Karnataka High Court Refuses To Quash Tax Evasion FIR Against Bookies Operating In Bangalore Turf Club

The Karnataka High Court has refused to quash proceedings initiated against licensed and unlicensed bookies operating within the Bangalore Turf Club who allegedly collected GST from the punters and TDS amount from the winning bettors but failed to deposit the same before the competent authority and also failed to maintain proper registers.

A single judge bench of Justice S Vishwajith Shetty dismissed the petition seeking to quash FIR registered under Section 78(1)(a)(i) of the Karnataka Police Act, 1963, Section 12 of Karnataka Race Betting Act and Section 420 of Indian Penal Code. It said,

“The allegations against the accused are of very serious nature and the accused amongst other allegations, allegedly have misappropriated crores of money collected by them towards payment of GST and TDS. Under the circumstances, I am of the opinion that the prayer made by the petitioners for quashing the FIR registered against them cannot be granted.”

As per the prosecution case, CCB Unit received information that certain bookies in Bangalore Turf Club 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.

Upon preliminary verification, FIR was lodged by High Grounds Police Station and as many as 66 persons were arrested. 9 persons were absconding.

The petitioners argued that they are licensed to collect the betting amount from punters and even if the allegations are presumed to be true, it is only competent GST Officers, who can take action and not the police.

The prosecution opposed the pleas contending that petitioners have been issuing betting cards which are not in the requisite format and the same does not even contain tax invoice or GST number.

The bench noted that offence under Section 78(1)(a)(i) would not get attracted for betting accepted or collected by licensed bookies on the day on which horse race is run in an enclosure set apart for the purpose in a race course by the licensee of such race course, provided the licensed bookies have strictly complied the terms of the licence. However, insofar as the unlicensed bookies are concerned, the offence under Section 78(1)(a)(i) of the Act gets attracted as they are not covered under the exception found in Section 2(7) of the Act.

Referring to Section 65 (b) of the Act, which authorises all police officers to obtain intelligence concerning the commission of cognizable offences or designs to commit such offences, Court said, “Therefore, it cannot be said that the first informant, who is a police officer attached to CCB could not have received the credible information and he could not have taken steps to lay such information.”

Further, it said a police officer can hold a preliminary enquiry for the purpose of verification of the correctness of the credible information received by him prior to registration of FIR.

“In the present case, allegations against the accused are that the licensed bookies who have collected GST amount from the punters and TDS amount from the winning bettors have failed to deposit the same before the competent authority. 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. So far as the unauthorised bookies, who had no licence or authorization from the competent authority to collect the betting amount from the punters, the allegation is that they have collected betting money from the public representing themselves to be licensed bookies and the money so collected by them from the punters was not being properly accounted nor was proper receipts being given to the same. In addition to the same, the GST amount collected or TDS amount collected were also not being deposited before the concerned Department.”

Court said the allegations in the first information and the material collected by the Investigation Officer during the course of investigation prima facie make out a cognizable offence against the accused.

Appearance: Senior Advocate Hasmath Pasha for Advocate Kariappa N A for Petitioners.

Advocate General Shashikiran Shetty a/w Additional SPP B N Jagadeesh & HCGP Rangaswamy for Respondents.

Citation No: 2024 LiveLaw (Kar) 213

Case Title: Surya & CO & Others AND State of Karnataka & Others

Case No: CRL.P.NO.795/2024

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