Bombay HC Stays ₹133 Crore GST Penalty on Shemaroo Entertainment Executive [Read Order]

In a recent development, the Bombay High Court granted interim relief to senior executives of Shemaroo Entertainment Limited in connection with a Rs. 133 crore GST penalty imposed by the tax authorities.

The petitioners, including the Chief Financial Officer, Chief Executive Officer, and Joint Managing Director of Shemaroo Entertainment, had approached the court challenging an order dated February 1, 2025. This order imposed the penalty based on alleged irregularities covering the period from July 2017 to July 2023.

The petitioners' counsel, Abhishek A Rastogi, founder of Rastogi Chambers, argued that the show cause notice initially issued to them only pertained to the period from July 2017 to March 2022, and hence, the order exceeded the scope of the original notice.

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Arguing that Section 122(1A) is prospective in nature, the petitioners’ counsel claimed that penalties could not be lawfully imposed for any period before its commencement in January 2021. They further argued that they were not “taxable persons” under the relevant clauses of Section 122(1), nor had they retained any benefit from the transactions in question, conditions necessary for invoking the penal provision.

The petitioners also cited a decision of the Bombay High Court in Shantanu Sanjay Hundekari v. Union of India [2024 (89) G.S.T.L. 62 (BOM)], which had settled similar questions of law..

A division bench of Justices B. P. Colabawalla and Firdosh P. Pooniwalla observed that Section 122(1A) of the Central Goods and Services Tax (CGST) Act, which provides for the imposition of such penalties, came into effect only on January 1, 2021. As such, applying this provision to earlier periods appeared, prima facie, to be legally untenable.

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The court observed that a strong prima facie case had been made out and that the balance of convenience favored granting interim protection. The court directed the GST department not to take any coercive action based on the impugned order pending a further hearing. The court granted the Revenue time to file a reply and listed the matter for further consideration on June 10, 2025.

To Read the full text of the Order CLICK HERE

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