LexM/S ASP TRADERS versus STATE OF UTTAR PRADESH & ORS.
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[2025] 7 S.C.R. 1462 : 2025 INSC 890 M/s ASP Traders v. State of Uttar Pradesh & Ors. (Civil Appeal No. 9764 of 2025) 24 July 2025 [J.B. Pardiwala and R. Mahadevan,* JJ.] Issue for Consideration Whether, upon payment of tax and penalty by the appellant within the time stipulated in the notice u/s.129(3), the proper officer is still mandatorily required to pass a final order u/s.129(3), or whether the deeming fiction u/s.129(5) dispenses with such requirement. Headnotes† Central Goods and Services Tax Act, 2017 – ss.129, 168 – CGST Rules, 2017 – r.142 – IGST Act, 2017 – s.20 – SGST/UTGST Act, 2017 – Circular No.41/15/2018-GST dated 13.04.2018 – A Consignment transported by the appellant was detained by the Mobile Squad for alleged contraventions under the IGST/CGST/SGST Act, 2017 – Following inspection, a notice u/s.129(3) was issued to the appellant, directing the appellant to file objections – The appellant submitted a reply, but due to business exigencies, paid the tax and penalty amounting to Rs.7,20,440/- and uploaded the receipt in Form GST DRC-03 – Thereafter, the respondent authorities released the goods by passing discharge order in Form GST MOV-05 – However, no formal order u/s.129(3) was passed – The appellant requested such an order to pursue statutory remedies, but the respondent authorities responded that in view of s.129(5), no further order needs to be passed – Aggrieved, the appellant filed writ petition, which was dismissed by the High Court – Correctness: Held: 1. Taking into account that objections were filed, payment was stated to have been made under protest due to business exigencies, and the appellant seeks to challenge the levy, the proper officer was under a clear statutory obligation to pass a final order u/s.129(3) in Form GST MOV-09 and DRC-07 – The * Author [2025] 7 S.C.R. 1463 M/s ASP Traders v. State of Uttar Pradesh & Ors. refusal by the High Court to direct the passing of such an order, has the effect of frustrating the appellant’s statutory right to appeal and is contrary to well established legal principles governing tax adjudication and procedural fairness – Accordingly, the impugned order passed by the High Court is set aside. [Paras 20 and 21] 2. No final order was passed, pursuant to the notice dated 21.01.2022 issued u/s.129(3) of the CGST Act – Evidently, the discharge order merely records that the detained goods and vehicle were released upon payment of the proposed tax and penalty – It makes no mention of any withdrawal of objections or of the conclusion of proceedings initiated u/s.129(3) of the CGST Act, 2017 – In the present case, payment was made under protest, and objections had already been filed by the appellant – Once objections are filed, adjudication is not optional, it becomes imperative to pass a speaking order to justify the demand of tax and penalty, to safeguard the right of appeal u/s.107 of the CGST Act, 2017 – The language of s.129(3) is categorical in stating that the officer “shall issue a notice… and thereafter, pass an order” – The use of the words “and thereafter” reinforces the mandatory nature of passing a reasoned order, regardless of payment, particularly where protest or dispute is raised – Significantly, the GST payment portal permits payments only through Form GST DRC-03, which is automatically classified as a voluntary payment, and does not provide any mechanism for an assessee to indicate that the payment is being made under protest – In the absence of such an option, payments made under commercial compulsion or business necessity—such as for securing release of detained goods–may be erroneously construed as voluntary, resulting in undue prejudice – Such procedural limitations cannot be allowed to defeat the rights of the taxpayer, particularly where the detention of goods is ultimately found to be unlawful – Therefore, this Court is of the considered opinion that the payment made by the appellant in the present case cannot be treated as voluntary – Further, the payment by an assessee will not absolve the responsibility of the proper officer to pass an order justifying the demand of tax and penalty – The payment, by itself, cannot be treated as a waiver or abandonment, especially when the appellant has clearly objected to the demand and when there is a statutory mandate to pass an order and a corresponding right to appeal – An appeal can lie only against an ‘order’, and in the ab
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