Penalty under Section 122(1A) on employees – Words ‘any person’ in said provision are required to be understood in context of ‘taxable person’

The Bombay High Court has allowed the petition filed by the Chief Financial Officer, Chief Executive Officer and Director and Joint Managing Director of a taxpayer/company in a case where personal penalty was imposed on them under Section 122(1A) of the CGST Act, 2017. The company had allegedly wrongfully availed and passed the ITC. 

The Court for this purpose noted that sub-section (1A) is applicable in the circumstances falling in clauses (i), (ii), (vii) or clause (ix) of Section 122(1), i.e., the violations which are purely attributable to a taxable person. The High Court hence found substance in the contentions, as to how in the absence of the petitioners being taxable persons, qua the business of the company, the petitioners can be held liable for any penalty under the provisions of sub-section (1A). 

Accordingly, it was observed that the opening words of sub-section (1A) when it uses the words ‘any person’, would be required to be understood in the context of a ‘taxable person’ as sub-section (1) itself applies to a taxable person. Court’s earlier decision in the case of Shantanu Sanjay Hundekari v. Union of India was relied upon. 

Allowing the petition, the Court in Amit Manilal Haria v. Joint Commissioner [2026 VIL 196 BOM] also noted absence of any finding regarding retaining of any benefit of the transactions covered under the specified clauses of Section 122(1) by the petitioners.