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Goods And Services Tax
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HC Quashes ₹400 Cr GST Penalty on Employees; Sec 122(1A) Not Retrospective, No Liability Without Personal Gain
The Hon’ble Bombay High Court, in the case involving M/s Shemaroo Entertainment Ltd., held that employees including the CEO, CFO, and Director cannot be subjected to penalties under Section 122(1A) of the CGST Act in the absence of clear evidence of personal benefit and direct involvement in wrongful ITC transactions, thereby quashing ₹400 crore penalties imposed through SCN and OIO; the Court clarified that Section 122(1A) must be read in conjunction with Section 122(1) and does not automatically extend to employees merely because of their position, emphasized that both conditions—personal gain and actions carried out at their instance—must be satisfied, rejected retrospective application of the provision prior to 01.01.2021 as violative of Article 20(1) of the Constitution of India, and concluded that the proceedings suffered from jurisdictional defects, reinforcing that there is no vicarious liability under GST law without explicit statutory backing.
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M/s M R Traders V/s Union of India & Ors.
The Hon’ble Rajasthan High Court, in the case involving M/s M R Traders, held that although the appellate authority under Section 107 of the CGST Act is strictly bound by the prescribed limitation period and cannot condone delay beyond the statutory cap, the High Court in exercise of its jurisdiction under Article 226 of the Constitution of India possesses the power to condone such delay in appropriate cases to prevent injustice; the Court observed that denial of the right to appeal on technical grounds may lead to disproportionate hardship and adversely affect the petitioner’s right to carry on business, accepted the petitioner’s explanation that the delay of 160 days was caused due to bona fide reliance on an accountant/advocate, lack of communication, and personal hardship, and consequently set aside the impugned appellate order dismissing the appeal as time-barred, condoned the delay, and remanded the matter to the appellate authority for adjudication on merits.
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