The Bombay High Court has granted ad-interim relief to an independent director facing penalty proceedings under Section 122(1A) of the Central Goods and Services Tax (CGST) Act, 2017, holding that a strong prima facie case exists in light of an earlier judicial precedent that individuals do not fall within the scope of the provision.
The Bench of Justices Suman Shyam and Advait M. Sethna passed the interim order while hearing a writ petition challenging the initiation of penalty proceedings against her in her capacity as an independent director.
During the hearing, counsel appearing for the GST department sought three weeks’ time to file a reply to the petition, which the Court allowed. The matter has been listed for further hearing on June 30, 2026.
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The petitioner argued that the penalty proceedings were unsustainable because the petitioner was not the company itself but merely an independent director. Relying on the Bombay High Court’s earlier decision in Shantanu Sanjay Hundekari v. Union of India [2024 (3) TMI 1277], it was contended that an individual does not fall within the definition of a “person” for the purposes of Section 122(1A) of the CGST Act.
The Court also noted that the said judgment has not been interfered with by the Supreme Court, thereby strengthening the petitioner’s case.
The Bench observed that the petitioner had established a strong prima facie case warranting interim protection. Consequently, the Court directed that no coercive action shall be taken against the petitioner in relation to the impugned penalty until further orders.
The Court’s reliance on its earlier interpretation of Section 122(1A) reinforces the principle that liability under the provision cannot automatically be extended to individuals solely because of their association with a company, unless the statutory requirements are satisfied.
The matter will now be taken up after the respondents file their reply, with the interim protection remaining in force until further orders of the Court.
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