2020 (12) TMI 624 - HC - GST

Grant of regular bail - sections 132(1)(a) of the Central Goods and Services Tax Act, 2017 - mis-applying and mis-interpreting the exemption notifications - HELD THAT - It appears that the applicant has taken benefit of the Notification, after intimating the Department vide communication dated 22.09.2017, which was acknowledged by the Department on 17.06.2020. It also appears that the returns were filed, which were also audited. Whether or not the registered trademark has been foregone and whether or not the applicant has mislead the authority would be a matter adjudication. The applicant is reported to have deposited a sum of ₹ 75 Lacs during the course of investigation - Considering the facts and circumstances of the case, this Court finds this to be a fit case where discretion could be exercised in favour of the applicant. The applicant is ordered to be released on regular bail - Application allowed.

Summary

Issues:
Application for regular bail under section 439 of the Code of Criminal Procedure for offences under sections 132(1)(a) of the Central Goods and Services Tax Act, 2017.

Analysis:
The applicant sought regular bail concerning an order passed by the Superintendent (Prev.), Central GST & C. Excise, Vadodara-II, alleging offenses under the Central Goods and Services Tax Act, 2017. The main accusation was the wrongful availing of tax exemption by misinterpreting exemption notifications and using the company's brand name on products, making them liable to GST. It was also alleged that the applicant willfully suppressed facts to evade GST by wrongly invoking certain notifications. The applicant argued that the issue was fiscal and should be adjudicated by the Department, emphasizing that he had deposited a significant amount during the investigation and had not utilized Input Tax Credit. The applicant's counsel urged for bail, emphasizing that any penalty should follow proper adjudication.

Analysis:
The respondent Department contended that the applicant deliberately evaded tax by registering a trademark, which was discovered during inspection at the Trademark Registry, leading to the applicant's arrest. The Department opposed granting discretion in favor of the applicant.

Analysis:
After hearing arguments from both sides and reviewing the evidence, the Court noted that the applicant had informed the Department about certain matters and had deposited a substantial sum during the investigation. The Court observed that the issue of the registered trademark and alleged misleading actions needed adjudication. Considering the circumstances, the Court found it appropriate to exercise discretion in favor of the applicant and granted regular bail.

Analysis:
Consequently, the Court allowed the application, ordering the applicant's release on regular bail upon executing a personal bond and surety. Various conditions were imposed, including restrictions on liberty, surrendering of passport, and compliance with COVID-19 related guidelines. The authorities were directed to release the applicant as per COVID-19 protocols and take action in case of any condition breaches. The bail bond was to be executed before the lower Court having jurisdiction over the case.

Analysis:
The rule was made absolute, permitting direct service, and the Registry was instructed to communicate the order promptly to the relevant Court/authority.