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Allahabad High Court Upholds ₹273.5 Crore GST Penalty on Patanjali Ayurved

Section 122 proceedings under the CGST Act are civil in nature, allowing tax authorities to impose penalties without criminal trials

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A division bench rejected Patanjali’s argument that such penalties constitute criminal liability and can be imposed only after a criminal trial. (For Representation)

Overview

  • A division bench of Justices Shekhar B Saraf and Vipin Chandra Dixit dismissed Patanjali Ayurved’s petition in a May 29 ruling upholding the penalty.
  • The court clarified that penalties under Section 122 can be adjudicated by civil authorities without requiring criminal prosecution.
  • The DGGI issued a show cause notice on April 19, 2024 proposing a ₹273.51 crore penalty over alleged circular trading of paper invoices without actual goods supply.
  • An adjudication order dated January 10, 2025 dropped tax demands under Section 74 but preserved the separate penalty action under Section 122.
  • Investigators found that Patanjali sold more quantities than it purchased and passed on all input tax credits claimed through the disputed invoices.