Can Company Directors be Penalised u/s 122(1A) of GST Act? Bombay HC to Decide, Grants Interim Relief [Read Order]

The Bombay High Court has restrained the GST ( Goods and Services Tax ) from taking any coercive action against the petitioner while examining whether a company director can be personally subjected to penalty under Section 122(1A) for GST Act allegedly committed by the company.

Harsh Jitendra Kumar Shah, the Managing Director of the company, filed a petition in his individual capacity challenging a show cause notice dated May 16, 2025 and the Order-in-Original dated December 15, 2025 imposing penalty under Section 122(1A) of the CGST Act.

The petitioner questioned both the applicability of the penal provision and the jurisdiction of the adjudicating authority.

Before the High Court, the petitioner contended that Section 122(1A) could not be invoked against him merely because he was a director of the company.

The Petitioner, depending on the Bombay High Court's decision in Shantanu Sanjay Hundekari v. Union of India, it was argued that the provision does not automatically fasten personal liability upon an individual director for alleged GST violations committed by a company.

According to the petitioner, the impugned proceedings were contrary to the law laid down in the earlier judgment.

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The petitioner further argued that Section 122(1A) was introduced with effect from January 1, 2021, could not be retrospectively applied to transactions that had taken place prior to its insertion. It was submitted that the Department was seeking to invoke a penal provision in respect of transactions preceding its commencement, making the proceedings legally unsustainable.

A further ground raised was regarding the competence of the adjudicating authority itself. The petitioner asserted that the authority issuing the show cause notice lacked jurisdiction at the relevant point of time, and consequently both the notice and the Order-in-Original were liable to be set aside on the ground of want of jurisdiction.

The petitioner’s counsel Adv. Ishaan V. Patkar, also informed the Court that identical legal issues concerning the applicability of Section 122(1A) to company directors were already pending before the Bombay High Court in other writ petitions, wherein interim protection had been granted against coercive recovery.

A Division Bench comprising Justice Suman Shyam and Justice Ranjitsinha Raja Bhonsale directed the respondents to file their reply and granted ad interim relief to the petitioner by directing that no coercive action shall be initiated against the petitioner in relation to the impugned penalty until further orders.

The matter was listed for further hearing on July 14, 2026.

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