M/S S S Jewellery vs. The State Of Karnataka
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Cause title — parties, addresses and appearances
ORAL ORDER
In this petition, petitioner seeks the following reliefs: " WHEREFORE, it is most humbly prayed that this Hon'ble Court may kindly be pleased to: a) Issue a Writ of Certiorari, quashing the Order dated 25.06.2025 passed by the Respondent No.2 for the assessment years 2020-2021, produced at Annexure-A. b) Issue a Writ of Mandamus directing the Respondents to refund the amount of Rs. 12,42,380/ collected by the Respondents towards SGST and CGST along with applicable interest. c) Grant such other relief/s as deemed fit by this Hon'ble Court under the facts and circumstances of the present case."
A perusal of the material on record will indicate that pursuant to the show cause notice dated 22.08.2024, the petitioner contested the proceedings while filing its HC-KAR NC: 2025:KHC:49740 reply, which culminated in the impugned order, imposing penalty and exonerating the petitioner from its liability to pay tax, but however, imposing penalty and interest upon the petitioner who is before this Court, inter alia contending that having exonerated the petitioner from its liability to pay penalty and tax, the second respondent could not have imposed penalty and interest on the ground that there were criminal proceedings pending, especially when the said criminal proceedings have been quashed by this Court in Criminal petition Crl.P.No.2108/2021 dated 09.06.2021 and as such, petitioner is before this Court by way of the present petition.
Per contra, learned HCGP for the first respondent and learned counsel for the second respondent would support the impugned order and submit that there is no merit in the petition and the same is liable to be dismissed. HC-KAR NC: 2025:KHC:49740
Before adverting to the rival contentions, it will be necessary to refer to the final order passed by this Court in Crl.P.No.2108/2021 dated 09.06.2021 whereby the criminal proceedings as against petitioner were quashed by this Court as hereunder: "This is a petition under Section 482 Cr.P.C. filed by accused no.1 and 2 in Cr.No.176/2020 registered by City Market Police Station, Bengaluru.
On 21.11.2020, FIR was registered after seizure of gold ornaments from the petitioners. The police suspected the petitioners to be thieves of the ornaments. On 20.11.2020, two police constables viz., Hanumantha and Ananda Kannoli were deputed for patrolling duty near Doddapet circle. At about 20.00 hours when they were at that place, they saw the petitioners coming on a motor cycle with a blue colour bag. The constables entertained suspicion seeing their movements and therefore enquired them. They did not give satisfactory answers. Thereafter the police constables opened the bag being carried by the petitioners and found gold ornaments in it. The petitioners did not give satisfactory answers about the gold ornaments. Therefore, they brought before Sub-Inspector and then FIR was registered against them.
It is the argument of the petitioner’s counsel that they were the employees of a jewellery business concern viz., S.S. Jewellery having head office at Mumbai, and a branch at Bengaluru. All the jewellery seized from the possession of the petitioners HC-KAR NC: 2025:KHC:49740 belonged to S.S. Jewellery which had sent the petitioners to Bengaluru along with the seized jewellery. The petitioners had brought the jewellery from Mumbai for delivering at Bengaluru branch. This is evident from a letter written by a Partner of S.S. Jewellery to the Inspector of Police replying to a letter dated 23.11.2020 addressed by the police to the S.S. Jewellery. Given a plain reading to the contents of FIR, no offence of theft is constituted. Registration of FIR against the petitioners was illegal. They cannot be prosecuted.
The Government Pleader opposed the petition.
As argued by the petitioners’ counsel, the petitioners appear to have been implicated on a suspicion that they might have committed theft of gold ornaments which they were carrying on 20.11.2020. Two letters are undisputed. The letter dated 23.11.2020 addressed to S.S. Jewellery by the Police Sub-Inspector of City Market Police Station shows that the police came to know that the seized gold ornaments belonged to S.S. Jewellery and that they wanted to ascertain the same. A Partner of S.S. Jewellery replied to the letter on the very same day stating that the petitioners were the employees of their business concern and they had been sent to Bengaluru from Mumbai for delivering the gold ornaments to the branch office. Therefore from these documents it becomes clear that the petitioners had not committed the offence of theft punishable under Section 379 IPC. Moreover even if FIR is read, it can be seen that ingredients of the offence of theft are absent. The petitioners cannot be prosecuted, HC-KAR NC: 2025:KHC:49740 registration of FIR against them was unwarranted. It can be quashed. Hence the following: ORDER Petition is allowed. FIR in Crl.No.176/2020 registered by respondent police station against the petitioners for the offences under Section 379 IPC r/w Section 41D and 102 of Cr.P.C. is quashed."
Though the said order was passed on 09.06.2021, the said criminal proceedings have been made the basis for imposition of penalty and interest upon the petitioner by the impugned order which does not even refer to the said order nor considered or appreciated the same.
Under these circumstances, while upholding the impugned order insofar as exonerating the petitioner from payment of tax is concerned, I deem it just and appropriate to set aside the impugned order to the limited extent of imposition of penalty and interest and remit the matter back to the second respondent for reconsideration HC-KAR NC: 2025:KHC:49740 afresh, bearing in mind the final order dated 09.06.2021 passed in Crl.P.No.2108/2021 and in accordance with law.
In the result, I pass the following: ORDER i. Writ Petition is allowed. ii. The impugned order dated 25.06.2025 at Annexure-A to the limited/restricted extent that it imposes penalty and interest upon the petitioner is hereby set aside. iii. The impugned order insofar as it exonerates the petitioner from payment of tax is hereby upheld and confirmed. iv. The matter is remitted back to the respondent No. 2, for reconsideration afresh to the limited extent of the liability of the petitioner to pay the penalty and interest, bearing in mind the quashment of the criminal proceedings in Crl.P.No. 2108/2021 dated 09.06.2021. HC-KAR NC: 2025:KHC:49740 v. Petitioner shall appear on 19.12.2025 without awaiting further notice from the respondent No. 2. vi. The respondent No.2 is directed to conclude the proceedings within a period of 3 months from19.12.2025. vii. Immediately upon conclusion of proceedings, the second respondent shall refund the entire tax paid by the petitioner together with applicable interest, in accordance with law. (S.R.KRISHNA KUMAR) JUDGE BSV List No.: 2 Sl No.: 7
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.