Telangana High Court’s Approach to Anticipatory Bail in HSNS Cess Evasion Investigation

1. Background of the Petition

A criminal petition was filed before the Telangana High Court under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), seeking pre-arrest (anticipatory) bail. The proceedings arose out of summons issued under Section 13 of the Health Security & National Security Cess Act, 2025 (HSNS Act).

The petitioner, Amir Mohammed Haq, claimed to be involved in the real estate sector through entities named Cyber Towers and Sanali Housing Projects Private Limited. He approached the Court asserting that the manner in which the summons were issued by the GST authorities generated a serious apprehension of arrest, despite the absence of any clear, disclosed accusation against him under the HSNS Act.

2. Petitioner’s Case: Lack of Clarity and Fear of Arrest

2.1 Business and Residence Details

The petitioner stated that:

  • He is a permanent resident of Hyderabad.
  • He has ongoing and established business activities through Cyber Towers and Sanali Housing Projects Private Limited.
  • He has strong local roots and no intention of absconding.

2.2 Grievance Against Summons Under Section 13

The petitioner’s core contention was that the summons issued under Section 13 of the HSNS Act:

  • Did not disclose:
    • The nature of the allegations,
    • The exact subject of the enquiry,
    • His purported role in any offence, or
    • The particular documents or records required.
  • Simply required his presence to give evidence and produce documents, without clarity on the basis or scope of enquiry.

He argued that:

  • He has not been named as an accused in any specific HSNS offence so far.
  • Despite this, he is being drawn into an investigation in a manner that reasonably suggests a likelihood of arrest.
  • The summons are vague and arbitrary, depriving him of an effective opportunity to understand and respond to the enquiry.

2.3 Apprehension of Custodial Interrogation

The petitioner maintained that:

  • No incriminating material has been properly disclosed against him.
  • The issue of repeated summons, without clarity or transparency, raises a genuine fear of coercive steps, including arrest.
  • He is prepared to:
    • Cooperate fully with the investigation,
    • Appear whenever required,
    • Obey any conditions imposed by the Court.
  • Custodial interrogation is not warranted given the nature of the allegations and the documentary nature of the case.

On this basis, the petitioner sought the discretionary relief of anticipatory bail to safeguard his personal liberty.

3. Respondent’s Stand: Serious Economic Offence and Need for Custody

3.1 CBIC’s Objection to Bail

The Central Board of Indirect Taxes and Customs (CBIC), representing the respondent, strongly opposed the petition. The primary submissions were:

  • The petition is intended to frustrate and obstruct an ongoing investigation into a serious and large-scale HSNS cess evasion case.
  • The investigation pertains to economic offences involving a syndicate and a substantial amount of cess.

3.2 Alleged Syndicate and Seizures

Relying on intelligence inputs and subsequent action, the respondent stated that:

  • The Anti-Evasion Wing detected an organized group clandestinely manufacturing “Kalakaar Pan Masala”.
  • The manufacturing was allegedly being carried out:
    • Using unregistered packing machines,
    • Without registration under the HSNS Act,
    • Without payment of the applicable HSNS cess.

Coordinated searches conducted in Hyderabad reportedly led to:

  • Seizure of four unregistered packing machines.
  • Confiscation of:
    • Large quantities of Kalakaar Pan Masala,
    • Significant stock of raw materials,
    • Packing material and other related items.

3.3 Estimated Cess Evasion and Relevant Provisions

According to the investigation:

  • The alleged evasion of HSNS cess was estimated at around ₹12 crores.
  • This quantum of evasion attracted Section 19(1)(a) of the HSNS Act, under which:
    • The offence is cognizable and non-bailable, and
    • Punishable with imprisonment up to five years, with fine, or both.

3.4 Alleged Role of the Petitioner

The respondent further alleged that:

  • A co-accused, in his statement, identified the petitioner as:
    • The mastermind of the operations,
    • The principal financier, and
    • The overall supervisor of the clandestine manufacturing activity.
  • The petitioner had allegedly invested ₹5 crores in the illegal business.
  • Financial documents and bank records examined so far prima facie link the petitioner with the syndicate’s activities.

3.5 Non-cooperation and Conduct

The respondent also stressed: