Supreme Court stays Rs 120 cr penalty on 'Gutkha' maker

The Supreme Court has stayed about Rs 120 crore penalty imposed by the Commissioner of Central GST on a man for "clandestinely manufacturing and clearing gutkha" with a brand name 'Aryan Gutkha' at his two properties in Ichalkaranji, Maharasthra between March 2013 to August 2018.

A bench presided over by Justice R F Nariman suspended the order imposing penalty while admitting a plea by Raju Laxman Pachhapure against it.

The court issued notice to the Commissioner, Central GST and others as advocate Sanjay Nuli, appearing for the petitioner, contended an arbitrary order was passed on August 21, 2019 demanding a payment of excise duty of Rs 59,60,68,224 and additionally a collective penalty of Rs 59,60,53,224 which was highly imaginary.

The petitioner challenged the validity of the Bombay HC's order of December 8, 2020 which dismissed his plea on computation of excise duty and penalty.

Among others, the plea contended that the constitutional validity of Section 3A of the Central Excise Act, 1944 (which is the genesis of Rule 17(2) of the Pan Masala Packaging Machines Rules 2008) and the notifications issued there under was currently pending before this court and the outcome of the said issue will have a direct impact on the case of the petitioner.