to the provisions suggesting
  that under the scheme the remittance is either to be made in
  foreign currency or atleast on the basis of the remittance by an
  NRI credited in the account held in the Indian Bank. He further
B points out that the provisions of Sections 90, 91, 95 and more        >
                                                                            .,
  particularly Section 91 were clear and couched in the language
  which admitted of no doubts. Relying heavily on the language of
  Section 91, the learned ASG suggests that this immunity has to
  be restricted to the offence under the Act and it could not be
c viewed as general immunity providing immunity covering all the
  other offences cover ad by different Acts which are distinct and
  separate from the tax laws. Further the learned counsel urged
  that the immunity was not available to a totally non connected
  persons like the appellant. In that behalf he pointed out that the
  third accused had not claimed immunity before the trial court or
0
  before the High Court. The learned counsel also suggested that
  the observations made in para 27 of the Hirala/'s case were
  entirely based on the observations in Sushi/a Rani's case.
  However, considering the narrow scope and the factual scenario
  in Sushi/a Rani's case, the broad observations made in para
E 27 in Hiralal's case were not justified. He further points out that
  those observations were ultimately diluted by Hon'ble
  Lakshmanan, J. in the subsequent decision in Alpesh
  Navinchdnara Shah's case. Learned counsel further invites our
  attention to the two judgments both by Hon'ble Sinha, J. reported
F in State, CBI v. Sashi Ba/asubramanian & Anr [(2006) 13 SCC
  252 and Master Cables (P) Ltd. V State of Kera/a & Anr [(2007)
  5 SCC 416]. According to learned counsel both these are direct
  judgments wherein the earlier judgments in Duncans Agro's
  case, Sushi/a Rani's case, Hirala/'s case and K. C. Builders's
G case have been explained and this Court has drifted away from
  the broad propositions laid down in those judgments. He,              J..,
  therefore, urges for the dismissal of the appeals.
       16. It will be, therefore, our task first to examine the
H provisions of KVS Scheme and more particularly,
                M. NATARAJAN v. STATE BY INSPECTOR OF POLICE,                 1013
 -~                SPE, CBI, ACB CHENNAI [VS. SIRPURKAR, J.]

                 Section 90, 91 and 95. Sections 88 to 98 which are included in A
                 Chapter IV of the Finance Act (No. 2) of 1998 cover the entire
                  Kar vivad Samadhan Scheme. The basic object of the Scheme,
  '
  1

  "              undoubtedly, is to recover the taxes both direct as well as indirect.
                 Section 87 U) specifically brings into the fold of the Scheme the
      •          Customs Act, 1962, which is the concerned Act for the purpose B
          ~
                 of the present controversy. Section 87 (a) gives the definition of
                 declarant as- "declarant means a person making a declaration
                 under Section 88". Section 88 provides that a declarant has to
                 make the declaration during the period from 1.9.1998 to
                 31.12.1998. The said declaration has to be in respect to the tax    c
                 payable either under direct tax enactment or indirect tax
               · enactment or any other provision of any law. Section 88 then
                 provides the modality for settlement of such tax. There is no
                 dispute that in the present case, it was the third accused and
       ..' t     not the appellant who actually gave a declaration statement
                                                                                       D
                 under section 88, in respect of the tax liability which was attracted
--f
                 on a;:;count of the import of the car. There is aIsa no dispute that
                 on the basis of this declaration under Section 88, the authorities
                 went on to decide the liability on the part of third accused and
                 ultimately, the tax liability was satisfied and the car was allowed
                 to be imported. Section 90 provides for the time and manner of E
                 payment of tax arrear which have been settled on the basis of
                 the declaration under Section 88. Indisputably, a certificate in
                 the prescribed form was granted in favour of the third accused
                 in which particulars of the tax arrear and the sum payable after
      • 1.       such determination was mentioned being a full and final F
                 settlement of the tax arrears. Section 91 is the real crux of the
                 matter. It provides immunity from prosecution and imposition of
                 penalty in certain cases:
                      "91. Immunity from prosecution and imposition of penalty
                                                                                G
                      in certain cases- The designated authority shall, subject
                      to the conditions provided in Section 90, grant immunity
                      from instituting any proceeding for prosecution for any
                      offence under any direct tax enactment or indirect tax
                      enactment, or from the imposition of penalty under any of
                                                                                H
A
    1014      SUPREME COURT REPORTS                   [2008] 7 S.C.R


           such enactments, in respect of matters covered in the
                                                                          ,..
           declaration under Section 88".

          It is this Section 91, which has been relied upon by the
    appellant suggesting that the language is broad enough to cover
    not only the declarant but any other person and the prosecution
B
    not only under the direct tax enactment or indirect tax enactment    .•
    but any and every other offence also. It is for this purpose, that
    the learned senior counsel, Shri K. Subramanian heavily relied
    upon the observations in paragraph 27 of Hira/al's case. The
    learned counsel also relied on the concurring and supplementing
c   observations by Hon'ble Brijesh Kumar, J., in which, the learned
    Judge has made a specific reference to Section 95 after quoting
    that Section.

         17. We were taken extensively through this judgment by
  the learned counsel who was at pains to urge that the factual
D
  scenario in Hiralaf's case is comparable to the present case, if       ..,
  not idemical. There also, the High Court in a pdition under
  Section 482 Cr.P.C. had refused to quash the FIR and the
  proceedings which were taken against the Director of Gujarat
  Cancer & Research Institute (for short "GCRI"), Secretary of
E
  Gujarat Cancer Society (GCS) and one Dr. Viral C. Shah. It
  was the case of the prosecution that the three had cheated the
  Government of India in terms of the evasion of customs duty
  and by concealment of facts obtained customs duty exemption
  certificate in respect of MRI and lithotripsy machines and by
F violating the provisions of "actual user" condition as per import-
  export policy and Customs Notification. In that case also, the
                                                                          '.
  customs duty had been paid by the appellant and was settled
  under the KVSS 1998. The charge against the appellant was
  that the machines were imported into India by the GCS who
G availed of the duty exemption on the basis of the exemption
  certificate issued in the name of the GCRI on a bona fide
   premise that since all the activities of the GCRI were funded by       1..,

  the GCS and all the operations of GCS were carried out through
  the GCRI, such imports could be made. The Customs Authority
H
           M. NATARAJAN v. STATE BY INSPECTOR OF POLICE,              1-015
              SPE, CBI, ACB CHENNAI [V.S. SIRPURKAR, J.]

           raided the premise of the GCRI and seized the machines on A
           the ground that the exemption certificate was issued in the name
           of the GCRI and not in the name of GCS and, therefore, GCS
           was not entitled to the exemption and was, therefore, liable to
           pay customs duty. The GCS was held liable to pay the customs
           duty, thus, denying the concessional duty benefit demanded from 8
..
     _.(   it under Section 28 of the Customs Act, 1962 read with the
           proviso to the said Section. Against the order imposing the duty
           by the Collector of Customs, the appeals were filed before
           Customs, Excise and Gold (Control) Appellate Tribunal, West
           Regional Branch, Bombay which confirmed the findings of the        c
           Collector of Customs. Against that, the GCS filed an appeal
           before this Court and while the matter was pending before this
           Court, the Government of India launched a Kar Vivad Samadhan
           Scheme, 1998, and in accordance thereof, the GCS had agreed
           to deposit a stipulated amount of over Rs.98 lakhs and also
                                                                               D
           withdrew the civil appeal pending before this Court. On
 "-t
           19.7.1989, a certificate for full and final settlemeilt of the tax
           arrears was issued to the GCS. The said certificate provided
           the final settlement of tax arrears and also granted the immunity
           to the GCS from any proceedings for prosecution for any offence
           under the Customs Act, 1962 or from the imposition of penalty E
           under the concerned enactments. However, a case was
           registered against the appellants on the ground that the
           appellants in conspiracy with the Director of the GCRI, Secretary
           of the GCS and others had cheated the Government of India.
           The prosecution was for the offence under Section 120-8 read F
, 1
           with Section 420 of the IPC. It was this prosecution which was
           challenged and after the challenge, failed at the High Court level,
           and the party had successfully approached this Court where
           the proceedings were ordered to be quashed.
                                                                               G
                  18. In Hiralal's case heavy reliance seems to have been
           placed on the judgment of Sushi/a Rani (Smt.) Vs.
           Commissioner of Income Tax & Anr. and of Central Bureau of
           Investigation, SPE, SIU (X}, New Delhi Vs. Duncans Agro
           Industries Ltd, Calcutta. The learned Judges in their separate
                                                                               H
     1016       SUPREME COURT REPORTS                    [2008) 7 S.C.R.


A    but concurrent judgments upheld the challenge and had quashed
     the proceedings relying on the KVSS 1998. The learned Judges
     noted the various provisions of the Scheme from Sections 86
     to 98. It was also noted that FIR in that case was filed on 6.1.1999,
     while the certificate under KVSS 1998 was issued on
 B   19. 7.1999. Hon'ble Lakshmanan, J. in paragraph 23 observed:
                                                                                 •
            "23. It is thus crystal clear that the Commissioner of
            Customs (Adjudication) and Designated Authority
            (KVSS-98) granted immunity from instituting any
            proceeding for prosecution for any offence under the
c           Customs Act, 1962, or from the imposition of penalty
            under the said enactment, in respect of matters covered
            in the aforesaid declaration made by the dec/arant. After
            hearing the case of the GCS, as already noticed, the
            Collector of Customs, Bombay held that the GCS was
 D          liable to pay the customs duty but in view of the activities
            of the Society and the bona fides of the Socir:ty, and
            considering the charitable and philanthropic activities of
            the Society, no prosecution was recommended. Moreover,
            only a token redemption fine of Re.1 was imposed."
 E                                                (Emphasis supplied).

           19. In paragraph 25, the learned Judge analyzed the
    judgment in Sushi/a Rani's case (supra), which was also under
    the KVSS 1998. Paragraph 6 and 8 of Sushi/a Rani's case
  F were quoted by the learned Judge which suggested that once a
    certificate was granted under Section 90 (1 ), it was absolutely         i       '
    conclusive as to the matter stated and no matter covered could
    be reopened in any other proceeding under any law for the time
    being in force. It is. probably on the basis of observations in
. G paragraph 6 of Sushi/a Rani's case, that the learned Judge
    made the observation in paragraph 27 which we have already
    quoted in para 13 of this judgment. We may at this stage itself
    point out that the observations 1n paragraphs 6 and 8 in Sushi/a
    Rani's case seem to have been made only in the pursuance of
  H tax laws. The question of prosecution under some other offences
          M. NATARAJAN v. STATE BY INSPECTOR OF POLICE,               1017
 ...,_
             SPE, CBI, ACB CHENNAI [V.S. SIRPURKAR, J.]

          (not under the Indirect Tax Act or the Direct Tax Act) was not     A
          there.

                20. A reference must be made, at this stage, to the
          judgment of this Court reported in Alpesh_Navinchandra 's case
   ,;..
          (cited supra) which was again decided by the Division Bench
                                                                         B
          consisting of Hon'ble Lakshman and Kabir, JJ., the judgment
          was, however, authored by Hon'ble Lakshmanan, J. This was
          the case of immunity granted under Sections 127H of the
          Customs Act, 1962, however, the appellant and his brother were
          preventively detained under COFEPOSA. The detention was
          challenged on the ground that once the immunity under Section      c
          127H of the Customs Act was granted in respect of customs
          offences, after settling the taxes finally by the Settlement
          Commissioner, the preventive detention could not have been
          ordered by the authorities for the same reasons. The case of
    ·!-
          Hirata! (cited supra) was relied upon, which is clear from a D
          reading of raras 17 and 46. This Court proceeded to hold in
          paras 46 and 47 of its judgment as under:

               "46. At the time of hearing, learned counsel for the petitioner
               relied upon Hira Lal Bhagwati Vs. CBI. According to
                                                                               E
               learned counsel for the respondent the said relied upon
               case was a case of duty evasion and the appellant therein
               was booked by Customs Authority and therefore, customs
               duty was paid under KVS Scheme and further in the
, i            criminal proceedings under Sections 120-B and 420 IPC
               initiated by CBI was quashed by this Court. Therefore, iJ F
               is admitted that the above cited case is different from the
               present case as in the case in hand the detention order
               was issued under the COFEPOSA Act against the
               petitioner with objective to prevent the nefarious activities
               in future. Therefore, the immunity granted by the Settlement G
               Commission from fine, penalty and prosecution under the
               provisions of the Customs Act and IPC have no bearing
               on the order of detention passed under the COFEPOSA
               Act. Therefore, it is contended that the detention order
               issued by the detaining authority is very much legal and H
    1018        SUPREME COURT REPORTS                    [2008] 7 S.C.R          'r
                                                                                      -
A          the same needs to be upheld.
           47. The Settlement Commission was constituted with the
           aim and objective of settling the tax evasion issues and by
           virtue of disclosure by tax offender, they gain immunity
           from fine/penalty which is otherwise mandatory under the          ,._
B          provisions of tax laws. But, such opportunity is only extended
           to one-time tax offenders but not available to habitual
           smugglers. For the persons involved in smuggling activities,
           other than the provisions made for the prosecution under
           the Customs Act, 1962, an equal deterrent is emphasized
c          under the provisions of the COFEPOSA Act, 1974 i.e.
           provisions for preventive detention. Such preventive
           detention prohibits smugglers from indulging in further
           smuggling activities. In the present ca$t:: the investigation
           reveals the consistent involvement of the petitioner detenu
                                                                             i
D          and his brother, Kamlesh Navinchandra Shah in smuggling
           activities, therefore, the detaining authority on the ba<>is of
           evidence placed before him felt it necessary to issue the
           detention orders in respect of both the detenus in order to
           prevent them from prejudicial activities in future.
E          Accordingly, the impugned order is justifiable in the eye of
           the law and the present writ petition deserves to be
           dismissed."
        In our opinion, the rigour of the observations made in
  paragraph 27 in Hira/a/'s case is removed by the observations                  r •
F made in paragraphs 46 and 47 in Alpesh Navinchandra Shah's
  case. It was contended that the legislature had created a
  Settlement Commission for generating revenue and had also
  made provisions for release of the goods on payment of duty
  and had also made provisions for granting immunity from
G prosecution under the Customs Act, 1962 under the Penal Code
  and also under the other Central law and, therefore, it was clear              ~.

  that the intention of the legislature was more on revenue aspect
  rather than prosecution and punishment aspect or in continuing
  with multiple litigations. And, therefore, it would be unjust, unfair
H and unreasonable if a person is made to suffer preventive
,.
               M. NATARAJAN v. STATE BY INSPECTOR OF POLICE,                 1019
     .....,,      SPE, CBI, ACB CHENNAI [V.S. SIRPURKAR, J.]

                detention mainly after his application for settlement is allowed A
                to be proceeded with, and after realization of the customs duties
                not only the goods are ordered to be released but on considering
                the cooperation extended by him in the settlement proceedings,
                the Settlement Commission had also granted to him immunity
                from prosecution under the Customs Act, 1962 as well as under B
         J.
                IPC. The reliance there, however, was being made not on KVSS
                1998, but on the Scheme under Section 127-H of the Customs
                Act, 1962 which provided the immunity not only from the Customs
                Act offences but also from the Indian Penal Code and other
                central enactmen~s. We must hasten to point out that at this c
                juncture itself, the immunity under the KVSS 1998 does not refer
                to the offences under the Penal Code or under any other central
                law, but restricts itself under Section 90 (1) only to the offences
               ·Linder the direct tax enactment or indirect tax enactment and as
     .    ~
                such Section 127H of the Customs Act is much broader than
                Section 90(1) of Finance Act in its operation.
                                                                                    D

                     21. The Court then in paragraph 46 of the above case held
               that the immunity granted by the Settlement Commission under
               the provisions of Customs Act and IPC had no bearing on the
               order of detention passed under the COFEPOSA Act. Thus                 E
               inspite of the broader nature of Section 127H of the Customs
               Act as compared with Section 90(1) of the Finance Act, this
               Court proceeded to hold that the detention under COFEPOSA
               Act was "outside the immunity". It was, therefore, clear that the
• i            rigour of observations made in paragraph 27 of Hiralal's Case          F
               was taken away in paragraphs 46 of Alpesh Navinchandra
               Shah's case.
                     22. It may be noted further that in Hiralal's case the learned
               Judge had specifically found that there was no prima facie
               material as regards the offences under Sections 1208 and 420           G
               of the Indian Penal Code and that was also the reason why the
       ,.<
               prosecution was quashed. Such is not the case here. It cannot
               again be forgotten that in Hiralal's case the immunity was granted
               to the tax-payer whereas the appellant in the present case was
               neither an applicant under Section 90(1) nor was any immunity          H
    1020       SUPREME COURT REPORTS                  [2008] 7 S.C.R.
                                                                         -
A   granted to him specifically. This aspect whether the immunity
    could be granted and could be enjoyed by any other person
    than the one who had made a declaration under Section 88
    and was granted the immunity was considered in the subsequent
    judgment of this Court.
B
         23. This situation was explained in State, CBI Vs. Sashi
  Ba/asubramanian and Anr. [(2006) 13 SCC 252]. There also,
  the private respondent had applied for import of cotton fabrics
  for a certain quantity of "cotton men's ensemble" under "the Duty
  Exemption Entitlement Certificate Scheme". That application
C was recommended and the Company was allowed to import
  cotton fabrics of a particular description. On allegations in regard
  to the grant of the license, an FIR came to be lodged on 2.3.1995
  for commission of offences under Sections 120-B, 420 and 471
  IPC as also Section 13 (2) read with Section 13(1 )(d) of the
D Prevention of Corruption Act, 1988 and Section 136 of the
  Customs Act, 19f32. The Company and its Directors had given
  a declaration on 31.12.1998. However, the charge sheet against
  them and the four public servants was filed on 12.4.1999,
  originally against the 7 accused persons, 3 out of whom were
E the private parties, namely, the Company and its 2 Directors.
  The High Court quashed the criminal proceedings against the
  private parties as also the Government servants. Challenging
  this quashing, the CBI came before this Court. It was urged
  before this court that: (i) the High Court had erred in holding that
F though the private parties have become entitled to immunity from
  prosecution, the official respondents would also be covered
  thereby, (ii) the High Court erred in holding Section 95(iii) of the
  Act to be inapplicable to the present case, and (iii) public
  servants were not entitled to any relief under the Scheme and
G far less immunity from prosecution. The questions which were
  formulated were: (i) Whether the Scheme was applicable in
  relation to a public servant?, (ii) when does a prosecution start?
  (iii) whether the offences enumerated under Section 95 (iii) were
  excluded from immunity under Section 91 ?.
H          24. Hon'ble Justice Sinha referred to the KVSS 1998 and
               M. NATARAJAN v. STATE BY INSPECTOR OF POLICE,                   1021
  --(             SPE, CBI, ACB CHENNAI [V.S. SIRPURKAR, J.]

               more particularly, to Hiralal's case in paragraph 42 of his              A
               judgment. This Court also referred to the observations of Justice
               Brijesh Kumar in Hiralal's case. In paragraphs 44 and 45, this
               Court observed:

,.(
                    "44. An accused may be discharged from a criminal case
                    under Section 245 of the Code, if his civil liability has           B
       ..I..
                    been determined in his favour; but the same must have a
                    direct nexus with his criminal liability. He would not acquire
                    any immunity only because civil and criminal liabilities have
                    some connection, however remote the same may be. The
                    connection between the two types of liabilities must be             c
                    direct and proximate. If in incurring the civil liability, he has
                    committed offence wherewith determination thereof has
                    no nexus, the immunity would not extend thereto.

 .     .)"
                    45. We will give a simple example. A person while obtaining
                    undue favour from an authority under the indirect tax
                                                                                        D

                    enactmeroi offers a bribe. Obtaining of an undue favour
                    resulting in prosecution under the indirect tax enactment
                    may be a separate offence, but involvement of the public
                    servant qua offences under the Prevention of Corruption
                                                                                        E
                    Act would be a separate and distinct one."

                     In paragraph 46, the Court took into consideration the
               observations of this·Court made in CBI Vs. Duncans Agro
               Industries Ltd. (supra). In paragraph 47, K. C. Builders case
               was also referred to. This Court ultimately set aside the judgment       F
' t
               of the High Court insofar as it was pertaining to the quashing of
               the prosecution in respect of public servants.

                    25. In the above case, the question was whether the
               immunity granted under the KVSS 1998 could also cover
               proceedings under the Kerala Sales Tax Act in respect of the             G
               same assessee. The learned Judges again referred in
      ,--1     paragraph 15 to Sushi/a Rani's case as also to Hiralal's case
               and more particularly to the observations made in paragraphs
               18 and 27, which we have already quoted above, The learned
               Judges then proceeded to hold that Hiralal's case was                    H
    1022       SUPREME COURT REPORTS                   (2008] 7 S.C.R.
                                                                          ,..
A   distinguished in Sashi Balasubramanian's case (cited supra)
    and held that the transfer of application of Salex Tax Act would
    not be covered by the immunity under KVSS, 1998. This Court
    in paragraph 33 observed as under:
           "33 ..... an immunity is granted only in respect of offences        ~
B
           purported to have been committed under direct tax              ).


           enactment or indirect tax enactment, but by no stretch of
           imagination, the same would be granted in respect of
           offences under the Prevention of Corruption Act. A person
           may commit several offences under different Acts; immunity
c          granted in relation to one Act would not mean that immunity
           granted would automatically extend to others. By way of
           example, we may notice that a person may be prosecuted
           for commission of an offence in relation to property under
           the Penal Code as also under another Act, say for example,
D          the Prevention of Corruption Act. Whereas charges under
           the Preventio'l of Corruption Act may fail, no sanctio'l       '
           having been accorded therefore, the charges under the
           Penal Code would not."
          Thus this Court accepted the principle that the immunity
E
    could not cover certain other offences than those covered in
    direct and indirect tax enactments. The Court also accepted
    that the immunity could not be granted to any other person
    automatically merely it was granted to a tax-payer who had made
    declaration under Section 88 of the Finance Act.
F                                                                          ~       ;


       26. One other judgment in Master Cables (P) Ltd. Vs. State
  of Kera/a and Anr. (supra) is to be seen at this stage. The
  concerned Sections 90(1) & (3), Section 91 and Section 87(h)
  & U) fell for consideration in this case also. It was declared in
G paragraph    10 in unequivocal terms in this judgment as follows:
       "10. What is conclusive is the order passed under sub-
                                                                           >-,
        section (1) of Section 90 of the Scheme determining the
       sum payable under the Scheme. The terms "direct tax
       enactment" or "indirect tax enactment" or "any other !aw
H      for the time being in force· refer only to those statutes
      M. NATARAJAN v. STATE BY INSPECTOR OF POLICE,               1023
         SPE, CBI, ACB CHENNAI [V.S. SIRPURKAR, J.]

           under which the order had been passed. Immunity, as            A
           noticed hereinbefore, is in respect of institution of any
           proceeding for prosecution of any offence under direct tax
           enactment or indirect tax enactment or from imposition of
           penalty under any of such enactments. The terms "direct
           tax enactment" and "indirect tax enactment" have been          B
           defined under Sections 87 (h) and 87 U) of the Scheme,
           which read as under:

           87. (h) "direct tax enactment" means the Wealth Tax Act,
           1957 (27 of 1957) or the Gift Tax Act, 1958 (18 of 1958)
           or the Income Tax Act, 1961 (43 of 1961) or the Interest C
           Tax Act, 1974 (45 of 1974) or the Expenditure Tax Act,
           1987 (35 of 1987);

               *       *        *       *       *        *       *

           U) "indirect tax enactment" means the Customs Act, 1962 D
           (52 of 1962~ or the Central Excise Act, 1944 (1 of 19t1A)
           or the Customs Tariff Act, 1975 (51 of 1975) or the Central
           Excise Tariff Act, 1985 (5 of 1986) or the relevant Act and
           includes the rules or regulations made under such
           enactment;" In paragraph 11, this Court observed:              E

           "11. Admittedly, the case of the appellant does not come
           within the purview thereof. Amplitude of the provisions of
           the Scheme having been extended only to the enactments
• i        made by Parliament. Having regard to the constitutional
           scheme contained in Article 246 of the Constitution of         F
           India, in our opinion, the same cannot be extended to
           assessment of sales tax under a State Legislation ........ "

            Once this Court had noticed the observations made in
      Hirala/'s case and then narrowed the width of the observations      G
      expressed in paragraph 27 thereof, we must proceed in terms
      of the subsequent judgment where the earlier judgment was
      taken note of.
          27. By way of almost a desperate effort Shri K.
      Subramaniam, learned Senior Advocate then urged that the only       H
    1024       SUPREME COURT REPORTS                 [2008] 7 S.C.R.


A   offence which could have been alleged against any of the
    accused was under Section 132 of the Customs Act, 1962, i.e.,
    of making a false declaration. The argument was that since the
    offence complained of related to the false declaration and false
    documents, the appellant could be prosecuted only under
B   Section 132 of the Customs Act and not under the offences
    covered under the Indian Penal Code. Section 132 of the
    Customs Act is as under:
           "132. False declaration, false documents, etc. -
           Whoever makes, signs or uses, or causes to be made,
c          signed or used, any declaration, statement or document
           in the transaction of any business relating to the customs
           knowing or having reason to believe that such declaration,
           statement or document is false in any material particular,
           shall be punishable with imprisonment for a term which
D          may extend to two years or with fine, or with both."
         The argument is only to be rejected. It is not at this stage
    that we would consider the nature of offences under Section
    132 of the Customs Act and/or those under the Indian Penal
E   Code, under which the appellant is being charged. However,
    merely because there may be some overlapping in the two
    offences, it does not mean that the appellant cannot be tried
    under the offences covered under the Indian Penal Code. The
    Court would proceed to decide the question on the basis of the

F
    evidence led before it. We must hasten to add that merely
    because the appellant could be tried under Section 132 of the
                                                                        ~-   .
    Customs Act, it does not mean that he could not be tried for the
    offence committed under the Indian Penal Code. There is no
    such provision.

G        28. Considering, therefore, the overall situation and
    considering the law laid down by this Court in the earlier
    judgments, we are of the clear opinion that the appeals are
    without any merit. Therefore, both the ap,ieals are dismissed.
    K.K.T.                                      Appeals dismissed.
H