The Uttarakhand High Court has adjourned sine die a petition challenging criminal prosecution under the Goods and Services Tax (GST) law after taking note of the fact that the adjudication order is already under challenge before the Commissioner (Appeals), CGST, Meerut.
The bench of Justice Rakesh Thapliyal clarified that the outcome of the appellate proceedings would remain subject to the final decision in the pending writ petition and made its earlier interim protection absolute. Since the adjudication order is presently under consideration before the appellate authority, the writ proceedings should remain pending until the appeal is decided.
The applicant challenged criminal proceedings initiated by the GST authorities against him. According to the submissions before the High Court, the prosecution had been launched on 10 October 2023 on the basis of a show cause notice dated 20 March 2023. Subsequently, however, the Adjudicating Authority passed an order on 9 January 2025, dropping the major allegations and imposing a penalty substantially lower than what had originally been proposed.
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The adjudication order itself has since been challenged before the Commissioner (Appeals), Central GST, Meerut, through an appeal filed on 6 August 2025, which remains pending for adjudication.
During the hearing, the applicant raised several legal objections to the continuation of the prosecution.
A principal contention related to Section 137 of the CGST Act, which governs offences committed by companies. The applicant argued that the complaint suffered from a fundamental defect because only the Director had been arraigned as an accused while the company itself had not been made a party to the complaint. According to the applicant, such prosecution was legally unsustainable in light of the statutory scheme governing offences by companies.
The applicant also relied upon the CBIC Circular dated 11 September 2022, contending that prosecution should not continue once the adjudication proceedings had resulted in a liability falling below the prescribed monetary threshold.
It was argued that Clause 5 of the Circular prescribes a threshold of ₹5 crore (₹500 lakh) for launching criminal prosecution. Since the Adjudicating Authority had ultimately imposed a penalty far below ₹5 crore, the very basis for continuing the criminal proceedings had ceased to exist, making the prosecution liable to be dropped.
After hearing the parties, the High Court noted that the appellate proceedings before the Commissioner (Appeals) were already pending.
In these circumstances, the Court considered it appropriate to adjourn the writ petition sine die, instead of deciding the issues at this stage. The Court also clarified that the decision ultimately rendered by the Commissioner (Appeals) would remain subject to the final outcome of the pending writ petition before the High Court.
The Court granted liberty to both parties to approach the Commissioner (Appeals) with an appropriate application seeking expeditious disposal of the appeal. It further permitted the parties to move the High Court after the appellate authority delivers its decision so that the writ petition can be revived for final adjudication.
The High Court directed that its interim order dated 26 June 2025 shall stand made absolute, thereby ensuring that the interim protection granted to the applicant continues until further orders in the matter.
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