Anticipatory bail denied in Rs 1.47 crore tax evasion case involving Section 76 MVAT Act and IPC charges

The Bombay HC rejected an anticipatory bail application in a tax evasion case involving Rs. 1,47,56,486. While offences under Section 76 of MVAT Act are bailable, the applicant also faced charges under Sections 406 and 420 of IPC for criminal breach of trust and cheating. The HC held that prosecution under both MVAT and IPC can proceed simultaneously, following the precedent in G.S. Oils Ltd. case. Given the substantial amount involved, gravity of offence, and necessity for custodial interrogation, the court found no grounds for anticipatory bail protection under Section 438 CrPC.

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Issues Involved
1. Legality of the FIR under Sections 406 and 420 of the IPC and Section 74(2) of the MVAT.
2. Applicability of IPC provisions alongside MVAT.
3. Justification for anticipatory bail.

Summary

Legality of the FIR under Sections 406 and 420 of the IPC and Section 74(2) of the MVAT
The Applicant sought anticipatory bail in connection with C.R. No. 949 of 2023 registered at Dindoshi Police Station, Mumbai, u/s 406 and 420 of the IPC and u/s 74(2) of the MVAT. The FIR was lodged by the Assistant Sales Tax Commissioner alleging non-payment of tax amounting to Rs. 1,47,56,486/- from 2009 to 2017. The Applicant argued that the FIR was not legal as MVAT is a complete code in itself and does not permit prosecution under the IPC for the same set of facts. The Applicant cited the case of Gagan Harsh Sharma & Anr. Vs. The State of Maharashtra to support this contention.

Applicability of IPC provisions alongside MVAT
The learned APP opposed the Applicant's submissions, arguing that the proceedings before the NCLT were not bona fide and that the evasion of MVAT involved multiple entities. The APP cited various judgments including State of Uttar Pradesh Versus Aman Mittal and another, and State of Maharashtra and another Versus Sayyed Hassan Sayyed Subhan and others to establish that prosecution under two different enactments can go on simultaneously. The Court referred to Section 26 of the General Clauses Act, which allows prosecution under multiple enactments but prohibits double punishment for the same offence. The Court concluded that the same set of facts could constitute offences under both the MVAT and IPC, and therefore, the FIR under Sections 406 and 420 of the IPC was valid.

Justification for anticipatory bail
The Court noted that the Applicant's firm had evaded tax payments and had not provided any acceptable justification for the same. The Court emphasized that the investigation revealed a significant amount of tax evasion and that the Applicant's custodial interrogation was necessary to trace all transactions. Given the gravity and seriousness of the offence, the Court decided that no protection u/s 438 of the Cr.p.c. could be granted to the Applicant.

Conclusion
The Application for anticipatory bail was rejected. The Court held that the investigation and prosecution under both the MVAT and IPC could proceed simultaneously, and the ingredients of Section 74(2) of the MVAT, as well as Sections 420 and 406 of the IPC, were clearly made out.

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