Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Gau) 1129

THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Devashis Baruah, J.
Mayank Bansal - Petitioner
Versus
The Union Of India Through The Secretary Department Of Revenue Ministry Of Finance North Block New Delhi And Ors. – Respondents
WP(C) 24 of 2026, WP(C) 25 of 2026
Decided On : 08-06-2026

Advocates Appeared:
For the Petitioner:Mr. A M Baruah, Mr. B. Raichandani, Advocate
For the Respondent:DY.S.G.I., Mr. S. C. Keyal, Senior Advocate, CGST, Mr. K. Jain, Advocate

Section 122(1A) applies to any person who retains benefits of specified transactions and at whose instance they occur. This provision is not restricted to taxable entities and does not violate constitutional principles against retrospective penalization, as it identifies responsible individuals for pre-existing statutory violations.

Headnote:(A) Taxation Law - GST Act, 2017 - Section 122(1) and 122(1A) - Penalty for offences - Interpretation of 'taxable person' versus 'any person' - Applicability of penalty provisions for periods prior to enactment - Penalty under Section 122(1A) is not limited to the registered taxable entity; it encompasses any individual who retains the benefits of prohibited transactions and under whose instances such acts were conducted.

(B) Constitutional Law - Article 20(1) - Retrospective penalization - Civil adjudication - Provisions identifying responsible parties for existing statutory violations during an ongoing adjudication process do not constitute the creation of new offences or retrospective penalization.

(C) Civil Procedure - Alternative remedy - Appellate tribunal - Courts may allow parties to pursue statutory appellate remedies after disposing of jurisdictional challenges. (Paras 31, 37, 51, 52)

Facts of the case:
The partners of a firm challenged the imposition of penalties under Section 122(1A) of the Act regarding the evasion of tax. The penalties were challenged on two primary grounds: that the provision applies only to the 'taxable person' (the firm) and not the partners, and that the provision could not be applied to periods prior to its enactment.

Findings of Court:
The court ruled that the provision identifies the natural persons behind transactions, extending liability beyond the primary taxable entity. It further held that the provision does not conflict with constitutional protections as it characterizes the penalty process for existing violations rather than creating new offences.

Issues: The main issues were whether the penalty for specific offences is strictly restricted to the primary taxable person and whether the application of the penalty provision to periods before its introduction is constitutionally permissible.

Ratio Decidendi: The provision was enacted to hold accountable individuals who control and benefit from prohibited commercial activities. Since it functions as part of a civil adjudication process regarding offences defined in existing legislation, it does not violate constitutional prohibitions against retrospective penalization.

Result: Petitions disposed of; liberty granted to approach the appellate tribunal within thirty days.

Table of Content
1. factual background involving gst penalties on partners. (Para 1 , 2 , 4 , 5 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15)
2. contentions regarding applicability of section 122(1a) to non-taxable persons. (Para 3 , 16 , 17 , 18 , 19 , 20 , 21)
3. statutory definitions and scope of person vs taxable person. (Para 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34)
4. partners can be liable to penalties under section 122(1a). (Para 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42)
5. section 122(1a) penalty application does not violate article 20(1). (Para 43 , 44 , 45 , 46 , 48 , 49 , 50 , 51 , 52 , 53 , 54)
6. procedural direction for statutory appeal before the tribunal. (Para 55 , 56 , 57 , 58)

JUDGMENT :

Devashis Baruah, J.

Heard Mr. B. Raichandani, the learned counsel appearing on behalf of the Writ Petitioners in both the writ petitions. I have also heard Mr. S. C. Keyal, the learned Senior counsel assisted by Mr. K. Jain, the learned counsel appearing on behalf of the Respondents.

PRELUDE:

2. In both the writ petitions, the Petitioners have assailed the common Order-in-Original dated 04.02.2025 as well as the Order-in-Appeal dated 26.08.2025 whereby in exercise of powers under Section 122(1A) of the Central Goods and Service Tax Act, 2017, (for short, the Act of 2017), the Petitioners in both the writ petitions have been respectively imposed a penalty equivalent to the tax evaded by M/S Quantum Infratech, which is a partnership firm wherein both the Petitioners are partners.

3. The Petitioners herein have an alternative and efficacious remedy to file Appeal under Section 112 of the Act of 2017. However, the Petitioners have approached this Court by challenging the Order-in-Original dated 04.02.2025 as well as the Order-in-Appeal dated 26.08.2025 primarily on two jurisdictional issues, which were-

(a) The penalty in terms of Section 122(1A) of the Act of 2017 can be imposed only upon the taxable person i.e. M/S Quantum Infratech and not the Petitioners who are only partners of the said firm. The basis of the said contention are the judgments of the learned Division Bench of the Bombay High Court in the case of Amit Manilal Haria and Others Vs. Joint Commissioner, CGST and Central Excise and Another reported in 2026 SCC OnLine Bom 1510 and Shantanu Sanjay Hundekari Vs. Union of India and Others reported in 2024 SCC OnLine, Bom 929.

(b) The second jurisdictional issue is that Section 122(1A) of the Act of 2017 was given effect to w.e.f. 01.01.2021 and as such, for the periods prior to 01.01.2021 even assuming, there can be imposition of penalty under Section 122(1A) of the Act of 2017, the Respondent Authorities could not have imposed penalty for the period prior to coming into force of Section 122(1A) of the Act of 2017. In that regard, the Petitioners relied upon the judgment of the Learned Division Bench of the Bombay High Court in Amit Manilal Haria (supra).

4. It is relevant at this stage to take note of that M/S Quantum Infratech, the Partnership Firm wherein the Petitioners are partners had filed a separate writ petition challenging the Order-in-Original dated 04.02.2025 and Order-in-Appeal dated 26.08.2025 which was registered and numbered as WP(C) No.20/2026. In the said writ petition, the jurisdictional issue which was raised is as to whether, it is permissible for the Proper Officer to issue a consolidated Show Cause Notice in terms of Section 74 of the Act of 2017 and thereupon to pass a consolidated order for various financial years.

5. This Court vide a separate judgment today i.e. 08.06.2026 opined that it is permissible for the Proper Officer to issue a consolidated Show Cause Notice for various financial years in terms with Section 74(1) of the Act of 2017 provided the same is permissible in terms of Section 74(2) of the said Act of 2017. This Court also opined in the said judgment that it is permissible for the Proper Officer to pass a consolidated order for different financial years in terms of Section

Click Here to Read the rest of this document

Judicial Analysis