GST Penalty of Rs. 400 Crore Imposed on Shemaroo Staff Members stayed by Bombay High Court:

GST Penalty of Rs. 400 Crore Imposed on Shemaroo Staff Members stayed by Bombay High Court The Bombay High Court granted provisional assistance to three senior employees of Shemaroo Entertainment Limited on Wednesday, who were dealing with a remarkable GST penalty of Rs. 400 crore, which was applied by the tax authorities. The Division Bench of Justice B. P. Colabawalla and Justice F. P. Poonawala restrained the authorities from taking any forceful actions against the employees on the basis of the challenged orders. "The petitioners' lawyer brought up constitutional issues before the Court in the case." Case Summary A well-known company in India named Shemaroo Entertainment Limited, which works in the media and entertainment industry, is at the heart of this important case. The concern is regarding the company that is apparently claiming Rs. 70 crore in input tax credit in the wrong way. The direct responsibility for the tax issues was put on some of the company's employees as personal penalties. The tax officials used Section 122(1A) of the GST Act 2017 on them. The total penalty of Rs. 400 crore was imposed on three employees of the company. Industry people are calling this action very harsh and unlike anything seen before. Key points from the case: Timing issue: The lawyer, Abhishek Rastogi, argued that penalties under Section 122(1A) of the CGST Act only came into effect from January 1, 2021, so they can't be applied to earlier periods. Inconsistencies: The dates mentioned in the initial notices didn't match the dates in the final penalty orders. No personal benefit: The employees did not personally gain anything from the disputed transactions, so they shouldn't face individual penalties. Proportionality: The court is considering whether it is fair to punish individual employees for company-level tax disputes without evidence of personal misconduct. The High Court has briefly prevented any action from being taken against these employees while the case runs, and it will finally have a hearing on June 10, 2025. Tax experts see this as an important case that could protect corporate employees from being unfairly targeted in company tax disputes. The final decision of the court could set guidelines for when tax authorities can hold individuals personally responsible in GST cases.