IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HONOURABLE SMT. JUSTICE K. SUJANA CRIMINAL PETITION No.1701 of 2026 DATE: 26.02.2026 BETWEEN:

Kankaria Vishal …..petitioner/accused And The State of Telangana, Rep. by its Special Public Prosecutor, High Court for the State of Telangana at Hyderabad and others.

…..Respondent/complainant

ORDER

This Criminal Petition is filed under Section 482 of Bharatiya Nagarik Suraksha Sanhita, 2023 (for short ‘BNSS’) for grant of pre-arrest bail to the petitioner, who is arrayed as accused in file No.GEXCOM/AE/INV/GST/4794/2025-AE dated 24.12.2025 on the file 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, 2017.

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 classifications. Respondent No.3 issued Show Cause Notice No.01/2025-26 dated 10.06.2025 alleging that the Petitioner had irregularly availed excess Input Tax Credit (ITC) amounting to Rs.1,07,89,173/- for the Financial Year 2023-24, based on discrepancies between ITC claimed in GSTR-3B and the credit reflected in GSTR-2B. Subsequently, summons under Section 70 of the CGST Act, 2017 were issued on 24.12.2025 directing the Petitioner to appear before the authorities, pursuant to which he appeared and produced relevant documents. During investigation, the officials 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 the threshold for cognizable offence, the petitioner filed an anticipatory bail application before the Special Judge for Economic Offences, Nampally, which was dismissed on

31.01.2026.

3. Heard Sri Shaikh Ahmed Ali, learned counsel appearing on behalf of the petitioner as well as Sri Dominic Fernandes, learned Standing Cousnel for Central Excise, Customs and Service Tax Department and DRI counsel for respondent Nos.2 and 3.

4. Learned counsel for the petitioner submitted that the case arose out of a mere discrepancy between GSTR-3B and GSTR-2B returns for the financial year 2023-24 and did not involve any fraudulent intent or mens rea. He further submitted that the Department had not completed adjudication proceedings under Sections 73 or 74 of the CGST Act, 2017, nor had any quantified demand been confirmed, 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 office hours under coercion and was being 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.1,07,89,173/- fell within a non-cognizable and bailable category under Section 132(4) of the Act and that custodial interrogation was wholly unnecessary, as all records were digital and 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 relied 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 Petition.

5. Learned Standing Counsel appearing for the respondents submitted that the petitioner had indulged in systematic and deliberate wrongful availment and passing