Amit Manilal Haria & Ors Vs Joint Commissioner of CGST & CE & Ors (Bombay High Court)
Mumbai: The Bombay High Court has temporarily halted the imposition of a substantial Goods and Services Tax (GST) penalty, amounting to approximately ₹133 crore, on three executives of Shemaroo Entertainment Limited. The court granted an ad-interim stay on the penalty order, citing a prima facie case based on the retrospective application of a key GST provision and the relevance of an earlier court judgment.
The penalty order, dated February 1, 2025, targeted Amit Manilal Haria (Chief Financial Officer), Atul Maru (Chief Executive Officer and Director), and Hiren Gada (Joint Managing Director) of Shemaroo Entertainment Limited. The penalty was purportedly imposed under Section 122(1A) of the Central Goods and Services Tax (CGST) Act, 2017.
The executives challenged the penalty in a writ petition before the High Court, raising several grounds. Their primary contentions included:
1. Retrospective Application of Law: They argued that Section 122(1A), under which the penalty was levied, was introduced into the CGST Act only with effect from January 1, 2021. However, the show cause notice preceding the penalty and the final penalty order covered a period commencing from July 2017, significantly before the provision came into force. The petitioners contended that a law imposing penalties is generally prospective in nature, and therefore, no penalty could be legally demanded for any period prior to January 1, 2021.
2. Order Exceeding Show Cause Notice: The petitioners also submitted that the final penalty order went beyond the scope defined in the show cause notice. While the notice covered the period from July 2017 to March 2022, the impugned order extended the period to July 2022. This discrepancy, they argued, invalidated the order as it dealt with matters not properly put to them in the initial notice.
3. Inapplicability of Section 122(1A): A further ground of challenge was the specific applicability of Section 122(1A). This section applies to “taxable persons” who engage in certain transactions and retain the benefit thereof. The petitioners argued that they were not “taxable persons” in the context of the alleged transactions and, in law, could not have retained any personal benefit from the company’s transactions.
The petitioners drew the court’s attention to a previous decision of another Division Bench of the Bombay High Court in the case of Shantanu Sanjay Hundekari vs. Union of India [2024 (89) G.S. T.L. 62 (BOM)]. They contended that one of the issues raised in their current petition was squarely covered by the ruling in the Shantanu Sanjay Hundekari case, suggesting that the principles laid down in that judgment supported their challenge against the penalty. While the specific issue covered by the precedent was not detailed in the immediate order, the petitioners asserted its direct relevance to their grounds of appeal.
