pri SC denies bail in Circular Trading / Fraudulent GST ITC Claim case SC denies bail in Circular Trading / Fraudulent GST ITC Claim case

Case Law Details

Case Name : P.V. Ramana Reddy Vs Union of India & Ors. (Supreme Court of India)
Appeal Number : Special Leave to Appeal (Crl.) No. 4430/2019
Date of Judgement/Order : 18/04/2019
Related Assessment Year :

P.V. Ramana Reddy Vs Union of India & Ors. (Supreme Court of India)

Supreme Court upholds decision of Hon’ble Telangana HC which rejected challenge to the power to issue summons under GST and held that a person can be arrested by the competent authority in cases of Goods and Service Tax (GST) evasion.

Facts- The petitioner had approached the High Court, challenging summons issued by the Superintendent (Anti Evasion) u/s 70 of the CGST Act as well as invocation of penal provisions u/s 69 of the Act. In a plea akin to one seeking anticipatory bail, the petitioner and others sought that directions be issued to the Revenue to not arrest them through exercise of powers u/s 69(1) of the Act. The main allegation of the Revenue was that the petitioners were guilty of circular trading by claiming ITC on materials never purchased & that the petitioners passed on such ITC to companies to whom the goods were never sold.

The High Court observed that to say that prosecution could be launched only after completing assessment would run contrary to provisions of Section 132. The list of offences u/s 132 are not co-related to assessment. It was also noted that issuing invoices or bills without supplying goods & availing ITC by using such invoices were made offences u/s 132(1)(b) & (c) & that the prosecution for these offences was not dependent upon completion of assessment. The High Court also rejected the petitioner’s contention of there being no necessity to arrest a person for an alleged offence which is compoundable. All technical objections raised by the petitioners were rejected. The High Court then observed that despite the petitions being maintainable & that protection u/s 41 & 41A of CrPC being available to the persons who are said to have committed cognizable & non-bailable offences & despite the findings of incongruities within Section 69 & 132 of the Act, it was not inclined to grant relief to the petitioners.

Decision of the Hon’ble Supreme Court

The Hon’ble Supreme Court held as under

No intervention is warranted in this case. The SLP and pending interlocutory applications stand dismissed.

High Court Judgment Link is as follows:-

Download Judgment/Order

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July 2021