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IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
Shekhar B. Saraf, Vipin Chandra Dixit
Patanjali Ayurved Ltd. – Appellant
Versus
Union Of India – Respondent
The legal document clearly establishes that penalties under Section 122 of the CGST Act are civil liabilities, not criminal offenses. This means that such penalties can be imposed without the necessity of proving mens rea, which is a key element in criminal proceedings (!) (!) . The Court emphasizes that the nature of these penalties is remedial and coercive, aimed at deterring unlawful activities related to tax violations, and are distinct from criminal penalties that require a criminal trial and proof of intent (!) (!) (!) .
Furthermore, the interpretation of the relevant provisions indicates that proceedings under Section 122 are to be adjudicated by the proper officer in a quasi-judicial manner, and such proceedings are separate from criminal prosecutions under the Act (!) (!) (!) . The absence of a reference to a proper officer in Section 122 does not automatically convert it into a criminal proceeding; rather, the scheme and context of the statute, along with procedural rules, support its classification as a civil penalty mechanism (!) (!) (!) .
Additionally, the document clarifies that the dropping of proceedings under Section 74 does not automatically abate or nullify proceedings under Section 122, as they pertain to different contraventions and are governed by separate procedural and substantive provisions (!) (!) (!) . The scheme of the law and the legislative intent support the view that penalties under Section 122 are civil in nature and are to be imposed through departmental adjudication, not criminal prosecution (!) (!) (!) .
In summary, the legal interpretation and statutory scheme affirm that penalties under Section 122 of the CGST Act are civil liabilities, enforceable through departmental proceedings by the proper officer, and do not require criminal trial or mens rea for their imposition (!) (!) (!) . The proceedings under this section are distinct from criminal prosecutions and are not rendered invalid or nullified by the prior dropping of proceedings under Section 74.
JUDGMENT :
Shekhar B. Saraf, J.
INDEX
| Serial No. | Contents |
| 1. | RELIEF SOUGHT |
| 2. | FACTUAL BACKGROUND |
| 3. | CONTENTIONS OF THE PETITIONER |
| 4. | CONTENTIONS OF THE RESPONDENTS |
| 5. | ISSUES |
| 6. | RELEVANT PROVISIONS |
| 7. | ANALYSIS |
| MEANING OF ‘OFFENCE’ AND ‘PENALTY’ | |
| INTERPRETATION OF STATUTES | |
| PENALTY IN TAX DELINQUENCY CASES | |
| DEALING WITH SUBMISSIONS OF THE PETITIONER | |
| 8. | CONCLUSION |
Relief Sought
1. This is a writ petition under Article 226 of the Constitution of India wherein the petitioner has prayed for the issuance of a writ of certiorari quashing the impugned Show Cause Notice No.02/2024-25 issued on April 19, 2024 vide Form GST DRC-01 reference No.DGGI/INV/GST/2179/2020/GRU/634(S/L) by Directorate General of Goods and Services Tax Intelligence (DGGI), Ghaziabad Regional Unit, (hereinafter referred to as ‘respondent no.2’) bearing CBIC DIN- 202404DNN40000555A8B, to the extent of exorbitant unexplained penalty of Rs. 2,735,113,681/- proposed to be levied against the petitioner firm under Section 122 (1), clause (ii) and (vii) of the Central Goods and Service Tax, Act 2017 (hereinafter referred to as ‘CGST Act’) and respective State Statutes namely Uttarakhand Goods and Services Tax Act, 2017, Haryana Goods and Services Tax
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