Hyderabad: Several firms charged by GST officials as being shell firms of Sujana group of companies are now approaching the Telangana high court challenging the penal notices being issued to them by central GST ( CGST ) officials and also seeking protection from imminent arrest of directors.Of the 27 alleged shell companies identified by CGST officials, notices have been served to 10 and six such firms have sought HC’s intervention, including M/s EBC Bearings India Ltd which approached the HC on Tuesday seeking stay of the process and arrest of its director Balarama Krishna Murthy.The anti-evasion wing of the CGST wing is pursuing the ‘fraud’ perpetrated by these alleged Sujana shell companies. According to CGST officials, Sujana group of industries floated these shell companies for the sole purpose of generating fake invoices and real loans. Officials said that Sujana group used these firms for fictitious business transactions and raised challans of Rs 1,284 crores as CGST payment. These same fictitious CGST payments were then shown as collateral by the shell companies to raise more than Rs 2,000 crore bank loans, CGST sources said.Now, CGST officials have slapped notices on directors of these firms to pay up the CGST amount cited to avail loans. Summons were issued on Feb 28 and later an authorisation was given to CGST officials to arrest the directors if they do not comply. The shell companies are reacting with a sense of urgency now because all notices issued to them are under Section 69 of the CGST Act that allows the CGST Commissioner to arrest and produce the directors in court if they fail to pay the CGST amount.A bench of Justice V Ramasubramanian and Justice Abhinand Kumar Shavili posted the case to March 18 after the counsel for CGST anti-evasion wing sought time to state the stand of the department on the pleas of these alleged shell companies. The bench, while asking the petitioner firms to cooperate with the investigators, told authorities not to arrest them till Mar 18 if they cooperate.

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