Heavy GST penalties on co executives face legal scrutiny

NEW DELHI: The Directorate General of Goods and Services Tax Intelligence has issued thousands of notices to various companies, as well as their directors and promoters, regarding the wrongful availment of input tax credit, according to sources. According to the show cause notice reviewed by the TNIE, the interesting element of these notices which have been issued, especially for the financial year 2017-18, by the first week of August, is whether the liabilities imposed by way of personal penalties is correct. Experts claim that such allegations to impose personal penalties on the individuals will have to cross the test of constitutional validity and such harsh penalties may not be sustained once these matters reach either the appeal forums or the jurisdictional High courts. “The directors, promoters, or the individuals can be subject to personal penalties only under specified exceptional circumstances and rarest of rare cases when benefit is retained for individual gains. When benefit has not been retained by these individuals, any penalty invoked on individuals will be subject to the test of constitutional validity before the jurisdictional High Court” explained Abhishek A Rastogi, founder of Rastogi Chambers, who has filed petitions against these huge penalties levied on individuals.