Shri. Kankaria Vishal vs. The State Of Telangana

The Court made the following: ORDER

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HONOURABLE SMT. JUSTICE K. SUJANA CRIMINAL PETITION No.1701 of 2o26 DATE:26.02.2o26 BETSIEEN: Kankaria Vishal peti tioner/ accused And The State of Telangana, Rcp. by its Special Public Prosecutor, High Court for thc Statc ol Telangana al Hyderabad attd ot hers. .. Respo ndent/ complainant ORDER This Criminal Petition is filed under Section 482 of Bharatiya Nagarik Suraksha Sanhita, 2023 (tor short 'BNSSJ for grant of pre-arrest bail to thc petitioner, who is arrayed as accused in filc No.tIEXCOM/AE/ INV/GST/ 4794 /2025-AE )

Crl.P. o.1701 of 2026 dated 24.12.2025 on the hle of the Superintendent of Central Tax, Anti Evasion, Secunderabad, GST Commissionerate, GST Bhavan, Basheerbagh, Hyderabad, registered for the offences punishable under Section 132(1)(i) of the CGST Act,2Ol7. 2. The brief facts of the case are that the Petitioner was the sole proprietor of M/s. Sri Nakoda Agencies, Secunderabad, engaged in wholesale and retail trade of electrical goods under various HSN classi{lcations. Respondent No.3 issued Show Cause Notice No.Ol12025-26 dated 1O.06.2025 alleging that the Petitioner had irregularly availed excess lnput Tax Credit (lTC) amoun ting to Rs. | ,O7 ,89 ,17 3 I - lor the Financial Year 2023-24, based on discrepancies between ITC claimed in GSTR-3B and the credit reflected in GSTR-2B. Subsequently, summons under Secl ion 70 of the CGST Act, 2Ol7 were issued on 24.12.2025 directing the Pctitioner to appear before the authorities, pursuant to which he appeared and produced relevant documents. During investigation, the ofhcials alleged further mismatches for subsequent years involving approximately Rs.7 crores, though no additional show cause notice had been issued. Apprehending arrest in view of Section 132 of the CGST Act, as the alleged amount exceeded t' i

w 3 the threshold for cognizablc offence, anlicipatory bail application bcfore SKS'J Crl.P.No.170l of 2026 the petitioner filed an the Special Judge for Economic Offent:r:s, Nampally, which was clismissed on 3t.o1.2026. 3. Heard Sri Straikh Ahmed Ali, lcarned counsel appearing on behalf of the petitioner as well as Sri Dominic Fernandes, Iearned Standing Cousnel for Central Excise, Customs and Service Tax Departmcnt and DRI counsel for respondent Nos.2 and 3. 4. Learned counsel for the petitioncr submitted that the case arose out of a mere discrepancy bctween GSTR-3B and GSTR-2B returns for the financial year 2023-24 and did not involve any fraudulent intent or mens reo. He further submitted that the Department had not completed adjudication proceedings under Sections 73 or 74 of the CGST Act, 2017, nor had any quantifled demand been conf-rrmed, yet it was attempting to coerce recovery during investigation in violation of statutory procedure and CBIC guidelines. He further submitted that the petitioner was forced to give statements after olhce hours under coercion and u,as being \ \ Crl.P.No.170l of 2026 threatened with arrest and third-degree methods, contrary to the investigation guidelines and settled principles of law and that the alleged excess ITC of Rs. 1,07,89 ,1731 - fell within a non-cognizable and bailable category under Section B2$l of the Act and that custodial interrogation was wholly unnecessary, as all records rvcre digital ar-rd already available on the GST portal. He emphasized that the Petitioner had consistently cooperated with the investigation, appeared pursuant to summons, authorized representatives, and sought adjournments bona fide. In support of his submissions, he rclied upon the judgments of the Hon,ble Supreme Court and various High Courts contending that anticipatory bail did not impede investigation and that arrest should not be made in a routine manner, particularly in tax matters involving documentary evidence. Therefore, he prayed the Court to grant pre-arrest bail to the petitioner by allowing this Criminal Petit ion.

5 SKS'J crl.P.No.1701 of 2026 flnancial years, lhereby attracting offences under Section 132(1)(b) and (c) read with Section 132(1)(i) o[ the CGST Act, 2017, which wcrc cognizable and non-bailable in view of Section 132(5). He further submittcd that during invcstigation, thc petitioner had admitted in his voluntary stateme nt datcd ()5.01.2026 that invoices were issued without aclual supply of goods on commission basis, and despite repcated opport unities, he failed to produ<:e supportrng records. He invoices, transport documents and statutory contended that the investigation was at a crucial stage involving verifi<:ation of suppliers, financial trail and benel-rciaries of firke ITC, and custodial interrogation could not be ruled out and that adjudication proceedings and criminal invr:stigation operated in distinct spheres, and absence o[ a hnalized demand did not bar action under Sections 69, 7O and 132 of the Act. llc further contended that the trial Court had passed a well-rezrsoned order after considering the magnitude and gravity of the economic offence. Therefore, he prayed the Court to dismiss the Criminal Petition.

6 sKS,.' Crl.P.I{o.l7O1 of 2026 record, it is the specific contention of the learned counsel for the petitioner is that the offences are compoundable and that there is no necessity for arrest, whereas the learned Standing Counsel contended that the offence under Scction 132(1)(b) of the CGST Act is excluded from compounding and that the case involves cognizable and non-bailable offences having regard to the quantum involved. The rccord discloses that the investigation is still in progress and that thc statements of the petitioner have already been recordcd. The respondents assert that further examination is necessary to ascertain the exact amount of tax evaded, as the allegation is that wrongful availment and passing of Input Tax Credit exceeds Rs. 12 Crores. The magnitude of the alleged evasion is substantial, and economic offences stand on a different footing because they affect public revenue and the financial system of the State.

8 SKTt,J Crl-P. o- 1701 of 2026 considered the nature o[ accusations, the stage of investigation and the magnitude of the allegecl tax evasion, at this stage, this Court is not inclined to grant pre-arrest bail to the petitioner and the same is liable to be dismissed. I Accordingly, this Criminal Petition is dismissed To Miscellaneous applications, if any pending, shall stand closed . C.DEEPIKA A SISTANT REGISTRAR /ffRUE COPY// SECTION OFFICER

HIGH COURT DATED: 2610212026 1 I .,..,:-, i,',t_ 9'lAT- ./ ,/.' tic, \lu \,..- },., v irE ORDER CRLP.No.1701 of 2026 DISMISSING THE CRIMINAL PETITION . . :1. ,:.. @ /\) \3 eL ' /0?E 2 .}