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Facts: The adjudicating authority held that
the Company wrongfully availed and passed ITC by issuing fake invoices. The
authority also imposed personal penalty under Section 122(1A) of the CGST Act
on Petitioners (CFO, CEO and Joint MD of the Company).
Ruling: The High Court held
that Section 122(1A) read with Section 122(1) only applies to ‘taxable
person’ who retains benefit of specified fraudulent transactions and at whose
instance such transactions are conducted. The Court, relying on its earlier
decision in Shantanu
Sanjay Hundekari vs. UOI, 2024-VIL-283-BOM (also affirmed by
the Supreme Court), held that penalty is not imposable on employees or
officers as they are not taxable persons and there are no clear findings of
them personally retaining any benefit.
Amit Manilal Haria v. JC CGST,
2026-VIL-196-BOM
Correctness: This
ruling incorrectly restricted application of Section 122(1A) to ‘taxable
person’ while provision clearly covers ‘a person’. However, the Court rightly
quashed penalty imposed on employees as factually they did not retain any
benefit nor transactions were conducted at their instance.
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