SC nixes plea on Telangana HC’s order regarding arrest power of GST officials

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The Supreme Court (SC) on Monday dismissed a batch of petitions challenging the power of goods and services tax (GST) officials to arrest individuals for GST evasion. An SC bench, comprising Chief Justice Ranjan Gogoi and Justice Aniruddha Bose, refused to interfere in the Telangana high court order and dismissed a special leave petition (SLP) filed by P V Ramana Reddy, MD of Infiniti Metal Products Private Limited. Ramana Reddy, who is allegedly running a business from the premises of Sujana Group of Companies and is also director of certain Sujana companies, had filed the SLP in the apex court challenging the April 18 order passed by Telangana HC. GST’s anti-evasion wing officials in Hyderabad had conducted searches on Infiniti Metals on Feb 27 and issued summons directing Ramana to appear before them. Ramana failed to appear before the GST officials and instead sought relief from court.

The GST officials alleged that Infiniti Metals and a few other companies had been issuing fake invoices since 2017 without actual supply of goods and availing input tax credit fraudulently. The officials alleged that the entities, including Infiniti, had availed Rs 224 crore input tax credit for Rs 1,289 crore turnover. The HC had on April 18 dismissed pleas of representatives of these entities not to arrest them. They had also questioned the power of GST officials. HC had said that even before the GST regime was put in place, someone could exploit the law without purchase or sale of goods or hiring or rendering services, projecting a huge turnover that remained on paper, giving rise to a claim for input tax credit of about Rs 224 crore. “There is nothing wrong in GST officials thinking that persons involved should be arrested. Generally, in other fiscal laws, the offences revolve around evasion of liability. In such cases, the government is only deprived of what is due to them. In the fraudulent input tax credit claims, a huge liability is created for the government,” the HC had said in its order.

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