Dismissed

M a Shahed S/O M a Majid v. the State of Maharashtra

Bombay HC24 Oct 2016APPLN/5767/2016

Case brief

AI extract

What is this about?

This judgment rejects two applications for anticipatory bail filed by motorists facing charges of cheating and forgery. The applicants had used forged Sales Tax clearance certificates to renew liquor shop licenses. The Court held that due to the gravity of the economic offense and the need to recover forged documents, no case for bail was made out.

What did the court decide?

Both applications for anticipatory bail under Section 438 CrPC were rejected.

M a Shahed S/O M a Majid Vs the State of Maharashtra — Cheque Dishonour | Bombay HC (2016)

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(1)Cri. Appln. No. 5585 & 5767 of 2016

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY, AURANGABAD BENCH, AT AURANGABAD.

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Criminal Application No. 5585 of 2016

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District : Nanded

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Sanganbai w/o. Digambar Mundkar,
Age : 70 years,
Occupation : Household,
R/o. Atkali, Taluka : Biloli,
District : Nanded. .. Applicant.

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versus

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1.The State of Maharashtra,
Through In-charge Police
Station Officer,
Shivajinagar Police Station,
Nanded.

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2.The Superintendent of Police,
Nanded, Dist. Nanded. .. Respondents.
............

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Mr. P.R. Katneshwarkar, Advocate, for the applicant.

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Mr. S.D. Ghayal, Addl. Public Prosecutor, for respondent nos.1 and 2.

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............

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With

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Criminal Application No. 5767 of 2016

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District : Nanded
M.A. Shahed s/o. M.A. Majid,
Age : 45 years,
Occupation : Business,
R/o. Narsi,
Taluka : Naigaon,
District : Nanded. .. Applicant.

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(2)Cri. Appln. No. 5585 & 5767 of 2016

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versus

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The State of Maharashtra,
Through In-charge Police
Station Officer, Shivajinagar
Police Station, Nanded. .. Respondent.

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............

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Mr. S.S. Thombre, Advocate, for the applicant.

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Mr. S.D. Ghayal, Addl. Public Prosecutor, for the respondent.

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............

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CORAM : A.M. BADAR, J.

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DATE : 24TH OCTOBER 2016

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ORAL ORDER:

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Applicants in both these applications are
accused in Crime No. 172/2016 registered with
Shivajinagar Police Station, Nanded, for offences
punishable under Sections 420, 467, 468, 471 read
with Section 34 of the Indian Penal Code. By these
applications under Section 438 of the Code of
Criminal Procedure, both these applicants are seeking
pre-arrest bail.

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2.Heard the learned Counsel appearing for
applicant Sanganbai w/o. Digambar Mundkar in Criminal
Application No. 5585 of 2016. He argued that the
applicant is an old lady aged about 70 years. Her
husband expired on 18.01.2015 and thereafter name of

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(3)Cri. Appln. No. 5585 & 5767 of 2016

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the applicant was introduced in the license. The
lealrned Counsel further argued that the applicant is
unable to write anything except putting her
signature. It is further argued that the applicant
had engaged a Chartered Accountant and on 27.06.2016
a notice was received by her which was replied by her
Chartered Accountant Mr. A. Sai Prakash. According
to the learned Counsel for the applicant, dues of the
Sales Tax Department were in respect of period when
the shop was managed by her husband. The applicant
had filed an application for administrative relief
and she has even changed the Tax Consultant. It is
further argued that the applicant has paid Rs.
4,98,887/- towards dues of the sales tax and the
departmental appeal is still pending. The matter is
pertaining to tax liability and therefore custodial
interrogation of the applicant is not warranted.

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3.I have also heard the learned Counsel for
applicant M.A. Shahed s/o. M.A. Majid in Criminal
Application No. 5767 of 2016. He argued that every
document is prepared by the Chartered Accountant and
as assessment was not correct, departmental appeal
was filed and stay is operating in that appeal till
date. The learned Counsel further argued that the
applicant himself on 26.09.2016 made a complaint
against the Chartered Accountant to the Police
Inspector of Police Station, Shivajinagar, Nanded, in
respect of this matter. It is further argued that

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(4)Cri. Appln. No. 5585 & 5767 of 2016

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amount of about 3,56,700/- towards dues of this sales
tax has already been paid by the applicant and the
applicant would pay the entire amount as determined
by the appellate authority. The learned Counsel
further argued that it is not disputed that the Tax
Clearance Certificate is forged but every document
was prepared by the Chartered Accountant.

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4.The learned Addl. Public Prosecutor opposed
applications by contending that the applications for
Tax Clearance Certificate were submitted under
signatures of both applicants and ultimately photo-
copies of forged Tax Clearance Certificates were
submitted to the State Excise Department for getting
the license renewed. Therefore custodial

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interrogation of both applicants is required as the
investigator wants to recover originals of those
photo-copies. The learned Addl. Public Prosecutor
pointed out that in economic offences, anticipatory
bail cannot be granted.

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5.I have carefully considered the rival
submissions and also perused papers of investigation.

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6.The FIR of the crime in question came to be
registered at the instance of the Sales Tax Officer
of the Sales Tax Department at Nanded, namely Anand
Rajaram Mudholkar on on 04.07.2016. Informant -
Sales Tax Officer reported Police that holder of

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(5)Cri. Appln. No. 5585 & 5767 of 2016

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license of liquor shop is required to renew that
license in the month of March of every year. For
renewal of the license of the liquor shop, the Excise
Department insists for no dues certificate from the
Sales Tax Department. The informant further reported
that both applicants are licensees of CL-III country
liquor shops, one located at Naigaon and another at
Harnala in Biloli Taluka. According to the
informant, applicants in both these applicants have
separately applied for no dues certificate from the
Sales Tax Department on 31.03.2016. The informant
further reported that there were arrears of sales tax
amounting to Rs. 1,71,00,000/- in respect of shop of
applicant M.A. Shahed (applicant in Cri. Application
No. 5767/2016) and that of Rs. 2,16,00,000/- against
applicant applicant Sanganbai (applicant in Cri.
Application No. 5585/2016). Therefore, according to
the informant, no dues certificates in Form No.415 in
respect of both these shops owned by applicants
herein were not issued by the Sales Tax Department.
What was issued to them were dues certificates in
Form No. 416. According to the informant, he made
enquiry with the Excise Department of the State and
found that forged no dues certificates by putting his
false signature and forged seals and stamps of the
Sales Tax Department were prepared by applicants and
these forged certificates were submitted to the State
Excise Department for getting renewal of CL-III
license by both applicants. With these material

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(6)Cri. Appln. No. 5585 & 5767 of 2016

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averments, a report was lodged which has resulted in
registration of Crime No. 172/2016 against both
applicants.

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7.Prior to adverting to merits of the case, it
would be apposite to refer to the relevant provisions
of the Maharashtra Value Added Tax Act 2002. Section
32 of this Act mandates a registered dealer
furnishing return to pay into the State Treasure, the
amount of tax due from him for the period covered by
return. He is also required to pay amount of
interest and other sum payable by him while
furnishing return. Sub-Section 3 of Section 32
requires that registered dealer furnishing a revised
return shall pay into the Government Treasure the
extra amount of tax first. Sub-Section 8 of Section
32 enables a dealer to apply in prescribed form for
Tax Clearance Certificate. The Maharashtra Value
Added Tax Tax Rules 2005 prescribes necessary forms
for making application for Tax Clearance Certificate
and for issuance of Tax Clearance Certificate.
Application for Tax Clearance Certificate is to be
made under Form No. 414 and Tax Clearance Certificate
is required to be issued in Form No. 415 as per these
Rules.

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8.In the case in hand, record of investigation
shows that applicant M.A. Shahed had applied for Tax
Clearance Certificate under Section 32(8) of the

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(7)Cri. Appln. No. 5585 & 5767 of 2016

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Maharashtra Value Added Tax Act, 2002, under his own
signature and in similar manner applicant Sanganbai
Mundkar had applied under her own signature for Tax
Clearance Certificate under the said provision.
Record of investigation further shows that no Tax
Clearance Certificate under Form No.415 was ever
issued to both applicants by the Sales Tax Department
of the State. However, it is seen from record of
investigation that photo-copies of forged Tax
Clearance Certificates were submitted by both
applicants before the State Excise Department for
obtaining renewal of their license to run CL-III
country liquor shops at village Harnala in Biloli
Taluka as well as at Naigaon

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9.As applications for issuance of Tax
Clearance Certificates under Form No. 414 prescribed
by Maharashtra Value Added Tax Rules, 2005, were
submitted under signatures of both these applicants,
it does not lie in their mouth that entire process
right from submitting applications for renewal of CL-

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III license was undertaken by their Chartered
Accountant. It cannot be said that applicants are in
no way concerned with preparation of forged no dues
certificates in Form No.415 which were to be
submitted for purpose of renewal of CL-III license
hold by both applicants. Ultimately it is the duty
of the licensee to apply for renewal of license to
run country liquor shop and therefore by attempting

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(8)Cri. Appln. No. 5585 & 5767 of 2016

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to pass the buck on the Chartered Accountant, both
applicants cannot escape their liability. There is
nothing on record to infer that the Chartered
Accountant of applicants has undertaken the work to
obtain the Tax Clearance Certificates for applicants
even by moving applications in prescribed forms to
the Sales Tax Department under signatures of the
Chartered Accountant himself.

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10.Prima facie record of investigation shows
that with fraudulent and dishonest intention, false
document was prepared by putting forged signature of
the Sales Tax Officer as well as putting rubber stamp
and seal of Sales Tax Department on those documents
i.e. certificate of tax clearance under Form No.415.
In fact perusal of pleadings of Criminal Application
No. 5767 of 2016 and particularly para 12 thereof
goes to show that the applicant was well aware about
arrears of dues of Sales Tax Department. Para 12 of
the said Application reads thus :-

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“ The applicant states that in the year 2014 also, the NIL certificate was issued for the year 2013-2014 in form No.415 by the Sales Tax authorities under clause (a) of Sub-Section (8) of Section 32 of the Maharashtra Value Added Tax Act, 2002, at that time also, there was dues outstanding against the applicant of Rs. 1,71,00,000/- and therefore, the applicant thought that, as like the year 2013-2014,

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(9)Cri. Appln. No. 5585 & 5767 of 2016

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the NIL certificate is issued by the authorities and therefore, the applicant had not inquired it with his tax consultant and acted upon the form no.415 handed over to him by his tax consultant. Copy of the form No.415 issued on 26.03.2014 is annexed herewith and marked as Exhibit "K" . ”

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11. In the wake of this knowledge of the applicant, the applicant should have taken precaution in getting Tax Clearance Certificate in Form No.415 even if contention of the learned Counsel for the applicant is accepted. Prima facie it is seen that even in past, applicants have indulged in similar modus operandi of using forged Tax Clearance Certificate of the Sales Tax Department for getting renewal of their CL-III license from the State Excise Department. At record page 149 of Criminal Application No. 5767 of 2016, there is photo-copy of the Tax Clearance Certificate in the Form No.415 dated 26.03.2014. From pleading of the applicant in the said application, it is obvious that the said certificate is also a forged certificate. The scam as such appears to be of a large magnitude resulting in large scale evasion of Sales Tax dues by country liquor shop owner requiring detailed investigation. In order to recover forged documents viz. Tax Clearance Certificates in Form No.415, custodial interrogation of both applicants is required which will result in qualitative investigation in order to

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(10)Cri. Appln. No. 5585 & 5767 of 2016

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elucidate facts constituting the offence.

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12.Dues of the Sales Tax Department and
departmental appeals challenging those dues are of no
consequence in the instant case. That liability and
the departmental action will take its own course as
per law. What is relevant is preparation of forged
Tax Clearance Certificate and making use of it for
obtaining renewal of CL-III license from the State
Excise Department. Prima facie it is seen that dues
of Rs. 1,71,00,000/- are there so far as applicant
M.A. Shahed is concerned, whereas dues of Sales Tax
Department against applicant Sanganbai Mundkar are
amounting to Rs. 2,16,00,000/-. Without paying those
dues and without clearing them, forged documents were
prepared for benefiting them by both applicants for
getting their CL-III license renewed. Thus, the case
is that of tax evasion and forgery for the purpose of
getting the CL-III license renewed.

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13.Somewhat similar matter was dealt with by
the Hon'ble Delhi High Court in Crl.M.C.198/2011 -
State Vs. Sumeet Suri & others, decided on 27.08.2012.
It was an application under Section 439(2) of the
Cr.P.C. for cancellation of bail granted to accused
persons wherein there was evasion of Sales Tax dues
to the tune of Rs. 1.9 Crores with some other
allegations. In that matter, reliance was placed on
order of the Hon'ble Supreme Court dated 07.05.2007

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(11)Cri. Appln. No. 5585 & 5767 of 2016

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in SLP (Crl.) No. 6139/2006 wherein amount involved
was Rs. 1.3 Crores in offence punishable under
Section 420 read with Section 120B of the IPC.
Relying on this order of the Hon'ble Supreme Court,
Hon'ble Delhi High Court set aside the order of bail
in the matter where there was evasion of Sales Tax
dues amounting to Rs. 1.9 Crores. It was held that
primary consideration for grant of bail is
examination of gravity and nature of offence.

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14.In the case in hand, primary object of
production of forged Tax Clearance Certificate
appears to be evasion of Sales Tax dues and obtaining
renewal of CL-III license. Forgery for non-payment
of Sales Tax dues to the State is an economic
offence. In the case of Nimmagadda Prasad Vs. Central
Bureau of Investigation[(2013) 7 Supreme Court Cases 466]
in paras 23 & 25 of the judgment, the Hon'ble Supreme
Court has observed thus :-

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“23. Unfortunately, in the last few years, the country has been seeing an alarming rise in whitecollar crimes, which has affected the fibre of the country's economic structure. Incontrovertibly, economic offences have serious repercussions on the development of the country as a whole. In State of Gujarat v. Mohanlal Jitamalji Porwal [(1987) 2 SCC 364] this Court, while considering a request of the prosecution for adducing additional evidence, inter

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(12)Cri. Appln. No. 5585 & 5767 of 2016

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alia, observed as under :-

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“5. .... The entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even-handed manner without fear of criticism from the quarters which view white-collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest.”

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Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deeprooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as a grave offence affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.”

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(13)Cri. Appln. No. 5585 & 5767 of 2016

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15.The instant case is a case relating to grave
and serious economic offence. The outcome of
investigation may be exposure of big scam of evading
of Sales Tax dues and submitting forged no dues
certificate to the other Departments of the State for
getting benefits. This is even reflected from the
pleadings in one of the instant case which are
reproduced in foregoing para.

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16.At this stage, the learned Counsel appearing
for the applicant in Criminal Application No. 5767 of
2016 submitted that it may also be noted that the
applicant had not signed Form No.414 for seeking Tax
Clearance Certificate.

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17.For the foregoing reasons, no case for
anticipatory bail is made out.

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18.Both Applications are accordingly rejected.

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M a Shahed S/O M a Majid v. the State of Maharashtra

Case brief

What is this about?

What did the court decide?

M a Shahed S/O M a Majid v. the State of Maharashtra

Case brief

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