Ad-Interim Relief to Shemaroo Directors: Bombay HC stays Rs. 133 Cr GST Penalty over Retrospective Application [Read Order]
The High Court held that Section 122(1A) of CGST Act, 2017 applied prospectively from January 1, 2021, and stayed penalty orders until the next hearing.
GST - penalty - taxscan.
GST - penalty - taxscan.
In a recent ruling, the Bombay High Court stayed Rs. 133 Crore GST Penalty imposed on the Shemaroo Directors, granting them complete ad-interim relief and quashed the Retrospective Application of imposing penalties for periods from July 2017 onwards. The High Court barred all coercive actions against the directors.
The Bench comprising Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla heard and reviewed the matter filed by the Petitioners.
The Petitioners, including the Chief Financial Officer of Shemaroo Entertainment Limited, the Chief Executive Officer and Director of the said Shemaroo Entertainment Limited and the Joint Managing Director of the said Shemaroo Entertainment Limited, whereby this writ petition had challenged an order dated 1st February 2025. This impugned order demanded a penalty of approximately Rs. 133 Crores from the three petitioners.
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The Petitioners challenged the impugned order on three primary reasons. Firstly, the petitioners argued on the grounds that the penalty was imposed under section 122(1A) of the CGST Act, 2017, which was brought into force from 1st January 2021. However, the Show cause notice proposed penalties on the petitioners for the period starting from July 2017 to March 2022, asserting that the said provision is prospective in nature and cannot be applied to periods before its enactment.
Secondly, the counsel contended on the ground that the impugned order goes beyond the show cause notice, as the notice covered the period from July 2017 to March 2022, whereby the impugned order was extended from July 2017 to July 2023. Therefore, the order goes beyond the show-cause notice.
And lastly, the counsel also argued that for Section 122 (1A) of the CGST Act, 2017 to apply, the petitioners must be "taxable persons" who have retained the benefit of a transaction covered under specific clauses (i), (ii), (vii) or (ix) of Section 122(1) of the CGST Act, 2017. However, the petitioners maintained not to be taxable persons in the present scenario and in law could never retain any benefit of a transaction covered under the aforesaid clauses.
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On the other hand, the revenue counsel sought time to file an Affidavit in Reply to the above Writ Petition. The court directed that the Affidavit in Reply be filed within a period of two weeks. The petitioners were allowed one week thereafter to file an Affidavit in Rejoinder. The matter had been listed for further hearing on 10th June 2025.
The court, prima facie, acknowledged that one of the issues raised in the present petition is squarely covered by the decision of this Court in the case of Shantanu Sanjay Hundekari vs. Union of India, [2024(89) G.S.T.L. 62 (BOM)].
The court also found that the balance of convenience favoured the petitioners. Therefore, the court granted complete Ad-interim relief and directed the respondents not to take any coercive steps in consequence of the impugned order dated 1st February, 2025, pending the final disposal of the writ petition.
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