Penalty imposed on Director under Section 122(1A) in an appeal filed only by the Company — without the Director being a party or being heard — is a nullity: Jammu & Kashmir High Court

The Court held that where a composite order-in-original imposes liability on both the Company and its Director, and separate appeals are filed, the First Appellate Authority cannot dispose of the Director's liability while adjudicating the Company's appeal alone, more particularly when the Director was not a party and had no opportunity to project his case.

The High Court of Jammu & Kashmir and Ladakh has quashed the order of the First Appellate Authority to the extent it confirmed the penalty imposed on a Director under Section 122(1A) of the CGST Act, holding that the Director was condemned without being heard in a proceeding to which he was not a party [Sh. Zahoor Ahmed Mir v. Joint Commissioner, Office of Principal Commissioner, Central GST, Jammu].

The petitioner, a Director of M/s H.K. Cement Industries Pvt. Ltd., was jointly penalised along with the Company in a composite order-in-original passed on the basis of a DGGI investigation. The Company and the Director had filed two separate appeals. The First Appellate Authority, however, took up only the Company's appeal and while dismissing it, proceeded to also determine and confirm the penalty against the Director under Section 122(1A) — even though the Director was not a party to that appeal, was not afforded any opportunity of hearing, and had a separate appeal pending consideration.

Justice Sanjeev Kumar and Justice Shahzad Azeem held that the First Appellate Authority committed a serious error of law by virtually disposing of the Director's appeal without affording him an opportunity of being heard and effectively depriving him of his statutory right to pursue his own appeal before the GSTAT. The Court observed that the case of the Director may be materially different from that of the Company, and it is always open to a Director to take a plea contrary to the view taken by the Company to avoid personal liability. In a composite order, each person has an independent right to contest the demand against them, and that right cannot be subsumed within another person's appeal proceedings.

The order was quashed insofar as the Director was concerned, and the Director's pending appeal before the First Appellate Authority was directed to be decided on its own merits without being influenced by observations made in the order passed in the Company's appeal. The Court also clarified that its observations would not prejudice either side in the appeal filed by the Company before the GSTAT. The decision underscores a fundamental procedural safeguard: in composite proceedings under the GST Act, each noticee is an independent party with an independent right of appeal and an independent right to be heard, and the disposal of one appeal cannot operate as a determination of the other.

2026-juristway.com-2862-HC(J&K and Ladakh)-GST  |  High Court of J&K and Ladakh  |  WP(C) No. 1954/2026  |  22.09.2026