Idrish Yusufbhai Malvasi vs. State Of Gujarat

Held

The Court allowed the application for regular bail. The Court noted that the petitioner had taken benefit of a notification after intimating the Department, which was acknowledged. It also appeared that returns were filed and audited. The Court found that whether the registered trademark was foregone and whether the petitioner misled the authority were matters for adjudication. Considering that the petitioner had deposited Rs. 75 Lacs during the investigation, the Court found it to be a fit case to exercise discretion in favour of the applicant. The petitioner was ordered to be released on regular bail upon executing a personal bond of Rs. 15,000/- with one surety of like amount, subject to conditions including not misusing liberty, not acting against the prosecution's interest, surrendering his passport, not leaving India without permission, and furnishing his address. The Court also directed adherence to COVID-19 related circulars for release and noted that the petitioner should not be required in connection with any other offence.

Facts

The petitioner, Idresh Yusufbhai Malvasi, filed an application for regular bail under Section 439 of the Code of Criminal Procedure. The bail was sought in connection with an order dated 29.10.2020 passed by the Superintendent (Prev.), Central GST & C. Excise, Vadodara-II. The proceedings were initiated for alleged offences punishable under Section 132(1)(a) of the Central Goods and Services Tax Act, 2017. The core allegation against the petitioner is wrongful availment of tax exemption by misinterpreting exemption notifications, by using the brand name of M/s. Mishkat Agro Industries Pvt. Ltd., of which he is the Managing Director, on products making them liable to GST. The petitioner claims to have informed the department about foregoing rights over the brand name and that the products are exempted goods. He also stated that Rs. 75 Lacs were deposited during the investigation and Input Tax Credit was not availed.

Key Issues

1. Whether the petitioner is entitled to regular bail under Section 439 of the Code of Criminal Procedure, considering the allegations of wrongful availment of tax exemption and evasion of GST under the Central Goods and Services Tax Act, 2017? Petitioner's Arguments: The petitioner contended that the issue is a fiscal matter requiring adjudication by the Department, and jail custody is not warranted. He highlighted that Rs. 75 Lacs were deposited during the investigation and Input Tax Credit was not availed. He argued that any penalty could be levied only after proper adjudication. The petitioner also stated that he had informed the Department about foregoing rights over the brand name and that the products manufactured are covered under exempted goods notifications. Revenue's Arguments: The respondent Department argued that the petitioner had registered his trademark, which was discovered during an inspection at the Trademark Registry. They contended that this was a deliberate act of tax evasion and therefore, discretion should not be exercised in favour of the petitioner.