Mayank Bansal Vs Union of India (Gauhati High Court)
Background
The petitioners, who were partners of a partnership firm engaged in the construction business, challenged an Order-in-Original dated 04.02.2025 and an Order-in-Appeal dated 26.08.2025. Through these orders, penalties under Section 122(1A) of the Central Goods and Services Tax Act, 2017 (CGST Act) were imposed on them equivalent to the tax allegedly evaded by the partnership firm.
The petitioners approached the Gauhati High Court despite the availability of an appellate remedy under Section 112 of the CGST Act, raising two jurisdictional issues:
- Whether penalty under Section 122(1A) can be imposed on partners of a firm or only on the taxable person.
- Whether Section 122(1A), which came into force on 01.01.2021, can be applied to transactions relating to periods before its commencement.
Facts of the Case
A Show Cause Notice dated 03.08.2024 was issued to the partnership firm, its partners, and an accountant following an investigation alleging GST evasion involving:
- Supply of construction services to landowners.
- Reverse charge liability on transfer of development rights.
- Availment of ineligible input tax credit (ITC).
- Other alleged GST violations during July 2017 to March 2023.
Specific allegations were made against the petitioners, stating that:
- They were involved in transactions contravening GST provisions.
- They suppressed turnover and collected undisclosed cash from customers.
- They supplied services without issuing invoices.
- They failed to furnish documents sought during investigation.
- They retained benefits arising from such transactions and conducted them at their instance.
The petitioners did not submit replies to these allegations. Following adjudication, penalties under Section 122(1A) equivalent to the evaded tax were imposed on them. Appeals before the Appellate Authority were dismissed, leading to the present writ petitions.
Petitioners’ Arguments
The petitioners argued that:
