Bombay High Court on GST Penalty: Ad-Interim Relief Granted to Shemaroo Directors.

Headnote:

The Bombay High Court granted ad-interim relief to the directors of Shemaroo Entertainment Ltd. by staying the GST penalty proceedings initiated under retrospective application of law. The Court held that retrospective enforcement of tax liability without statutory backing violates the principles of natural justice.

Background:

• The petitioners, directors of Shemaroo Entertainment Ltd., were subjected to penalty proceedings under the GST Act for transactions predating the amendment introducing the penalty provision.

• They challenged the retrospective application of the penalty, asserting lack of legal basis.

• The department defended the proceedings on grounds of continuing liability.

Court’s Observations:

• The Court found a prima facie case that the penalty provision could not apply retrospectively.

• It emphasized that retrospective penal consequences are impermissible unless explicitly provided in the statute.

• Consequently, ad-interim relief was granted, staying the operation of the impugned penalty orders until the next hearing.

Legal Provisions Discussed:

• Section 122, Central Goods and Services Tax Act, 2017 – Penalty for certain offences.

• Article 20(1), Constitution of India – Protection against retrospective penal legislation.

• Article 226, Constitution of India – Writ jurisdiction of High Courts.

Citation: 2025:BOM:1436505

Case: Shemaroo Entertainment Ltd. Directors v. Union of India & Ors.

Court: High Court of Bombay