HONOURABLE JUSTICE G. SRI DEVI CRIMINAL PETITION No. 1275 OF 2020 ORDER : 1. present Criminal Petition is filed under Section 438 Cr.P.C. seeking to enlarge petitioners on bail, in event of their arrest, in connection with proceedings in F.No.INV/DGGI/ WRU/GST/04/2019-20/PF (Legal) on file of Special Judge for Economic Offences, Nampally, Hyderabad. 2. Heard Sri P.Vamseedhar Reddy, learned Counsel appearing for petitioners and Sri B.Narasimha Sharma, learned Special Public Prosecutor, appearing for respondent. 3. case of prosecution is that petitioners are Directors of M/s. Transworld Educare Private Limited (hereinafter referred to as TEPL ). Intelligence developed by officers of Warangal Regional Unit revealed that TEPL is providing taxable services i.e., consultation services without raising invoices for services rendered by them and also not paying appropriate GST on consideration received towards provision of taxable services, resulting in loss of revenue to government exchequer. Accordingly, investigation was initiated against TEPL and some incriminating documents were recovered under panchanama dated 06.01.2020 and statement of David Koil Pillai (A-1) Chairman and CEO of TEPL. On scrutiny of documents resumed and voluntary statement given by A-1 reveals that TEPL is indulging in evasion of GST on 2 taxable services provided by them during period from 7/2007 to 12/2019 without raising any invoices for taxable services rendered. During said period, TEPL evaded amount of Rs.11,80,95,716/- towards GST by not raising any invoice/bill and by suppressing details in returns filed for taxable services rendered by them to various service recipients and caused loss to Government exchequer. During course of investigation and as per statement of A-1, it is revealed that A-1 is managing entire affairs of organization and he is responsible for evasion of GST on taxable services provided by them without issuing any invoices. Further, he had deliberately evaded GST without raising invoices/bills resulting in huge loss to Government. 4. Learned Counsel appearing for petitioners would submit that petitioners are innocent of offences alleged, they are in no way connected with offences and that they are falsely implicated in above crime. It is further submitted that even if entire complaint is taken into consideration, no offence is made out against petitioners for offence under Section 132 of CGST Act, 2017. 1st petitioner is wife and that 2nd petitioner is son of A-1. It is further submitted that entire operation and running of TEPL company was looked after by A-1, petitioners were not even aware about activities being run by A-1, they are only Directors and that they are nothing to do with said offence. It is also submitted that petitioners received summons under Section 70 of CGST Act, 2017 calling upon them to appear before respondent authority and 3 that they are apprehending that they would be falsely implicated in above crime by using coercive measures to extract confession. 5. Sri B.Narasimha Sharma, learned Special Public Prosecutor, appearing for respondent filed counter opposing application and it is contended that petitioners are Directors of TEPL and they were summoned thrice on 27.01.2020, 31.01.2020 and 18.02.2020 but they have not appeared before respondent authorities to give evidence. petitioners being Directors it is mandatory to appear before investigation agency and admit what are their roles in company s affairs and in alleged offence. It is apparent that petitioners are not cooperating with investigation. petitioners preferred present petition on assumptions and presumptions with view to avoid statutory proceedings. nature of financial frauds is complex in nature and requires examining several evidences to conclude investigation and if petitioners are released on anticipatory bail, there is every possibility of manipulating records. He relied on order of this Court in Crl.P.No.5324 of 2019 dated 15.11.2019 and also order of Division Bench of this Court in W.P.No.4764 of 2019 and Batch dated 18.04.2019. 6. Division Bench of this Court in its order, dated 18.04.2019, in W.P.No.4764 of 2019 and batch, observed in para Nos.52, 54 (2), 58 and 61 as under: 52. But, to say that prosecution can be launched only after completion of assessment, goes contrary to Section 132 of CGST Act, 2017. list of offences included in sub-Section (1) of Section 132 4 of CGST Act, 2017 have no co-relation to assessment. Issue of invoices or bills without supply of goods and availing of ITC by using such invoices or bills, are made offences under clauses (b) and (c) of sub- Section (1) of Section 132 of CGST Act. prosecutions for these offences do not depend upon completion of assessment. Therefore, argument that there cannot be arrest even before adjudication or assessment, does not appeal to us. 54. (2) Under third proviso to sub-Section (1) of 138, compounding can be allowed only after making payment of tax, interest and penalty involved in such cases. Today, wrongful ITC allegedly passed on by petitioners, according to Department is to tune of Rs.225 Crores. Therefore, we do not think that even if we allow petitioners to apply for compounding, they may have meeting point with Department as liability arising out of alleged actions on part of petitioners is so huge. Therefore, argument that there cannot be any arrest as long as offences are compoundable, is argument of convenience and cannot be accepted in cases of this nature. 58. Therefore, all technical objections raised by petitioners, to entitlement as well as necessity for respondents to arrest them are liable to be rejected. Once this is done, we will have to examine whether, in facts and circumstances of these cases, petitioners are entitled to protection against arrest. It must be remembered that petitioners cannot be placed in higher pedestal than those seeking anticipatory bail. On other hand, jurisdiction under Article 226 has to be sparingly used, as cautioned by Supreme Court in Km.Hema Misra (cited supra). 61. In view of above, despite our finding that writ petitions are maintainable and despite our finding that protection under Sections 41 and 41-A of Cr.P.C., may be available to persons said to have committed cognizable and non-bailable offences under this Act and despite our finding that there are incongruities within Section 69 and between Sections 69 and 132 of CGST Act, 2017, we do not wish to grant relief to petitioners against arrest, in view of special circumstances which we have indicated above. 7. In view of aforesaid observations made by Division Bench of this Court in its order, dated 18.04.2019 in W.P.No.4764 of 5 2019 and batch and in view of fact that Department is still conducting further investigation with regard to offence committed by TEPL, in which petitioners are Directors and that there is specific allegation that TEPL is providing taxable services without raising invoices for services rendered by them to various service recipients and is not paying appropriate GST on consideration received towards provision of taxable services, resulting in loss of Rs.11,80,95,716/- to Government exchequer, I am of considered opinion that this is not fit case to grant anticipatory bail to petitioners and that prayer for grant of anticipatory bail is rejected. 8. Accordingly, Criminal Petition is dismissed. _____________________ JUSTICE G. SRI DEVI 10.03.2020 gkv/Gsn 6 Jecintha Pillai v. State of Telangana