Prayagraj, June 2, 2025 

In a major setback for Patanjali Ayurved Limited, the Allahabad High Court has dismissed the company’s petition challenging a staggering ₹7,273.5 crore penalty imposed under the Goods and Services Tax (GST) regime. The Court refused to interfere with the penalty proceedings initiated by tax authorities, stating there were no grounds to invoke writ jurisdiction at this stage.

The bench, led by Justice Saumitra Dayal Singh, observed that the petitioner had failed to demonstrate any procedural illegality or breach of natural justice that would warrant judicial intervention under Article 226 of the Constitution.

Background of the Case

Patanjali had approached the Court against show cause notices and consequential penalty demands issued by the GST Department alleging massive tax evasion and wrongful claim of input tax credit (ITC). The total penalty, amounting to over ₹7,273 crore, was the result of a multi-state investigation by GST intelligence units.

The company contended that the demands were arbitrary and violative of principles of natural justice, as they were not granted adequate opportunity to respond. However, the High Court noted that the tax adjudication process was still ongoing and statutory remedies were available to the company under GST law.

Court’s Observations

The Court reaffirmed the principle that high courts should not interfere in tax adjudication unless there is a blatant violation of law or procedure.

“The petitioner must first exhaust all remedies provided under the GST Act. Entertaining such a writ would short-circuit the statutory scheme,” the Court stated in its detailed order.

The judgment emphasized judicial restraint in fiscal matters and noted that mere issuance of a show cause notice does not constitute a cause of action for a writ unless accompanied by clear evidence of malice or jurisdictional error.

Implications and Next Steps

Legal experts suggest that Patanjali may now move to file an appeal before the appropriate GST appellate authority or challenge the penalty after the final assessment order is passed. The case is significant as it highlights the expanding scrutiny on large corporates under the GST framework and sets a precedent for future challenges against high-value penalties.