2023 (3) TMI 532 - HC - VAT and Sales Tax

Seeking grant of anticipatory bail - any offence committed by the Director or not - for non-payment of tax, can the directors be made liable? - HELD THAT - Going through the FIR as also the papers of investigation and the documents annexed with the application, without entering into the discussion in detail about invoking provisions of the Act, 2003 or the Penal Code, suffice it to say that its invocation in such set of facts, as stated, that too, against the Directors in absence of any specific provisions under the Act, 2003 and there is no provisions under the IPC, when coaccused is already considered by this Court and while admitting the present application detail reasons are assigned, on those reasons also, it is deemed fit to grant an order in the nature of anticipatory bail, which was continued since 17.02.2022. The present application is allowed by directing that in the event of applicant herein being arrested pursuant to FIR registered as C.R.No.I-11200011210293 of 2021 with Valsad Rural Police Station, Valsad, on his executing a personal bond of Rs.10,000/- with one surety of like amount on the conditions imposed - application allowed.

Summary

Issues:
Application for anticipatory bail under Section 438 of the Code of Criminal Procedure, 1973 in connection with offences under Sections 406 and 420 of the Indian Penal Code and Sections 85(1)(d), 85(1)(g), 86(1), and 86(2) of the Gujarat Value Added Tax Act, 2003.

Analysis:
The applicant sought anticipatory bail, arguing that no offence was committed by them as a Director of the Company under the Act, 2003 or the Indian Penal Code. They highlighted that the company, for which tax was not paid, had been wound up before the FIR was filed. The applicant cooperated with the investigation and was interrogated by the Investigating Officer. The applicant's submission emphasized that since no offence was committed by the Directors of the company as per the prosecution's case, anticipatory bail should be granted, especially when a co-accused Director, who is in a similar situation, had already been granted bail.

The Additional Public Prosecutor opposed the anticipatory bail, arguing that due to the company evading tax, the applicant, as a Director, should not be granted bail. The prosecutor also noted that a co-accused had previously claimed that the applicant was administering the company's affairs, indicating the applicant's involvement.

After considering the arguments and examining the FIR and investigation papers, the Court refrained from discussing the specific provisions of the Act, 2003 or the Penal Code. The Court found no specific provisions holding Directors liable in the absence of such provisions under the Act, 2003 or the IPC. Given that the co-accused had been considered by the Court and in light of the reasons provided in the application, the Court granted anticipatory bail, effective since a previous date.

The Court allowed the application for anticipatory bail, setting conditions for the applicant upon arrest, including cooperation with the investigation, appearance at the Police Station, not influencing witnesses, and not leaving the country without permission. The Investigating Officer could apply for remand if necessary, and the applicant must comply with the Magistrate's directions. The Court clarified the process for police remand and the applicant's rights in such a situation. The Court also instructed that the trial court should not be influenced by the observations made in the present order. The rule was made absolute to the specified extent, with permitted direct service.