Tax Evasion under Government License without maintaining proper registers, documents :  Karnataka HC upholds FIR registered under Karnataka Police Act

In a recent case, the Karnataka High Court  while observing tax evasion carried under government license without proper registers and documents  upheld the First Information Report ( FIR ) registered under Karnataka Police Act , 1968 . Petitioner, Surya And Co  who have been issued license from the State Government were accepting betting on the horse races, without maintaining proper registers, documents etc.with regard to the amount collected by them from the punters and thereby they were evading tax payable to the State and certain others.

On receipt of such information, the first informant along with the staff had visited the Bangalore Turf Club and after a preliminary verification the Bangalore police registered an FIR.

Thereafter, the High Grounds Police along with CCB Police had conducted a raid on the premises of the Bangalore Turf Club where the bookies had installed their stalls and were indulged in collecting the betting amount from the punters illegally without maintaining proper registers and documents and had seized the amount of Rs.3,45,74,040/-

Subsequently for quashing the FIR the petitioner approached the court.

During the adjudication Hasmath Pasha The Counsel for petitioner submitted that petitioners herein are Licensed Bookies and they are licensed to collect the betting amount from punters. Further submits that horse racing is kept out of the definition of the word 'Gaming' under the Act.

Shashikiran Shetty, Advocate General submits that the offense under Section 78(1)(a)(i) of the Karnataka Police Act, 1963, may not be applicable to the petitioners herein, who are licensed bookies provided they have strictly complied the terms of license, but the same would be strictly applicable to other accused, who do not have license to collect betting amount from the punters.

Further respondent counsel argued that the persons who were collecting betting amounts unauthorizedly also had put-up stalls inside the premises of the Bangalore Turf Club, without displaying the license issued to them from the State Government and without maintaining any register or documents.

It was observed that  the petitioner has collected the amount from the punters towards payment of Goods and Service Tax ( GST ) and from the winning bettors towards payment of ( Tax Deduction at Source ( TDS )and have not deposited the same to the concerned Department and on the other hand, they have misappropriated the same.

They have also failed to maintain proper registers and documents in their stalls and also had failed to give proper receipts to the punters for having collected the betting amount. After analyzing the facts and arguments of both parties, a single bench of Justice S.Vishwajith Shetty upheld the FIR registered under Karnataka Police Act and observed that the allegations against the accused is of very serious nature and the accused amongst other allegations, allegedly have misappropriated crores of money collected by them towards payment of Goods and Service Tax ( GST ) and Tax Deduction at Source ( TDS ) .

To Read the full text of the Order CLICK HERE

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