The Telangana High Court granted anticipatory bail to businessman Devendra Surana in a case involving alleged wrongful availment of Input Tax Credit (ITC) exceeding ₹97 crore on the grounds that custodial interrogation is not warranted where the case is predominantly based on documentary evidence and the accused has cooperated with the investigation.
The bench of Justice K. Sujana noted that the entire case is based on documentary evidence already in possession of the Department. The petitioner had responded to summons, recorded statements, and furnished relevant documents. There was no indication of criminal antecedents or prior tax evasion history. The petitioner had already deposited ₹17.5 crore towards the alleged ITC amount.
The petitioner, Managing Director of Bhagyanagar India Limited, approached the Court under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023 seeking protection from arrest in connection with proceedings initiated by the Directorate General of GST Intelligence (DGGI), Hyderabad Zonal Unit.
The allegations stemmed from transactions between November 2022 and March 2023, during which the company purchased copper scrap from M/s AMZ Traders through 153 transactions amounting to approximately ₹97.25 crore. These transactions were supported by invoices, e-way bills, transport records, and banking channels.
Subsequently, the supplier’s GST registration was cancelled retrospectively, leading authorities to allege wrongful availment of ITC by the petitioner.
The petitioner argued that all transactions were genuine and fully documented. Due diligence was exercised, including verification of the supplier’s GST registration and KYC compliance. The case is purely documentary, and all records have already been submitted to authorities. He has cooperated fully with the investigation, including appearing for summons and furnishing documents. No criminal antecedents exist, and arrest would cause irreparable harm to business operations.
It was further submitted that liability, if any, arising from the supplier’s default cannot automatically be attributed to the purchaser.
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The Department opposed the bail plea, contending that the case involves serious economic offences affecting public revenue. The alleged ITC fraud involves substantial amounts exceeding ₹97 crore. Investigation is at a nascent stage and requires thorough examination. Custodial interrogation may be necessary to uncover the nature of transactions and possible irregularities.
The Court emphasized that while offences under Section 132 of the Central Goods and Services Tax Act, 2017 are serious, arrest should not be mechanical, especially when investigation can proceed without custodial interrogation.
The Court relied on the judgment in Radhika Agarwal v. Union of India and other precedents, reiterating that the arrest powers under GST laws must be exercised cautiously. “Reasons to believe” must be based on tangible material and recorded explicitly. Anticipatory bail is a safeguard of personal liberty under Article 21 of the Constitution. Even in GST cases, arrest is not mandatory merely because allegations involve high-value ITC claims.
The Court directed that the petitioner shall surrender before the DGGI within two weeks. Upon surrender, he shall be released on bail upon furnishing a personal bond of ₹1 lakh with two sureties. He must cooperate with the investigation and appear when summoned. He shall not leave India without prior permission and must surrender his passport. He shall not influence witnesses or tamper with evidence.
Case Details
Case Title: Devendra Surana Versus UOI
Case No.: Criminal Petition No.5740 Of 2026
Date: 23/04/2026
Counsel For Petitioner: B. Vamshidhar Reddy
Counsel For Respondent: Dominic Fernandes
