The Allahabad High Court has dismissed Patanjali Ayurved Limited’s petition challenging a ₹273.50 crore penalty imposed under the Goods and Services Tax (GST) Act.
A division bench rejected Patanjali's argument that the penalty involved criminal liability and thus required a criminal trial before imposition.
“After detailed analysis, it is clear that the proceeding under Section 122 of the CGST Act is to be adjudicated by the adjudicating officer and is not required to undergo prosecution,” the court noted.
The judgment clarified that penalties under Section 122 can be imposed through civil proceedings without initiating criminal prosecution, reinforcing the authority of tax officials in such cases.
The Directorate General of GST Intelligence (DGGI), Ghaziabad unit, had issued a show-cause notice to Patanjali Ayurved on April 19, 2024, proposing a penalty of ₹273.51 crore under multiple sections of the GST Act. The DGGI’s investigation reportedly found that Patanjali claimed input tax credit (ITC) based on transactions where quantities sold were consistently higher than those purchased, indicating suspicious invoicing patterns.
In an order on January 10, 2025, the DGGI dropped tax demands raised under Section 74 of the GST Act, acknowledging that the ITC availed had been passed on. However, it decided to continue with penalty proceedings under Section 122, which deals with misreporting and wrongful claims. Patanjali challenged this move in the high court, which has now been dismissed.
According to the DGGI, Patanjali was allegedly a key player in circular trading—issuing tax invoices without actual movement of goods. The company’s manufacturing units in Haridwar, Sonipat, and Ahmednagar were reportedly part of the probe following alerts over excessive ITC claims.
Shares of Patanjali Foods Ltd, a listed group company of Patanjali Ayurved, traded 0.44 percent lower at ₹1,690.20 on Tuesday compared to the previous close of ₹1,697.65.
Meanwhile, in a separate development, Patanjali Foods issued a clarification denying reports that the Ministry of Corporate Affairs (MCA) had issued any notice to Patanjali Ayurved. In a stock exchange filing dated June 1, the company stated, “Patanjali Ayurved Limited has not received any communication from the Ministry of Corporate Affairs for the proposed investigation as reported in the media.”
