Gauhati High Court Grants Interim Protection Against Penalty Imposed Under GST Statute

The Gauhati High Court has issued an interim protection order in favor of a taxpayer who challenged a penalty levied under Section 122 of the Goods and Services Tax (GST) Act. The court held that the penalty action taken by revenue officials was contrary to the governing instructions issued via a Central Board of Indirect Taxes and Customs (CBIC) circular. Consequently, the judiciary stayed the coercive recovery of the disputed penalty pending further hearings. Statutory penalties under Section 122 of the GST Act apply for specific offences such as supplying goods without invoices or evading tax, but must be administered in harmony with clarifying board notifications.

In practice, when field formations issue notices that override beneficial circulars issued by the apex indirect tax body, taxpayers can seek judicial intervention to halt coercive enforcement. The old practice of unquestioned departmental penalty enforcement faces judicial checks when misaligned with administrative circulars. Tax practitioners and chartered accountants should examine all ongoing Section 122 penalty orders against existing CBIC circulars to identify potential grounds for writ petitions.

Track upcoming court directions and final judgments in similar indirect tax litigation matters. Bottom line: verifying departmental penalty orders against administrative circulars safeguards clients from arbitrary tax recoveries.