Setback to Patanjali Ayurved, Allahabad High Court dismisses ₹273.5 crore GST penalty appeal — Details here

Mint

4 days ago

The Allahabad High Court rejected Patanjali Ayurved Limited's plea challenging the ₹ 273.50 crore goods and service tax (GST) penalty, PTI reported on Tuesday, 3 June 2025.
The high court bench comprising Justice Shekhar B Saraf and Justice Vipin Chandra Dixit dismissed Patanjali's argument that such cases are made up of criminal liability and can be imposed only after a criminal trial.
'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,' said the judicial bench, as per the report.
The court observed that the tax authorities can impose penalties on firms under Section 122 of the GST Act through civil proceedings without requiring criminal court trials.
Patanjali Ayurved's sister concern, Patanjali Foods, even though a separate entity, is listed in the Indian stock market. Shares of Patanjali Foods were trading 0.44 per cent lower at ₹ 1,690.20 during Tuesday's stock market session, compared to ₹ 1,697.65 in the previous market close.
The Directorate General of GST Intelligence (DGGI), Ghaziabad, issued a show cause notice to Patanjali Ayurved on 19 April 2024 proposing a penalty of ₹ 273.51 crore under various sections of the GST Act, reported the news agency.
Later, the DGGI dropped tax demands under Section 74 in an order dated 10 January 2025. The department reportedly found that the quantities sold for all commodities were more than those purchased from the suppliers.
'For all the commodities, the quantities sold were always more than the quantities purchased from the suppliers, thereby making the observation that all the ITC which was availed in the impugned goods was further passed on by the petitioner,' the DGGI said.
Despite dropping the tax demand, the tax authorities decided to continue with the penalty proceedings under Section 122, prompting Patanjali to challenge the order in the high court.
Patanjali Ayurved operates three manufacturing units at Haridwar, Sonipat, and Ahmednagar. The company reportedly was under investigation following information received by authorities about suspicious transactions with high input tax credit (ITC) utilisation.
The investigation reportedly found that Patanjali was 'acting as a main person' involved in circular trading of tax invoices on paper without supplying actual goods.
According to an earlier Mint report, Patanjali Foods Ltd. rejected reports that Patanjali Ayurved Limited received notice from the Ministry of Corporate Affairs on Sunday, 1 June 2025.
It also said that Patanjali Ayurved is not being investigated by the authorities.