Gujarat High Court
Patel Sharadkumar Madhalal vs State Of Gujarat on 4 July, 2024
NEUTRAL CITATION
R/SCR.A/1548/2020 ORDER DATED: 04/07/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 1548 of 2020
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PATEL SHARADKUMAR MADHALAL
Versus
STATE OF GUJARAT
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Appearance:
MR MANISH J PATEL(2131) for the Applicant(s) No. 1
MR H.K. PATEL, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE HASMUKH D. SUTHAR
Date : 04/07/2024
ORAL ORDER
1. Heard Mr. Manish J. Patel, learned counsel for the petitioner and Mr. H.K.Patel, learned APP for the respondent State.
2. RULE. Learned APP waives service of Rule on behalf of the respondent State.
3. By way of this application under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as "Cr.P.C."), the applicant has prayed to quash and set aside the order dated 10.04.2019 passed by learned Metropolitan Magistrate Court No.11, Ahmedabad, below Exh:8 in Criminal Case No.114254 of 2018 as well as order dated 12.02.2020 passed by learned City Sessions Court in Revision Application No.189 of 2019 confirming the order of learned Metropolitan Magistrate Court No.11, Ahmedabad.
4. Brief facts of the prosecution are that, the petitioner started a business in buying and selling of old iron pipes and for the business purpose, he obtained TIN No.24072702479 from Ahmedabad Commercial Office. The petitioner and one Jignesh Mehta started one firm namely M/s. K. Babulal & Co. and they prepared a bogus Page 1 of 10 Downloaded on : Mon Jul 08 20:58:44 IST 2024 NEUTRAL CITATION R/SCR.A/1548/2020 ORDER DATED: 04/07/2024 undefined bills and both put their signatures on the bogus bills. The said bills have been accepted by another accused namely Sharadkumar Patel. The cost of one bill was Rs.3,47,850/- and on the basis of said bogus bill, K. Babulal & Co. opened a bank account with Axis Bank and in order to get government benefit, they made illegal transaction with the said bank and got tax credit of Rs.34,010/- from the government. In this regard, FIR came to be filed at DCB Police Station, Ahmedabad, under Sections 420, 467, 468 and 120 (b) of the IPC.
5. It is the submissions of learned counsel for the petitioner that, the petitioner is businessman and has no any criminal background; that there is no evidence against the Petitioner. He also submitted that, the trial court committed an error in passing the order. The Petitioner is a businessman with no criminal background. It was further submitted that there is no evidence against the present applicant. On 26.02.2019, as per the instruction of the VAT Department, the applicant deposited Rs.34,010/- along with interest of Rs.18,365/-. Thus, the applicant deposited a total amount of Rs.52,375/- with the VAT Department. Therefore, no case is made out against the present applicant. Learned counsel for the applicant also argued that the evidence on record demonstrates that the present Petitioner has not committed any offence. However, the learned trial court rejected the discharge application filed by the petitioner (i.e., the original accused) without considering the evidence. Consequently, the Revision Application filed requesting the Court to discharge the Petitioner from the case and to set aside the order passed by the Additional Chief Metropolitan Magistrate, Court No.11 also came to be rejected. He also submitted that, before registration of impugned complaint, VAT Department has issued show-cause notice stating that the amount which was shown in bills are due. Hence, the petitioner through challan has been paid Page 2 of 10 Downloaded on : Mon Jul 08 20:58:44 IST 2024 NEUTRAL CITATION R/SCR.A/1548/2020 ORDER DATED: 04/07/2024 undefined Rs.34,010/- with interest Rs.18,365/- and then, the petitioner has also cancelled TIN No and closed the business. Hence, no offence is made out against the petitioner. The petitioner has nothing to do wit h the offence and in the income tax returns and in all documents, said transaction of invoices issued by K. Babulal & Co. is mentioned and the authority has also inspected and cleared the statement and assessment for each and every year. He also submitted that, for the offnece of 2012, complaint is registered in the year 2016.
In view of the above submissions, Mr. Patel prays to allow present petition as prayed for in this petition.
6. Learned APP appearing for the State has opposed present petition and submitted that, the petitioner is also facing charge under Section 120B of Indian Penal Code, 1860 and he has siphoned the amount and caused monetary loss to the Government; that in connivance and in collusion with the accused persons, they have fabricated and forged the bills. From the conduct of the petitioner, it crystal clear that this is a clear cut case of malafide intention and the petitioner has committed an offence by preparing bogus bills.
Considering the above contentions, learned APP prays not to entertain present petition and may kindly be dismissed.
7. Having heard learned advocates on both the sides and considering the material placed on record, it appears that the petitioner has paid Rs.52,375/- with penalty and said amount being paid prior to lodgment of the FIR in February 2016 upon issuance of show cause notice. The petitioner appeared before the authority and submitted relevant documents and upon notice that there was shortfall in the amount, he had paid the amount. Prior to that, in the year 2012-13, the authority has verified the record and through ESC, refund has been paid to the petitioner, meaning thereby, no Page 3 of 10 Downloaded on : Mon Jul 08 20:58:44 IST 2024 NEUTRAL CITATION R/SCR.A/1548/2020 ORDER DATED: 04/07/2024 undefined any objection ever raised by the authority and assessment order being issued, which are produced along with the petitioner. The allegations made in the complaint to the effect that the petitioner forged bills of K.Babulal & Co. and has wrongly taken undue advantage and caused revenue loss to the government. It is the case of the petitioner that, he has sold the goods and output credit is also mentioned. Even three tax invoices are mentioned and towards the said goods, he has received an amount through RTGS and said fact is also mentioned in the ledger account book and even in the bank account also, said fact is revealed. This is not a benami transaction. The amount is received through authorization and local code. Herein, the petitioner is facing charges under Sections 176, 191, 192, 196, 200, 405, 409, 415, 416, 420, 463, 467, 468, 471 and 120(b) of Indian Penal Code, 1860, Sections 11(7), 85(1) (B)(C) (E)(F)(G) and 85(2)(J) of the Gujarat Value Added Tax and Sections 65, 66(C)(D) of Information Technology Act.
For ready reference, relevant provisions of Section 85 of VAT Act are reproduced as under:-
"11. Tax credit.
(1)xxx (2)xxx (3)xxx (4)xxx (5)xxx (6)xxx (7). Where a registered dealer without entering into a transaction of sale, issues to another registered dealer tax invoice, retail invoice bill or cash memorandum with the intention to defraud the Government revenue or with the intention that the Government may be defrauded of its revenue, the Commissioner may, after making such inquiry as he thinks fit and giving a reasonable opportunity of being heard, deny the benefit of tax credit, in respect of such transaction, to such registered dealers issuing or accepting such tax invoice, retail invoice, bill or cash memorandum either prospectively or retrospectively from such date as the Commissioner may, having regard to the circumstances of the case, fix.Page 4 of 10 Downloaded on : Mon Jul 08 20:58:44 IST 2024
NEUTRAL CITATION R/SCR.A/1548/2020 ORDER DATED: 04/07/2024 undefined
85. Offences and penalties.
(1)Whoever-
(a)xxx ;(b)knowingly furnishes a false return where the amount of tax, which could have been evaded if the false had been accepted as true, exceeds Rs. 1000;
(c)knowingly produces before the Commissioner, false tax invoice, bill, voucher, cash-memorandum, declaration, certificate or other document for claiming deduction or tax credit, the value of which exceeds Rs. 1000
(d)xxx
(e)knowingly keeps or produces false account;
(f)issues to any person certificate or declaration under this Act, or a invoice, bill, cash-memorandum, voucher or other document which he knows or has reason to believe to be false;
(g)wilfully attempts, in any manner whatsoever, to evade tax leviable under this Act;shall on conviction, be punished with imprisonment for a term which [may extend to six months or with fine not exceeding rupees twenty thousand or with both.Provided that in absence of special and adequate reasons to the contrary to be mentioned in the judgement of the Court, such imprisonment shall not be less than one month and such fine shall not be less than rupees ten thousand.] [These words were substituted for the words 'shall not be less than six months but which may extend to three years and with fine of rupees twenty thousand.' by Gujarat 6 of 2006 Section 40(1)] (2)Whoever -
(a)xxx
(b)xxx
(c)xxx
(d)xxx
(e)xxx
(f)xxx
(g)xxx
(h)xxx
(i)xxx
(j)issues to another registered dealer tax invoice, retail invoice, bill or cash memorandum with the intention to defraud the Government revenue or with the intention that the Page 5 of 10 Downloaded on : Mon Jul 08 20:58:44 IST 2024 NEUTRAL CITATION R/SCR.A/1548/2020 ORDER DATED: 04/07/2024 undefined Government may be defrauded of its revenue, shall, on conviction, be punished with imprisonment for a term which may extend to [six months or with fine not exceeding rupees twenty thousand or with both : [These words were was substituted for the words `one year and with fine of rupees twenty thousand' by Gujarat 6 of 2006 Section 40(2)
(b).]Provided that in absence of special and adequate reasons to the contrary to be mentioned in the judgement of the Court, such imprisonment shall not be less than one month and such fine shall not be less than ten thousand.]."
8. As per the case of the prosecution, the co-accused Babulal Shivabhai is income tax practitioner and doing accounting work. In collusion and in connivance of Commercial Tax Adviser Mr.Jignesh Mehta, they have forged bills and TIN number and opened the account on government website on the name of K. Babulal & Co. and started business of aluminum casting and forged bogus bills and evade the amount of tax and thereby, caused loss to the government revenue. Whatever the allegations are leveled against Babulal Shivabhai and Jignesh Mehta and other accused. During the said inquiry, initially name of the petitioner was not named, but during investigation, three bills of K. Babulal & Co was found and amount was transferred through RTGS. As discussed in earlier part, except the petitioner, other accused have siphoned off the amount of Rs.2,01,56,000/- and subsequently, after getting benefit of tax credit, TIN number got cancelled by the accused persons. During investigation, three forged bills were found from the petitioner and tax credit is received by the petitioner. Even though, we accept the aforesaid allegations as it is, then also, the petitioner has received Rs.34,010/- and when it came to his knowledge, he immediately paid the said amount on 26.02.2016 along with interest of Rs.52,375/-, while the offence has been registered on 28.05.2016. Prior to that, twice he appeared before the authority and every year after going through the account and statements, refund order was Page 6 of 10 Downloaded on : Mon Jul 08 20:58:44 IST 2024 NEUTRAL CITATION R/SCR.A/1548/2020 ORDER DATED: 04/07/2024 undefined issued in favour of the petitioner by the Department. When the said irregularities or the alleged offence came to notice of the petitioner, he has shown his bonafide and amount has been paid, which remains undisputed.
9. Learned APP has submitted that in aid of Section 120(B) of Indian Penal Code, 1860, the petitioner is arraigned as an accused, but perusing the investigation papers and allegations, which suggests that there was malafide intention to take undue advantage of tax credit/input credit on the part of the petitioner since inception. Even perusing offence under Section 177 of Indian Penal Code, 1860 against the petitioner, at the relevant point of time, he has furnished false information and the authority has inspected the same and when it came to knowledge that, such bills are forged and received the amount through RTGS in his account, there is no reason to believe that the said information was not false.
In view of the above contentions, he prays not to entertain present petition and may kindly be rejected the same.
10. So far as Sections 191, 192 and 196 of the Indian Penal Code, 1860 are concerned, the petitioner has not given any false evidence and he has not made any false declaration as he was legally bound to disclose the fact under law, which he has made before the authority and authority has accepted. Under Section 192, he has not fabricated any evidence. It is not case of the prosecution that, the petitioner has forged any bills or documents and therefore, application of offence of forgery, would not get attracted.
11. Section 409 of Indian Penal Code, 1860 is concerned, no case of entrustment of property and no criminal breach of trust on the part of the petitioner. Even the petitioner has not committed any offence under Sections 415, 416 and 420 of Indian Penal Code, Page 7 of 10 Downloaded on : Mon Jul 08 20:58:44 IST 2024 NEUTRAL CITATION R/SCR.A/1548/2020 ORDER DATED: 04/07/2024 undefined 1860. As discussed earlier, the petitioner has acted in bonafide manner and he has received the amount through cheque and as and when such irregularities came to know, the petitioner has paid the amount along with penalty with interest and then complaint is lodged.
12. In so far application of Sections 85(1)(B)(C)(E)(F)(G) and 85 (2) (J) of Value Added Tax Act are concerned, the petitioner has not furnished any false return knowingly for the purpose of evading tax liability. In absence of any such allegation that the petitioner has knowingly opened account and willfully made an attempt to evade tax, as department has lodged the complaint to cause public revenue of more than Rs.2 crore. Meager amount of Rs.34,010/- tax liability is fixed on the part of the petitioner and that too, without showing any malafide intention on the part of the petitioner. Further, the petitioner has reflected the entire transaction in his books of account and regularly submitted before the authority and authority has after examining it, given a refund to the petitioner. Merely because three bills were found forged in off-suit of other investigation, the petitioner has arraigned as an accused. Hence, in absence of any lawful act or with intention to defraud the government revenue or with intention to forge any bill and evade tax credit, alleged offence levelled against the petitioner are not attracted. Hence, no any offence under Section value Added Tax is made out as the petitioner is acted bonafidely.
13. Invocation of Sections 65 & 66(C)(D) of IT Act are concerned, no any offence under the IT Act is made out, as the petitioner never tempered with any document or computer source and fraudulently or dishonestly, he has not made out any electronic signature or made any cheating by personating using computer source and no such allegation is levelled against the petitioner.
Page 8 of 10 Downloaded on : Mon Jul 08 20:58:44 IST 2024NEUTRAL CITATION R/SCR.A/1548/2020 ORDER DATED: 04/07/2024 undefined For ready reference, relevant provisions of Information & Technicalities Act are reproduced herein below:-
"65. Tampering with computer source documents.- Whoever knowingly or intentionally conceals, destroys or alters or intentionally or knowingly causes another to conceal, destroy, or alter any computer source code used for a computer, computer programme, computer system or computer network, when the computer source code is required to be kept or maintained by law for the time being in force, shall be punishable with imprisonment up to three years, or with fine which may extend up to two lakh rupees, or with both 66C. Punishment for identity theft. -
Whoever, fraudulently or dishonestly make use of the electronic signature, password or any other unique identification feature of any other person, shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine with may extend to rupees one lakh. 66D. Punishment for cheating by personation by using computer resource-
Whoever, by means of any communication device or computer resource cheats by personation, shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine which may extend to one lakh rupees
14. Further, it is necessary to consider whether the power conferred by the High Court under section 482 of the CrPC is warranted. It is true that the powers under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. The Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court being the highest court of a State should normally refrain from giving a prima facie decision in a case where the entire facts are incomplete and hazy, more so when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of magnitude and Page 9 of 10 Downloaded on : Mon Jul 08 20:58:44 IST 2024 NEUTRAL CITATION R/SCR.A/1548/2020 ORDER DATED: 04/07/2024 undefined cannot be seen in their true perspective without sufficient material. Of course, no hard-and-fast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceeding at any stage as the Hon'ble Supreme Court has decided in the case of Central Bureau of Investigation vs. Ravi Shankar Srivastava, IAS & Anr., reported in AIR 2006 SC 2872 as well as the principle laid down in the case of State of Haryana & Ors. Vs. Bhajanlal & Ors., [1992 Suppl. 1 SCC 2020], this is a fit case to exercise inherent power under Section 482 of the Cr.P.C for quashing of criminal proceedings.
15. In the result, the petition is allowed. The impugned order dated 10.04.2019 passed by learned Metropolitan Magistrate Court No.11, Ahmedabad, below Exh:8 in Criminal Case No.114254 of 2018 as well as order dated 12.02.2020 passed by learned City Sessions Court, Ahmedabad, in Revision Application No.189 of 2019 are hereby quashed and set aside qua the petitioner herein. Rule is made absolute. Direct service is permitted.
(HASMUKH D. SUTHAR,J) SUCHIT Page 10 of 10 Downloaded on : Mon Jul 08 20:58:44 IST 2024