Bail granted by Gujarat High Court to accused who wrongfully availed Input Tax Credit

Bail granted by Gujarat High Court to accused who wrongfully availed Input Tax Credit

High Court imposed various conditions and consequences of the breach for granting bail to the accused who had wrongfully availed Input Tax Credit.

In Idrish Yusuf bhai Malvasi (Applicant) v. State of Gujarat (Respondent), an application has been filed under Section 439 of the Code of Criminal Procedure for regular bail by the Applicant regarding the order dated 29 October 2020 passed by the Respondents i.e. Superintendent (Prev.), Central GST & C. Excise, for offenses punishable under Sections 132(1)(a) of the Central Goods and Services Tax (GST) Act, 2017.

The allegations against the applicant were regarding wrongfully availing tax exemption by misinterpreting the notification that is issued by the concerned department whereby the applicant used the brand name of M/s. Mishkat Agro Industries Private Limited, in which he is a Managing Director, on the products and it makes liable to GST.

He had also purposefully suppressed the facts with a mala fide intention for wrongfully availing the benefits of exemption zero rates on supplies and evaded a huge amount of GST by wrongfully gaining the benefit of Notification No. 2/2017, which could not be availed otherwise according to the Notification No.1/2017-CT dated 28 June 2017 which was later amended by Notification No.27/2017-CT dated 22 September 2017.

It was also alleged that the applicant had deliberately evaded the tax and he also registered the trademark of his Company and hence he was arrested for tax evasion. Respondents prayed for no discretion in favour of the applicant.

The matter was heard by the single judge bench of Justice Gita Gopi, Justice permitted the bail application of the applicant after imposing various conditions. The applicant is ordered to be released on regular bail on executing a personal bond of Rs.15,000 with one surety of the like amount to the satisfaction of the trial.

The conditions imposed by the court on the applicant while granting bail comprised of not taking undue advantage of the liberty granted, not to act in any manner that is injurious to the interest of the prosecution, surrendering the passport within a week to the lower court, not permitted to leave India without prior permission of the trial court, and furnishing of the present address of residence to the Investigating Officer and the Court at the time of execution of the bond. The applicant was not permitted to change the residence without prior permission of the concerned trial court.

The order further contained directions that if a breach of any of the above conditions is committed, the Sessions Judge will be free to issue a warrant or take appropriate action in the matter. Court further directed execution of a bail bond before the lower court having jurisdiction to try the case.