The Punjab and Haryana High Court quashed a show cause notice and order invoking Section 122(1A) of the CGST Act, agreeing with Delhi and Bombay High Court rulings that the provision operates prospectively.
Section 122(1A) of the CGST Act, which penalises a person who retains the benefit of certain fraudulent transactions and at whose instance they are conducted, applies only prospectively [Gourav Kumar v. Union of India & Ors., 2026-juristway.com-3196-HC(Punjab & Haryana)-GST].
The oral order was passed by a Division Bench of Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor, with the Chief Justice speaking for the Bench.
The Court framed a single question: whether Section 122(1A) is prospective or retrospective. It reproduced the provision:
“(1A) Any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.”
Punjab and Haryana High Court, Gourav Kumar v. Union of India & Ors.
The Court noted that the statute does not indicate that the provision is retrospective. It held that the law is settled: “unless a provision, by specific provision or necessary implication, is shown to have retrospective effect, it would remain prospective.”
The Court relied on two Division Bench rulings to the same effect: the Delhi High Court in Parag Garg v. Commissioner, Adjudication, CGST Delhi West & Anr. (2026 SCC OnLine Del 7505) and the Bombay High Court in Amit Manilal Haria & Ors. v. Joint Commissioner, CGST and Central Excise & Anr. (2026 SCC OnLine Bom 107). Having gone through both judgments, the Bench said it was in “absolute agreement” with them and adopted their reasons.
The petition was allowed. The show cause notice dated 27 Mar 2024 and the order dated 31 Jan 2025 were quashed insofar as they relate to the petitioner. Pending applications were disposed of.
The order does not set out the transactions alleged against the petitioner or the dates of the underlying events.
2026-juristway.com-3196-HC(Punjab & Haryana)-GST
