Penalty Under Section 122(1A) Stayed Against Shemaroo Directors

Case Title: Mr. Amit Manilal Haria & Ors. v. Joint Commissioner of CGST & CE & Ors.
Court: High Court of Judicature at Bombay (Civil Appellate Jurisdiction)
Petition No.: Writ Petition No. 5001 of 2025
Category of Dispute: Penalty under GST – Section 122(1A)
Date of Judgment: 16 April 2025
Relevant Sections: Section 122(1), Section 122(1A), CGST Act, 2017

Facts of the Case (Paras 1–2)

1. The petitioners are senior management of M/s Shemaroo Entertainment Ltd. – the CFO, CEO & Director, and Jt. Managing Director (Para 1).

2. The impugned order dated 01.02.2025 imposed a penalty of approx. ₹133 crores on them under Section 122(1A) of the CGST Act (Para 1).

3. Petitioners argued:

   • Section 122(1A) became effective only from 01.01.2021, but penalty was imposed for July 2017–March 2022. Hence retrospective application is invalid (Para 1a).

   • The impugned order extended the liability period up to July 2023, beyond the SCN (July 2017–March 2022), thus going beyond SCN (Para 1b).

   • Petitioners are not “taxable persons” retaining benefit of any transaction under clauses (i), (ii), (vii) or (ix) of Section 122(1); hence Section 122(1A) does not apply (Para 1c).

Questions in Consideration (Paras 1–2)

1. Whether penalty under Section 122(1A) can be imposed retrospectively for a period before 01.01.2021?

2. Whether the order can extend liability period beyond the SCN?

3. Whether directors and officers of a company, not being taxable persons, fall within Section 122(1A)?

Observations of the Court (Paras 5–6)

1. Prima facie, Section 122(1A) came into effect only from 01.01.2021; penalty prior to that is unsustainable (Para 5).

2. The Court found that one of the issues is already covered by Shantanu Sanjay Hundekari v. Union of India (2024) [2024 (89) G.S.T.L. 62 (Bom)] (Para 2, 5).

3. A strong prima facie case exists; balance of convenience favours petitioners; hence coercive action must be stayed (Para 6).

Judgment of the Court (Paras 6–7)

• Ad-interim relief granted:

  • Revenue restrained from acting on or giving effect to the impugned order dated 01.02.2025 against petitioners.

  • No coercive steps to be taken against petitioners until final disposal (Para 6).

• Next hearing fixed on 10.06.2025 (Para 7).

Between Fine Lines (5-line Simplified Outcome)

• GST penalty of ₹133 crores imposed on Shemaroo’s directors was stayed.

• Court held that Section 122(1A) cannot apply retrospectively before 01.01.2021.

• Order had illegally extended period beyond the SCN.

• Petitioners not being taxable persons, prima facie, outside Section 122(1A).

• Interim relief granted; case to be heard further in June 2025.

Summary of Referred Cases

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