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High Court issues bail to assessee accused of offenses punishable u/s 132(1)(a)

Punishment Under section 132Hon’ble HC(Gujarat), Idrish Yusufbhai Malvasi v. State of Gujarat & Ors to grant a periodic bail to the MD of M/s. Mishkat Agro Industries Private Limited.

who was arrested on charges of wrongfully availing of tax exemption by misapplying and misinterpreting the notices of exemption notifications provided by the Dept by deliberately using the company’s brand name &  by willingly suppressing the fact/truth.

Facts:

Idrish Yusufbhai Malvasi (“Applicant/Assessor”) is MD of M/s. Mishkat Agro Industries Private Limited who has been arrested for offenses punishable under Section 132(1)(a) of the CGST Act, via order dated October 29^th, 2020, passed by the Superintendent (Prev.), Central Goods & Service Tax & C.

Excise (“Respondent No.2”), with the important claim that the tax exemption was incorrectly granted by misapplying and misinterpreting the notices of the exemption provided by the Dept by simply using the company’s brand name, on the goods and thus having them subject to Goods & Services Tax.

This is also stated that the Claimant has deliberately withheld the truth in order to benefit from the zero-rate exemption/exempt supplies and thus prevented a large number of Goods and services tax by wrongly invoking the advantage of Notification No. 2/2017-Central Tax (Rate) dated 28^th June 2017, which can’t have been used in the light of Notification No. 1/2017-Central Tax dated 28^th June 2017, as modified.

The Claimant filed a periodic bail in accordance with the above order issued by Respondent No. 2.

Issue:-

In relation to punishable offenses under Section 132(1)(a) of the Central Goods & Services Act, if regular bail could be issued to the Assessee?

Held:-

Hon’ble Gujarat HC, R/Criminal Misc. Application No. 18320 of 2020 agreed on 10^th December 2020 to be observed & held as follows:

• The Applicant took advantage of Notification No. 2/2017—Central Tax (Rate) dated 28th June 2017, following intimation by the Dept via Communication dated 22 September 2017, which was recognized by the Dept on 17th June 2020 to the impact that the name of the Company had been wrongly seen as a brand name & that the Company had agreed to forfeit its rights over the brand name.
• Consequently, the commodity produced and processed by the claimant is protected as exempted products. Already, the returns have been filed, which have also been audited.
• Whether or not the licensed trademark was foregone & whether or not the Applicant deceived the authority will be a matter for adjudication.
• The claimant is stated to have deposited a total of INR 75,00,000/- in the process of the inquiry In view of the facts and circumstances of the case, the Court decided that it was reasonable to exercise judgment in support of the Applicant.
• The Applicant is ordered to be released on normal parole in accordance with the order of 29 October 2020 passed by Respondent No. 2 on the execution of a personal bond of INR 15,000/-with a guarantee of the like amount, to the satisfaction of the trial court and subject to the conditions which it may impose;

(a) Do not place undue liberty or misuse liberty;

(b) not act in a way that is injurious to the interests of the prosecution;

(c) surrender of the passport, if there are any, to the district court within one week.

(d) cannot leave India without the prior authorization of the court concerned;

(e) furnish the current residence address to the Investigator as well as to the Court at the time of the implementation of the bond and would not change the residence without the specific authorization of the concerned trial court;

• The Authorities are directed to comply with their own circular relating to the Coronavirus disease (COVID-19) pandemic and, then, to release the applicant only if it is not necessary for the time being in link with any other offense.
• If a violation of any of the above situations is committed, the Judge concerned shall be free to issue a warrant or to take the appropriate required step in the matter.
• The bail bond is to be implemented before the court which has jurisdiction to try the case

Relevant Provision: Section 132(1) (a) of the Central Goods & Services Act:

“Punishment for such offenses-

132. (1) So whoever commits or induces any of the following crimes to commit and maintain the benefits arising from them, namely: –

(a) supply any goods or services, or both, without the issue of any invoice, in breach of the laws of this Act or of the rules laid down therein, with a purpose to escape tax;

would be punishable –

(i) in cases where the amount of illegal evasion of taxes or the amount of ITC incorrectly used or the refunds incorrectly taken exceeds 5,00,00,000 Rupees, with a period of Up to 5 years’ imprisonment and along with a fine;

(ii) in situations where the amount of tax escape or the amount of ITC incorrectly used or the amount of refund incorrectly imposed exceeds 200,00,000 Rs. but does not exceed  500,00,000 Rs., with imprisonment for a period of up to 3 years and a fine;

(iii) in the case of any other violation where the amount of tax eluded or the amount of ITC incorrectly used or the amount of refund incorrectly imposed exceeds 100,00,000 but does not exceed 200,00,000 Rs., with imprisonment for a period of one year and a fine;

(iv) In the case where the offense referred to in clause (f) or clause (g) or clause (j) is committed or abets, the person would be punished with imprisonment for a period which may be extended to 6 months or with a fine or along with both.”