HC Upholds GST Penalty on Partners Under Section 122(1A) for Tax Evasion

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  • Last Updated on 12 June, 2026

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Penalty on Partners Under Section 122(1A)

Case Details: Mayank Bansal vs. Union of India [2026] 187 taxmann.com 394 (Gauhati)

Judiciary and Counsel Details

  • Devashis Baruah, J.
  • A.M. Baruah & B. Raichandani, Advs. for the Petitioner.
  • S.C. Keyal, Sr. Adv. & K. Jain, Adv. for the Respondent.

Facts of the Case

The petitioners, who were partners of a construction firm, were issued a show cause notice under Section 122(1A) of the CGST Act and Assam GST Act, alleging GST evasion on the transfer of development rights and wrongful utilization of ineligible input tax credit. Following an Order-in-Original, a penalty equal to the tax evaded was imposed based on findings that undisclosed cash was collected without invoices and that the petitioners derived personal benefit from transactions executed at their instance. After the first appeals failed, the petitioners filed a writ petition contending that Section 122(1A) applies only to taxable persons, not to partners as natural persons, and that the provision could not be applied retrospectively to past periods. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that while Section 122(1) targets the taxable person, Section 122(1A) intentionally extends liability to any person who causes the transaction and retains its benefit, thereby encompassing the natural persons operating behind an entity structure. The Court observed that Section 122(1A) did not create new violations but merely identified the liable beneficiaries for offences that existed under Section 122(1) since the inception of the Act. It further determined that no issue of retrospectivity arises so long as the show cause notice is issued after the enforcement of Section 122(1A). Consequently, the Court sustained the concurrent findings of the lower authorities and dismissed the writ petition in favour of the Department of Revenue.

List of Cases Reviewed

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied