Desk of CA. Praveen Sharma – 1062 Series (CAPS) 

Punjab & Haryana High Court – Asim Kumar v. Union of India & Another

The Punjab & Haryana High Court has held that a director cannot ordinarily be prosecuted under the GST law unless the company itself is made an accused. The Court observed that under Section 137 of the CGST Act, the company is the principal offender, while the liability of directors and officers is only vicarious.

In this case, the prosecution was initiated only against the director for alleged fake ITC transactions without arraigning the company as an accused. The Court held that such prosecution is not maintainable, as criminal liability of a director cannot arise independently of the company, except in legally recognised exceptional circumstances.

Relying on the Supreme Court's decision in Aneeta Hada, the Court quashed the proceedings and reiterated that penal provisions must be strictly interpreted, and statutory requirements for prosecution must be fully complied with before initiating criminal action.

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