New Delhi: The Supreme Court on Monday dismissed a plea challenging the Telangana High Court verdict that a person can be arrested by the authority concerned in cases of Goods and Service Tax (GST) evasion.

Special Leave Petition (SLP) dismissed

The Special Leave Petition (SLP) was filed by various directors of Sujana Universal Industries Ltd and a number of firms that are said to be the front companies of the Sujana Group of Companies owned by the Telugu Desam Party (TDP) Rajya Sabha MP who is a very close aide of TDP chief N Chandrababu Naidu.

The plea came up for hearing before a vacation bench of Chief Justice Ranjan Gogoi and Justice Aniruddha Bose. The apex court said it was not inclined to interfere with the April 18 judgement of the Telangana high court and dismissed the SLP accordingly.

Fraudulent claims of Input Tax Credit (ITC)

It may be recollected that on April 18, the Telangana high court had said it was not inclined to grant relief against arrest to the petitioners who had approached it challenging the summons issued by Superintendent (Anti-Evasion) of the Hyderabad GST Commissionerate under the Central Goods and Services Tax Act, 2017 and invocation of penal provisions under the law.

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The Telangana high court dismissed pleas for relief by various directors of Sujana Universal Industries Ltd and a number of firms that are said to be the front companies of the Sujana Group. They were seeking preventive relief from the high court ,against the summons issued by GST officials who were investigating fraudulent claims of Input Tax Credit (ITC) amounting to Rs 225 Crore supposedly made by these directors.

Telangana High Court Judgement

A bench comprising of Justice V Ramasubramanian and Justice P Keshava Rao, which heard the pleas of the directors from Sujana Universal, Hindustan Ispat Pvt Ltd, EBC Bearings, said that “In essence, the main allegation of the GST department against the petitioners is that they are guilty of circular trading by claiming Input Tax Credit (ITC) on materials they never purchased and passing on such input tax credit to companies to whom they never sold any goods".

They also expressed their views on the way the accused had exploited the law by wrongfully claiming for ITC of about Rs.225 Crore and in such a scenario, GST authorities were correct in arresting persons involved in this kind of a wrongful claim.

With the High Court dismissing their pleas, a special leave petition (SLP) was filed by P V Ramana Reddy, MD of Infiniti Metal Products Private Limited in the apex court challenging the April 18 order passed by Telangana HC. Ramana Reddy, is allegedly said to be running the business from the premises of Sujana Group of Companies and is also director in the group which is owned by the TDP Rajya Sabha Member Sujana Choudary.

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