The Telangana High Court on Thursday dismissed a batch of writ petitions filed by seven private companies seeking a direction to the Hyderabad GST Commissionerate officials not to arrest them and set aside summons issued by the latter.
A Division Bench comprising Justice V. Ramasubramanian and Justice P. Keshava Rao pronounced the verdict, rejecting the technical objections raised by the petitioners over the powers and reasons of the GST officials to arrest them. The judgment said that despite the petitions being maintainable and incongruities within some provisions of the Central Goods and Service Tax (CGST) Act-2017, the relief could not be granted to the companies due to the ‘special circumstances’ of the case.
The companies — Infinity Metals Products India Limited, Sujana Universal Industries Limited, Hindustan Ispat Private Limited, EBC Bearings India Limited, V.S. Ferros Enterprises Private Limited, Hyderabad Steels, MSR India Limited, Suyati Impex Private Limited — approached the HC. They challenged the summons issued by the Hyderabad GST officials and the searches conducted by the latter at their respective offices. Since they were apprehending their arrest, the Bench issued interim directions not to arrest them initially.
The authorities, in their counter affidavit, said that the companies claimed Input Tax Credit based on some invoices without there being any actual physical receipt of goods. They contended the said companies used bogus or fake invoices to avail and utilize fraudulent ITC of GST by the recipients of such invoices. According to them, all the said companies put together showed a total turnover of ₹1,289 crore in the GST and claimed the fraudulent ITC to the tune of ₹224.05 crore. The counsels for the petitioners said the maximum punishment under Section 132 of the CGST Act was five years apart from fine. They contended that under sections 41 and 41A of the Criminal Procedure Code a person cannot be arrested as long as he or she complies with the notice for appearance.
The GST regime is at its nascent stage. The law is yet to reach its second anniversary. “The complaints against the petitioners constitute a threat to the very implementation of law within a short duration of its inception,” the judgment said.