Hyderabad: In a major blow to the Sujana Group of Industries owned by Telugu Desam Party Rajya Sabha MP Sujana Choudary, the Telangana High Court dismissed pleas for relief by various directors of Sujana Universal Industries Ltd and a number of firms which 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.

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 on materials they never purchased and passing on such input tax credit to companies to whom they never sold any goods".

Fake GST invoices were issued to the total value of about Rs.1,289 Crore and the benefit of wrongful ITC passed on by the petitioners is estimated to be about Rs 225 Crore.

The bench also stated that normally in evasion of liability in such GST cases, the government is only deprived of what is due to them. However, in cases of fraudulent ITC claims, a huge liability is created for the government.

They also expressed their views on the way the accused had exploited a new law that was still at a nascent stage. They said that even before the GST regime is put on track, if someone exploits the law, without the actual purchase or sale of goods or hiring or rendering of services taking place, then projecting a huge turnover that remained only on paper, giving rise to a wrongful claim for Input Tax Credit of about Rs.225 Crore.In such a scenario, GST authorities were correct in arresting persons involved in this kind of a wrongful claim.

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