Bhavana Jain Vs Union of India (Bombay High Court)
Bombay High Court: Penalty under Section 122(1A) unsustainable where Director has not retained benefit of transaction
The Petitioner is an Independent Director of the Company. The Company is the registered tax payer. There was an allegation that the Company has short paid GST on goods sold by it; basis a classification dispute. There was a demand of over Rs. 18 crores along with interest and penalty confirmed under Section 74 against the Company. A penalty of same amount came to be imposed on the Director under Section 122(1A) of the CGST Act. The same was challenged in writ.
The Hon’ble Bombay High Court granted stay of recovery against penalty. It noted that Section 122(1A) cannot be invoked against individual who could not have retained the benefit of the transaction. It notes that similar issue has been decided in the case of Shantanu Sanjay Hundekari; which has been confirmed by the Hon’ble Supreme Court as well. Directs revenue to take instructions.
Argued by Adv. Bharat Raichandani a/w Adv. Mahesh Raichandani i/b UBR Legal.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. At the request of Mr Satyaprakash Sharma, learned counsel appearing for Respondent Nos.3, 4 and 5, three weeks’ time is granted to file Reply.
