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The Allahabad High Court dismissed a plea filed by Patanjali Ayurved Limited against the Rs. 273.5 Crore GST penalty levied on them.
Patanjali had argued that such penalties amount to criminal liability, however, a Division Bench comprising Justices Shekhar B Saraf and Vipin Chandra Dixit ruled that penalties under Section 122 of the Central GST Act are civil in nature and do not require a criminal trial.
The allegations against Patanjali are that they issued tax invoices without actual supply of goods. An investigation by the Directorate General of GST Intelligence (DGGI) was conducted into the alleged circular trading and misuse of Input Tax Credit (ITC) involving the company.
DGGI then issued a show cause notice on April 19, 2024 proposing a penalty of Rs. 273.51 crore under Section 122(1), clauses (ii) and (vii) of the Central Goods and Service Tax Act 2017.
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