Penalty U/s 122 of the CGST Act can be imposed even if no tax is ultimately found due under Section 74?

 

The Allahabad High Court’s recent judgment in Patanjali Ayurved Ltd. v. Union of India has upheld that penalties under Section 122 of the CGST Act can be imposed even if no tax is ultimately found due under Section 74.  From a taxpayer’s standpoint, this raises red flags it is a penalty without tax & Mens rea (intent) no longer relevant.

No proper officer mentioned – yet still adjudicated by the department?

Despite the Petitioner being exonerated of tax liability, the department’s ₹273 crore penalty survives – a worrying precedent. The judgment expands the power to impose civil penalties without the safeguards of judicial trial or even proof of evasion.

Should taxpayers must now prepare for penalty risks even in cases of genuine error?

Time to re-evaluate risk management strategies under GST and ensure bulletproof documentation and compliance.

The copy of the order is as under:

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