A Bench of Justice Pamidighantam Sri Narasimha and Justice A.S. Chandurkar issued a notice to the Union government and the Directorate General of GST Intelligence (DGGI) on Patanjali’s appeal. The stay will remain in force until further orders.
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The Supreme Court on Thursday stayed the recovery of a ₹273.5 crore Goods and Services Tax (GST) penalty imposed on Patanjali Ayurved Limited, while agreeing to hear the company’s challenge to an Allahabad High Court order upholding the penalty.
A Bench of Justice Pamidighantam Sri Narasimha and Justice A.S. Chandurkar issued a notice to the Union government and the Directorate General of GST Intelligence (DGGI) on Patanjali’s appeal. The stay will remain in force until further orders.
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The penalty followed a DGGI probe into alleged irregularities in Patanjali’s transactions. The department claimed the company was linked to circular trading of tax invoices without actual supply of goods, leading to wrongful availment and passing on of Input Tax Credit (ITC).
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In April 2024, the DGGI issued a show-cause notice under Section 122 of the CGST Act, proposing the penalty. In January 2025, the department dropped related tax demands under Section 74 but continued with the penalty proceedings, saying they were independent of the dropped demand.
Patanjali’s plea before the High Court argued that such penalties were quasi-criminal and could only be imposed after a trial before a criminal court, and that they could not survive once the main tax demand was dropped. The Court rejected these arguments, holding that Section 122 penalties are civil in nature and can be imposed by proper officers.
Challenging this in the Supreme Court, Patanjali has questioned the nature of penalties under Section 122, the powers of GST officers to impose them, and the effect of quashing related tax demands.
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