SC Stays Retrospective GST Penalty u/s 122(1A)

Mukesh Kumar Garg Vs Union of India & Ors. (Supreme Court of India)

Supreme Court stays retrospective GST penalty under Section 122(1A) and to examine its applicability to non-taxable persons

The Hon’ble Supreme Court in Mukesh Kumar Garg v. Union of India & Ors [SLP(C) No. 18178/2025, order dated August 04, 2025] held that Section 122(1) of the Central Goods and Services Tax Act, 2017 would not apply to a non-taxable person, and provisions of Section 122(1A) which came into force from January 1, 2021 could not be applied retrospectively for assessment years 2017 to 2020. The Court granted leave and stayed recovery of the penalty amount subject to the petitioner depositing 25% of the demand before the GST department.

Also Read: Mukesh Kumar Garg Vs Union Of India & Ors. (Delhi High Court); W.P.(C) 5737/2025; 09/05/2025

Facts:

Mukesh Kumar Garg (“the Petitioner”) was involved in the alleged establishment of 28 firms in collusion with various traders for the availment of fictitious Input Tax Credit (ITC). The Directorate General of GST Intelligence issued a Show Cause Notice dated July 31, 2024, alleging that the Petitioner and his son Anuj Garg had incorporated multiple firms to fraudulently avail ITC amounting to over Rs. 115 crores without any actual supply of goods or services.