2024 (10) TMI 1499 - HC - GST

Levy of additional tax on vehicles misused - tax evasion and fraud against a Managing Director and an educational society - Section 3-A of the Andhra Pradesh Motor Vehicles Taxation Act, 1963 - HELD THAT - Admittedly, the petitioner is the Managing Director of M/s. NSPIRA Management Services Private Limited since 2017 onwards. He is nothing to do with M/s. Narayana Educational Society. Going by the record, the accusation that has been made against M/s. Narayana Educational Society is that it is involved in tax evasion by altering vehicle purchase invoices and deceitfully misrepresented ownership to the Regional Transport Authority. The only accusation against the petitioner herein is that he being the Managing Director of M/s. NSPIRA Management Services Private Limited, has purchased the vehicles in the name of M/s. Narayana Educational Society and caused loss to the Government to a tune of Rs. 4.48 Crores by resorting to tax evasion. On a perusal of the complaint further goes to show that the same has been given on 03.03.2024 and the same has been registered as a case in crime No.45 of 2024 of Balajinagar Police Station, SPSR Nellore district on 04.03.2024 at about 2.00 AM, for the offences punishable under Sections 120-B, 420, 467, 471, 477-A read with 34 IPC. It is not the case of the prosecution that it is the petitioner herein, who has forged or altered the documents Since the petitioner herein is Managing Director of M/s. NSPIRA Management Services Private Limited and has a fixed place of abode, the question of his absconding would not arise. The police concerned are directed to conduct investigation without taking any coercive steps against the petitioner herein, for a period of six (6) weeks. The petitioner herein is directed to cooperate with the investigating agency - List the matter after four (4) weeks for filing counter affidavit.

Summary

Issues:
1. Allegations of tax evasion and fraud against a Managing Director and an educational society.
2. Interpretation of Section 3-A of the Andhra Pradesh Motor Vehicles Taxation Act, 1963.
3. Dispute regarding collusion between the Managing Director and the educational society in tax evasion.
4. Investigation at a nascent stage and the need for cooperation from the accused.

Analysis:
The judgment by the High Court of Andhra Pradesh addresses allegations of tax evasion and fraud involving the Managing Director of a company and an educational society. The petitioner, who is the Managing Director of M/s. NSPIRA Management Services Private Limited, is accused of purchasing school buses and other vehicles for Rs. 20.68 crores in the name of the educational society, causing a loss to the state exchequer. The prosecution alleges that the educational society colluded with the company to evade taxes and manipulate invoices to benefit from lower road tax rates. However, the defense argues that according to Section 3-A of the Andhra Pradesh Motor Vehicles Taxation Act, 1963, the government should levy additional taxes in case of misuse, which is not the responsibility of the petitioner but the government.

The court notes that the accusations primarily target the educational society for tax evasion through fraudulent practices, while the petitioner's involvement is limited to being the Managing Director of the company that made the purchases. The complaint, registered under various sections of the IPC, does not directly implicate the petitioner in forging or altering documents. Given that the petitioner has a fixed place of abode and is cooperating with the investigation, the court directs the police to conduct a non-coercive investigation for six weeks. The petitioner is instructed to continue cooperating with the authorities during this period.

The judgment emphasizes that the investigation is in its initial stages, and the court refrains from taking coercive action against the petitioner at this point. The court sets a timeline for the investigation to proceed without any prejudicial steps against the petitioner, allowing for the gathering of facts and evidence. The matter is listed for further proceedings after four weeks, indicating the court's intention to monitor the case's progress and the petitioner's cooperation with the investigation.