Amit Manilal Haria and ors v. Joint Commissioner CGST and Central Excise and ors
Immunity of Employees from Personal Penalty under Section 122(1A) of the CGST Act for Corporate Tax Disputes and Prohibition of Retrospective Application of Penal Provisions.
Court: Bombay High Court
Citation: 2026:BHC-AS:9556-DB
Decision Date: 25-02-2026
List of Laws
The Central Goods and Services Tax Act, 2017; The Maharashtra Goods and Services Tax Act, 2017; Article 226 of the Constitution of India; Article 20(1) of the Constitution of India; Finance Act, 2020
- Facts: The petitioners are the Chief Financial Officer, Chief Executive Officer, and Joint Managing Director of M/s. Shemaroo Entertainment Limited. Following a search action in September 2023, the GST authorities alleged that the company had availed and passed on ineligible Input Tax Credit (ITC) through fake invoices. Consequently, show cause notices were issued to the petitioners individually under Section 122(1A) of the CGST Act. An Order-in-Original was subsequently passed on 1 February 2025, imposing personal penalties of approximately Rs. 133.60 crores on each petitioner, totaling over Rs. 400 crores, for the period July 2017 to July 2023.
- Procedural Posture: The petitioners approached the Bombay High Court under Article 226 of the Constitution of India, seeking a Writ of Certiorari to quash the Order-in-Original and a declaration that the proceedings were without jurisdiction.
- Issue: Whether personal penalties can be imposed on employees of a company under Section 122(1A) of the CGST Act, particularly when they are not "taxable persons" and for a period prior to the enactment of the said sub-section?
- Holding: No, the impugned order and show cause notices are illegal and without jurisdiction.
- Reasoning: The Court reasoned that Section 122(1A) must be read conjointly with Section 122(1), which applies specifically to a "taxable person" as defined under Section 2(107). Since the petitioners were merely employees and not registered or liable to be registered in their individual capacity, they do not qualify as taxable persons. Furthermore, the Court noted that Section 122(1A) was introduced via the Finance Act, 2020, and came into force only on 1 January 2021. Applying this provision to transactions occurring between July 2017 and December 2020 would amount to an impermissible retrospective application of a penal law, violating Article 20(1) of the Constitution of India. The Court relied on its previous binding precedent in "Shantanu Sanjay Hundekari vs. Union of India", noting that there was no evidence that the petitioners personally retained any benefit from the alleged transactions.
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