Section 122(1A) of CGST Act Cannot Be Invoked Against Employee as He is Not ’Taxable’/’Registered Person’

Case Details: Shantanu Sanjay Hundekari v. Union of India - [2024] 161 taxmann.com 27 (Bombay)[28-03-2024]

Judiciary and Counsel Details

• G.S. Kulkarni & Firdosh P. Pooniwalla, JJ.
• Harish Salve, Ms Anuradha Dutt, Ms Fereshte Sethna, Tushar Jarwal, Pranav Bansal, Rahul S. Jain, Rahul S., Mohit Tiwari, Ms Mrunal P., Ameya Pant, Abhishek Tilak, Ms Snigdha Mishra & Ashish Mishra, Advs. for the Petitioner.
• M.P. Sharma, Ms Mamta Omle, Vishal Thadani, Ms Jyoti Chavan, Himanshu Takke & Jaymala J. Ostwal for the Respondent.

Facts of the Case

The petitioner, an employee of M/s. Maersk Line India Pvt. Ltd (‘MLIPL’), is a Taxation Manager with the company. The petitioner received a Show Cause Notice (‘SCN’), requiring an explanation as to why a penalty equivalent to the tax allegedly evaded by MLIPL should not be imposed on him under Section 137 and Section 122(1A) of the CGST Act, 2017.

The petitioner argued that Section 122(1A) is not applicable since they do not derive any benefit from transactions conducted by MLIPL, and thus invoking Section 122(1A) is unjustified.

High Court Held

The Court held that Section 122(1A) does not apply to the petitioner as they are not a ‘taxable person’ or ‘registered person’ which is a condition of the said provision. Further, as an employee of MLIPL, the petitioner was not legally positioned under the CGST Act to retain benefits from MLIPL transactions.

Moreover, the Court stated that Section 137 does not apply since the petitioner was not responsible for or in charge of MLIPL’s business. Hence, it set aside the impugned SCN.