The Allahabad High Court has entertained a writ petition challenging the imposition of penalty under Section 122(1A) of the Central Goods and Services Tax (CGST) Act, 2017 for the assessment year 2017–18, holding that the petitioner has raised a prima facie jurisdictional issue regarding the retrospective application of the penal provision.
The bench of Justice Saurabh Lavania has also granted interim protection by directing that no coercive recovery action be taken against the petitioner, subject to the furnishing of an indemnity bond.
The bench observed that the petition deserves consideration as the petitioner has specifically challenged the jurisdiction of the authorities to invoke Section 122(1A), a provision that came into force only on January 1, 2021, in respect of transactions relating to the assessment year 2017–18.
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The petitioner/assessee through its authorised representative, challenged two orders passed by the GST authorities. The first was the order dated November 19, 2024, passed by the Additional Commissioner, Central GST, Lucknow, imposing penalty under Section 122(1A) of the CGST Act. The second was the appellate order dated December 18, 2025, by the Commissioner (Appeals), Central GST, Lucknow, affirming the penalty.
The principal contention before the High Court was that the impugned orders were without jurisdiction, as the authorities had invoked a penal provision that did not exist during the relevant assessment period.
The petitioner argued that Section 122(1A) was introduced by the Finance Act, 2020, and became operational only from January 1, 2021. Consequently, it could not be invoked for transactions pertaining to the assessment year 2017–18, as doing so would amount to giving retrospective effect to a penal provision.
It was further submitted that the competent officers authorised to exercise powers under Section 122(1A) were appointed only through a Circular dated October 27, 2025, further demonstrating that the provision could not have been validly applied to earlier tax periods.
In support of its challenge, the petitioner relied upon the judgment of the Bombay High Court in Amit Manilal Haria & Others v. Joint Commissioner, CGST & Central Excise, decided on February 25, 2026.
The Bombay High Court had held that Section 122(1A) cannot be applied retrospectively for periods before its enforcement. It observed that Article 20(1) of the Constitution of India prohibits the imposition of a penalty under a law that was not in force when the alleged offence was committed. The Bombay High Court had therefore concluded that proceedings initiated under Section 122(1A) for periods prior to January 1, 2021 were without jurisdiction and legally unsustainable.
The department opposed the writ petition by contending that the petitioner had an alternative statutory remedy available under the GST law against the impugned orders. Accordingly, it argued that the High Court should decline to exercise its writ jurisdiction.
In response, the petitioner submitted that the challenge was maintainable because it involved a pure question of jurisdiction, namely whether the authorities had any legal competence to invoke Section 122(1A) for the assessment year in question.
After considering the rival submissions, the Allahabad High Court observed that the petitioner had made out a prima facie case that warranted examination under Article 226 of the Constitution.
The Court accepted the petition for consideration, noting that the challenge related to the very jurisdiction of the authority that imposed the penalty. Accordingly, it directed the respondents to file a counter-affidavit within four weeks, with liberty to the petitioner to file a rejoinder thereafter. The matter has been directed to be listed along with several connected writ petitions raising similar issues.
Pending adjudication of the writ petition, the High Court directed that no coercive action shall be taken for recovery of the disputed amount against the petitioner. However, this protection is subject to the petitioner furnishing an indemnity bond to the satisfaction of the competent authority within ten days from the date of the order.
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