Supreme Court to hear plea of factory owner against bail dismissal by Allahabad HC

ILNS: The Supreme Court will hear the petition filed by the owner of Zarda Factory, challenging the dismissal of her bail by the Allahabad High Court.

Justices Uday Umesh Lalit and KM Joseph will hear the plea of Chhavi Devi, accused of economic offence under Sections 132(1)(1) and 132(1)(b) r/w 132(1)(i) of the CGST Act at the CGST Noida, District Meerut Police Station.

The High Court had remarked on the case that

“The offence alleged against the applicant is economic offence, in which the evasion of duty amounting to Rs 62,10,28,165 is made against the applicant. Although the offence is punishable with imprisonment of five years, yet the evasion of huge amount of duty is a great loss to the government exchequer.”

The applicant submitted that she is the proprietor of M/s Prabhat Jarda Factory Overseas, while business of the firm is being managed by the manager and is in effective control of the manager. The applicant cannot be made vicariously liable. Only duty which was payable was about Rs 3.85 crore. If the figure of Rs 9.39 crore and Rs 43.10 crore is removed, then, out of the alleged figure of Rs 56.43 crore, only a duty of about Rs 3.85 crore is due to be payable.

To this, the High Court had held:

“Admittedly in the case in hand, the applicant is the proprietor of the company and is responsible to the company for conduct of the business of the company, even if the business is being managed by the so-called manager.”

The counsel of the Applicant had relied on Siddharam Satlingappa Mhetra vs State of Maharashtra and others (2011), which talks about the liberty of an individual, to which the court held that, “Personal liberty is very precious fundamental right and it should be curtailed, only when it becomes imperative according to the peculiar facts and circumstances of the case.” The applicant complained that she was arrested in January this year on the basis of order passed by the Principal Commissioner, CGST, Noida and before arresting the applicant, no proper assessment of the duty was made and no opportunity of hearing was given to the applicant during investigation, whether the alleged duty was due on her part or not.

Further, the applicant revealed that the Principal Commissioner, CGST, Noida had not made any endorsement regarding necessity of the arrest. Out of the alleged seized goods, the admitted duty which was payable by the applicant’s firm was Rs 3.53 crore. The remaining figures are imaginary and assumptive. Apart from the applicant’s firm, there are three other concerns with the name of Prabhat Zarda India Private Ltd, Prabhat Zarda International and Prabhat Zarda factory, which all run in the market and have common suppliers and transporters and as such to bring the entire burden of any documents or slips or register in the name of Prabhat Zarda, cannot be attributed to be applicant or her firm.

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In view of search conducted by the officials of GST Department, which establishes that the Applicant, proprietor of M/s Prabhat Jarda Factory Overseas has violated the provisions of Section 132(1)(a) to (h) of CGST Act, 2017 and therefore, M/s Prabhat Jarda Factory Overseas, E-37, Sector-8, Noida, on account of clandestine removal of finished goods without issuance of any invoice, without payment of any applicable duties, have evaded duties amounting to Rs 62,10,28,165, which is more than Rs 5,00,00,000.

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