P.V. Ramana Reddy vs. Union of India – 2019 (26) G.S.T.L. J175 (Supreme Court)

Bail rejected on wrongful utilization of ITC on material never purchased

Facts: In the matter, the petitioner assessee had filed SLP (Special Leave Petition) before the Supreme Court challenging the order passed by the Telangana High Court.  The GST tax-evasion Authorities had issued summon and arrested the assessee by virtue of Section 69 of CGST Act. It was the contention of the Authorities that the assessee had been issuing fake invoices since 2017 without actual supply of goods and availing ITC on such fraudulently. 

Further, the Telangana HC had dismissed the pleas of representatives of the petitioner 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 . “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. 

The petitioner aggrieved by the order of High Court filed this SLP.

Held: The Supreme Court dismissed the SLP filed by the assessee and upholds decision of Telangana HC. 

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