The Bombay high court has rejected a bail plea made by Kandra Naidu for nonpayment of service tax to the state worth over Rs 50 lakh.

Justice A R Joshi while pronouncing the order on March 5 held that the offence committed by Naidu was a "continuing offence" and as on May 2013, there were outstanding in the excess of Rs 50 lakh which remained the same even at the time of his arrest in January 2014. "It is not a case in which the applicant can be released on bail more so when the investigation is still going on. Consequently the present application for bail is dismissed," the judge ordered.

Naidu had moved against the Service Tax, Mumbai - II and the Maharashtra government on the grounds that there was no provision to arrest him under the latest legal provisions governing service tax.

Naidu, a director of M/s Prashant Transport Exchange Division and managing director of another firm was booked for offence punishable under Section 89 read with Section 90 of the Finance Act, 1994 for non-payment of service tax between 2010-2013.

The HC observed that Naidu had "collected Rs.2.59 Cores of Service Tax during 2010-2011to 2013-2014 but had not deposited the amount except for Rs15 Lakhs. The applicant had in fact never filed any service tax returns and as such knowingly utilized the Government monies for his personal use. "

Naidu did not dispute his liability to pay the tax but said "there is no authority in superintendent (AE) to arrest in view of the amended provisions of Section 89(1)(d) of the Finance Act, 1994."