# M/s ASP Traders v. State of Uttar Pradesh & Ors

- **Citation:** 2025 INSC 890
- **Court:** Supreme Court of India
- **Decided:** 2025-07-24
- **Case number:** Civil Appeal No. 9764 of 2025
- **Bench:** J.B. Pardiwala, R. Mahadevan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-asp-traders-v-state-of-uttar-pradesh-ors-38425
- **Pages:** 35

## Headnote

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

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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.
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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 absence of
a reasoned order passed u/s.129(3) of the Act, the taxpayer is
effectively deprived of the statutory remedy of appeal - Such a
1464
[2025] 7 S.C.R.
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deprivation undermines the foundational principles of fairness,
due process, and access to justice, rendering the right of appeal
illusory or nugatory - The proper officer could not be absolved of
the statutory obligation to pass a reasoned order - Such adherence
is in consonance with the constitutional mandate u/Art.265 of
the Constitution of India - Thus, respondent no.3 is directed to
pass a reasoned final order u/s.129(3) of the CGST Act, 2017.
[Paras 11, 13.1, 15, 16, 16.1, 16.2, 20]
Central Goods and Services Tax Act, 2017 - ss.129, 168 - CGST
Rules, 2017 - r.142 - IGST Act, 2017 - s.20 - SGST/UTGST Act,
2017 - Whether section 129(5) absolves the responsibility of
the proper officer to pass an order concluding the proceedings:
Held: It is a well settled principle that every show cause notice
must culminate in a final, reasoned order - While Section 129(5)
of the CGST Act, 2017 provides that proceedings shall be deemed
to be concluded upon payment of tax and penalty, this deeming
fiction cannot be interpreted to imply that the assessee has
agreed to waive or abandon the right to challenge the levy-a
right that is protected by the very enactment itself - The term
"conclusion" as used in Section 129(5) merely signifies that no
further proceedings for prosecution will be initiated - It does not
absolve the responsibility of the proper officer to pass an order
concluding the proceedings - Therefore, the proper officer is dutybound to pass a formal order in Form GST MOV-09 and upload a
summary thereof in Form GST DRT 07 as mandated under Rule
142(5) and the Circular dated 13.04.2018, so as to enable the
taxpayer to avail the appeal remedy as per law. [Para 14]
Constitution of India - Art. 265 - Central Goods and, Services
Tax Act, 2017 - Right against the illegality committed by the
proper officer - Whether payment can be treated as a waiver
or abandonment:
Held: The assessee, even by election, cannot be treated to have
waived his right against the illegality committed by the proper officer
or acquiesced to the demand, as by the constitutional mandate
u/Art.265 of the Constitution, no tax can be levied or collected
except with the authority of law - There is not only a bar against
levy but also against collection - Therefore, the action of the proper
officer must always be justifiable and fall within the four corners
of law, as it is well settled that there can be no acquiescence in
[2025] 7 S.C.R.
1465
M/s ASP Traders v. State of Uttar Pradesh & Ors.
tax - It must be much more than an abandonment of a right to
plead waiver or acquiescence - 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.
[Paras 16.1 and 16.2]
Central Goods and, Services Tax Act, 2017 - s.129(3) and
s.107 - Right to appeal - When there is an absence of a
reasoned order:
Held: An appeal can lie only against an 'order', and in the absence
of a reasoned order passed u/s.129(3) of the Act, the taxpayer is
effectively deprived of the statutory remedy of appeal - Such a
deprivation undermines the foundational principles of fairness, due
process, and access to justice, rendering the right of appeal illusory
or nugatory - Failure to issue a speaking order in response to a
show cause notice creates a legal vacuum - Any consequential
action including imposition of tax or penalty, would then be
unsupported by authority of law, thereby potentially violating Art.
265 of the Constitution of India. [Para 18]
Central Goods and, Services Tax Act, 2017 - Waiver and
Acquiescence - Distinction thereof - Discussed. [Para 16.2]
Case Law Cited
Sha Mulchand & Co. Ltd. v. Jawahar Mills Ltd. [1953] 1 SCR 351 :
MANU/SC/011/1952 : AIR 1953 SC 98; Bhau Ram v. Baij Nath
Singh and Ors. [1962] 1 SCR 358 : MANU/0031/SC/1961 : AIR
1961 SC 1327; M/s. Kranti Associates (P) Ltd & Anr. v. Masood
Ahmed Khan & Ors. [2010] 10 SCR 1070 : (2010) 9 SCC 496 :
(2010) 3 SCC (Civ) 852 : 2010 SCC OnLine SC 987; Commissioner
of Customs (Import) Mumbai v. Dilip Kumar & Co. and Others
[2018] 7 SCR 1191 : (2018) 9 SCC 1 - relied on.
List of Acts
Central Goods and Services Tax Act, 2017; CGST Rules, 2017,
IGST Act, 2017; SGST / UTGST Act, 2017; Constitution of India.
List of Keywords
Central Goods and Services Tax Act, 2017; Section 129(3) of
CGST Act, 2017; Discharge order; No formal order passed under
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[2025] 7 S.C.R.
Supreme Court Reports
section 129(3)of CGST Act, 2017; One Nation, One Tax; Payment
construed as admission of liability; Statutory right to appeal; Waiver
or abandonment; Right to challenge; Payment under protest; Article
265 of Constitution of India; No acquiescence in tax; Principles
of natural justice; Procedural formality; Substantive safeguard;
Principles of fairness, due process and access to justice; Failure
to issue speaking order; Transparency and accountability in tax
department.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9764 of
2025
From the Judgment and Order dated 18.07.2022 of the High Court
of Judicature at Allahabad in WT No. 955 of 2022
Appearances for Parties
Advs. for the Appellant:
Pawanshree Agrawal, Ms. Aakriti Goel.
Adv. for the Respondents:
Bhakti Vardhan Singh.
Judgment / Order of the Supreme Court
Judgment
R. Mahadevan, J.
Leave granted.
2.
This appeal has been preferred by the appellant against the final
judgment and order dated 18.07.2022 passed by the High Court of
Judicature at Allahabad1 in Writ Tax No. 955 of 2022.
3.
The relevant facts giving rise to the present appeal are as follows:
3.1. The appellant is a registered dealer in Red Arecanut operating
from Channagiri, Davangere, Karnataka. On 14.01.2022, they
consigned 17,850 kg of dry Arecanut valued at Rs.51,72,930/-,
1
Hereinafter referred to as "the High Court"
[2025] 7 S.C.R.
1467
M/s ASP Traders v. State of Uttar Pradesh & Ors.
packed into 255 bags to one M/s. Diamond Trading Company,
Delhi, through Vehicle No. UP-78-GN-7563 accompanied by
E-Way bill No.141424463403.
3.2. During transit, the goods were transhipped and loaded onto
another vehicle bearing Registration No. HR-38-U-0152 for
onward journey to Delhi. However, only 248 bags were loaded
onto the new vehicle, with 7 bags missing from the original
consignment.
3.3. On 17.01.2022, the said vehicle was detained by the Mobile
Squad at Lalitpur Bypass Road, Jhansi. The driver's statement
was recorded in Form GST MOV-01. Following physical
inspection, a report was generated in Form GST MOV-04 on
20.01.2022 alleging certain deficiencies. A detention order in
Form GST MOV-06 dated 20.01.2022 was also issued.
3.4. Subsequently, a notice dated 21.01.2022 under section
129(3) of the Central Goods and Services Tax Act, 20172, was
issued in Form GST MOV-07 highlighting the discrepancy of 7
missing bags and the resulting shortfall in quantity from 18220
kg to 17670 kg. It was further alleged that the consignee,
M/s. Diamond Trading Company, was prima facie non-existent
and that the address of the consignor was incorrect as per
departmental records.
3.5. The appellant submitted a detailed reply dated 24.01.2022 to
Respondent No.3, denying all allegations. However, in view
of pressing business exigencies, the appellant deposited
Rs.7,20,440/- towards IGST, as indicated in the show cause
notice, through Form GST DRC-03 dated 27.01.2022.
Accordingly, the detained goods were released under Form
GST MOV-05 dated 27.01.2022.
3.6. Despite the release, no final order under Section 129(3) was
passed by the Mobile Squad. Accordingly, on 26.02.2022,
the appellant submitted a representation seeking an order in
Form GST MOV-09, to enable it to pursue statutory remedies.
In response, by communication dated 03.03.2022, the Mobile
Squad Official stated that one Mohd. Javed, the appellant's
2
For short, "the CGST Act, 2017"
1468
[2025] 7 S.C.R.
Supreme Court Reports
representative, appeared on 27.01.2022, orally requested
withdrawal of the earlier reply dated 24.01.2022, and sought
release of goods, and hence, no further proceedings were
deemed necessary.
3.7. The appellant denied having made any oral request to withdraw
the reply or abandon further proceedings. Asserting that the
authorities are statutorily bound to pass a reasoned order under
section 129(3), the appellant sent further communications dated
13.04.2022, 29.04.2022 and 13.05.2022, seeking a copy of the
order, if any, passed under said provision.
3.8. Receiving no response, the appellant approached the High Court
by filing Writ Tax No.955 of 2022 praying for the following reliefs:
(i) A direction to Respondent No. 3 to furnish a copy of
the order passed under Section 129(3) in compliance
with Section 129(4) of the U.P. GST Act, pursuant
to notice dated 21.01.2022 in Form GST MOV-07;
(ii) A direction to Respondent No.3 to pass a
speaking order under Section 129(3) after affording
an opportunity of hearing.
3.9. By the impugned order, the High Court dismissed the writ
petition with the following observations:
"6. Admittedly a notice under Section 129(3) of the
CGST Act was issued by the respondent no. 3 to the
petitioner. Pursuant thereto the petitioner deposited
the amount on his own in Form GST DRC-03 and
intimated it to the respondent no.3. Therefore, the
respondent no. 3 has issued an order in form GST
DRC-05. Thus, proceedings in respect of the aforesaid
notice under Section 129(3) of the CGST Act stood
concluded in terms of mandate of sub-section (5) of
Section 129. Hence, relief sought by the petitioner
cannot be granted since the matter is concluded as
per legislative mandate.
7. Once the proceedings in respect of notice under
Section 129(3) of the Act stood concluded in terms
of Section 129(5) of the Act read with Rule 142(3)
of the Rules, no mandamus can be issued to the
[2025] 7 S.C.R.
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M/s ASP Traders v. State of Uttar Pradesh & Ors.
respondent no. 3 to pass an order under Section
129(3) of the CGST/UPGST/IGST Act.
8. The contention of the petitioner that a copy of the
order under Section 129(3) of the CGST/UPGST/
IGST Act be provided to him, is wholly misconceived
inasmuch as the proceedings stood concluded in
terms of sub-section (5) of Section 129 read with Rule
142 (3) of the Rules and therefore, no mandamus
contrary to law can be issued in exercise of powers
conferred under Article 226 of the Constitution of
India."
3.10. Aggrieved by the aforesaid order, the appellant has preferred
the present appeal before this Court.
4.
Mr. Pawanshree Agrawal, learned counsel appearing on behalf of
the appellant, at the outset, submitted that it is a settled position in
law that every show cause notice must culminate in a reasoned final
order. Such an order is essential to enable the person affected to
avail all statutory remedies.
4.1. It was further submitted that the payment of penalty cannot be
treated as voluntarily under Form GST DRC-03, as no show
cause notice or statement in Form GST DRC-01 was ever
issued by the respondent authorities requiring the appellant
to make such a deposit. The respondent authorities failed to
follow the mandatory procedure prescribed under Rule 142 of
the CGST Rules, 2017. The High Court, in the impugned order,
erroneously recorded that the penalty was deposited voluntarily,
whereas the appellant had consistently sought final adjudication
and had, in fact, filed a reply to the notice issued under section
129(3) of the Act.
4.2. Without prejudice to the above, the learned counsel submitted
that even if it is assumed that the penalty was paid voluntarily
to secure release of the goods, Respondent No.3 was still under
a statutory obligation to pass an order in Form GST MOV-09,
in accordance with Section 129(3) of the CGST Act, 2017, and
as clarified in Circular No.41/15/2018-GST dated 13.04.2018
issued by the CBIC, GST Policy Wing.
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[2025] 7 S.C.R.
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4.3. It was further submitted that Section 129 of the CGST / SGST
Act governs the detention, seizure, and release of goods in
transit. Under section 129(3), the proper officer is required to
issue notice specifying tax and penalty payable and thereafter
pass an order. This obligation to pass an order is independent
of whether any payment has been made by the taxpayer.
Section 129(5) merely states that the proceedings shall be
deemed concluded upon payment of penalty, and does not
dispense with the requirement of adjudication, once a notice
under section 129(3) has been issued.
4.4. The learned counsel submitted that neither Section 129(5) nor
Rule 142(5) permits dispensing with the adjudication process.
While Rule 142(5) provides that detention/ seizure proceedings
conclude on payment of penalty, it does not override the
requirement to pass a formal order determining such penalty.
For proper legal closure, a final order in Form GST DRC-07
and GST MOV-09 must be issued. The CBIC's circular dated
13.04.2018 being a binding departmental clarification, ought to
have been considered by the High Court.
4.5. According to the learned counsel, an order must be passed
under Section 129(3) even if the penalty amount is paid during
the pendency of proceedings, so as to preserve the taxpayer's
right of appeal under section 107 of the CGST Act, 2017, and
the failure to pass such an order violates Article 265 of the
Constitution, which mandates that no tax or penalty shall be
levied or collected except by authority of law.
4.6. It was further submitted that the imposition of penalty has
wider implications, including possible consequences in future
adjudication or enforcement proceedings under the CGST Act,
2017. In the absence of a formal order, the appellant stands
prejudiced, and the statutory right of appeal under Section 107
becomes illusory. However, the High Court erred in holding that
no further order was necessary merely because the amount
was paid during the pendency of the notice.
4.7. In light of the above submissions, the learned counsel prayed
that the impugned order of the High Court be set aside, and
appropriate directions be issued to the respondent authorities
[2025] 7 S.C.R.
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M/s ASP Traders v. State of Uttar Pradesh & Ors.
to pass final orders in Form GST MOV-09 and GST DRC-07,
thereby preserving the appellant's right to appeal against the
same under the CGST Act, 2017.
5.
Per contra, Mr. Bhakti Vardhan Singh, learned counsel appearing
on behalf of the respondents submitted that the vehicle bearing
Registration No. UP78 GN 7563 transporting betel nuts from
Nagpur to Delhi, was intercepted by the Assistant Commissioner,
Mobile Squad Unit, Jhansi, on 17.01.2022. Upon examination of the
documents, several discrepancies were found. Consequently, the
goods and the vehicle were detained, and proceedings under the
GST Act were initiated.
5.1. It was submitted that the statement of the driver was recorded
in Form GST MOV-01, followed by physical inspection of the
goods and issuance of Form GST MOV-04 dated 20.01.2022.
A detention order in Form GST MOV-06 was issued on the
same date. Thereafter, a show cause notice under Section
129(3) of the CGST Act, 2017 was issued on 21.01.2022
directing the owner of the goods and vehicle to submit a reply by
27.01.2022. In compliance, one Mohd. Taha Qureshi, proprietor
of M/s. Diamond Trading Company appeared on 25.01.2022
and submitted a joint objection on behalf of the appellant
herein, M/s.ASP Traders Co., the purchaser firm M/s. Diamond
Trading Company, and the transporter, M/s Verma Roadways.
On 27.01.2022, the authorised representative of the appellant
Mohd. Javed, appeared and orally sought withdrawal of the
earlier objections, and voluntarily deposited Rs.7,20,440/- via
Form GST DRC-03 as demanded in the notice. Upon this
payment, the goods and vehicle were released under Form
GST MOV-05 dated 27.01.2022. Hence, in terms of Section
129(5), the proceedings stood concluded.
5.2. The learned counsel further submitted that although Section
129(3) requires a notice followed by an order, Section 129(5)
clearly stipulates that upon payment of the amount under Section
129(1), "all proceedings in respect of the notice specified in
sub-section (3) shall be deemed to be concluded" and thus,
no further order is necessary.
5.3. It was further argued that Rule 142(3) of the CGST Rules
reinforces this position stating that if payment is made after
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[2025] 7 S.C.R.
Supreme Court Reports
issuance of the notice under Section 129(3) but before passing
of the order, the proceedings shall stand concluded. Hence, no
further adjudication is mandated.
5.4. The learned counsel contended that had the appellant intended
to contest the notice, it could have avoided withdrawing
objections and instead opted to secure release of goods by
furnishing security under the Act. Thus, the High Court rightly
declined to grant a mandamus directing the authorities to pass
an order.
5.5. Finally, relying on the decision of this Court in Commissioner of
Customs (Import) Mumbai v. Dilip Kumar & Co. and others3,
it was argued that when a statute is clear and unambiguous, it
must be applied in its literal sense. In the present case, Section
129(5) is explicit, and the appellant cannot now be permitted to
reopen concluded proceedings. Accordingly, the High Court's
decision is correct, and the present appeal deserves to be
dismissed.
6.
We have heard the learned counsel appearing for both sides and
carefully perused the materials available on record.
7.
Admittedly, the 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
dated 21.01.2022 under Section 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 on 27.01.2022. Thereafter, the respondent authorities
released the goods by passing discharge order in Form GST MOV05 dated 27.01.2022. However, no formal order under Section
129(3) was passed. The appellant requested such an order, but the
respondent authorities responded that in view of Section 129(5),
no further order needs to be passed. Aggrieved, the appellant filed
Writ Tax No.955 of 2022, which was dismissed by the High Court,
accepting the stand of the respondents. Hence, the present appeal
came to be filed.
3
(2018) 9 SCC 1
[2025] 7 S.C.R.
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M/s ASP Traders v. State of Uttar Pradesh & Ors.
8.
The issue that arises for consideration in this appeal is whether,
upon payment of tax and penalty by the appellant within the time
stipulated in the notice under section 129(3), the proper officer is
still mandatorily required to pass a final order under section 129(3),
or whether the deeming fiction under section 129(5) dispenses with
such requirement.
9.
Before proceeding further, it is necessary to examine the relevant
legal provisions applicable to the present case. The IGST Act, 2017,
CGST Act, 2017 and SGST / UTGST Act, 2017 are interrelated
parts of the Goods and Services Tax (GST) regime in India. All three
enactments originate from the same constitutional amendment - 101st
Amendment Act, 2016 - aimed at establishing a harmonized indirect
tax structure under the philosophy of 'One Nation, One Tax'. While
the tax base and compliance framework are integrated, the Acts are
separate to reflect the federal distribution of taxing powers.
9.1. Notably, Section 20 of the IGST Act adopts the provisions of
Section 129 of the CGST Act mutatis mutandis.
9.2. Section 129 of the CGST Act, 2017 outlines the mechanism
for detention, seizure, and release of goods and conveyance
in transit. Sub-section (1) authorizes detention and prescribes
the conditions for release. Sub-section (3) requires the proper
officer to issue a notice specifying the tax and penalty payable
and thereafter pass an order. Sub-section (4) mandates that
no tax or penalty shall be determined without providing an
opportunity of hearing. Sub-section (5) provides that upon
payment of the amounts under sub-section (1), all proceedings
in respect of the notice shall be deemed to be concluded. For
ease of reference, the said provisions are reproduced below:
"129. Detention, seizure and release of goods and
conveyances in transit:
(1) Notwithstanding anything contained in this Act,
where any person transports any goods or stores any
goods while they are in transit in contravention of the
provisions of this Act or the rules made thereunder,
all such goods and conveyance used as a means of
transport for carrying the said goods and documents
relating to such goods and conveyance shall be liable
to detention or seizure and after detention or seizure,
shall be released,-
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(a) on payment of the applicable tax and penalty equal
to one hundred per cent of the tax payable on such
goods and, in case of exempted goods, on payment
of an amount equal to two per cent of the value of
goods or twenty-five thousand rupees, whichever is
less, where the owner of the goods comes forward
for payment of such tax and penalty;
(b) on payment of the applicable tax and penalty
equal to the fifty per cent of the value of the goods
reduced by the tax amount paid thereon and, in case
of exempted goods, on payment of an amount equal
to five per cent of the value of goods or twenty five
thousand rupees, whichever is less, where the owner
of the goods does not come forward for payment of
such tax and penalty;
(c) upon furnishing a security equivalent to the amount
payable under clause (a) or clause (b) in such form
and manner as may be prescribed:
Provided that no such goods or conveyance shall
be detained or seized without serving an order of
detention or seizure on the person transporting the
goods.
.............
(3) The proper officer detaining or seizing goods
or conveyances shall issue a notice specifying
the tax and penalty payable and thereafter, pass
an order for payment of tax and penalty under
clause (a) or clause (b) or clause (c).
(4) No tax, interest or penalty shall be determined
under sub-section (3) without giving the person
concerned an opportunity of being heard.
(5) On payment of amount referred in sub-section
(1), all proceedings in respect of the notice
specified in sub-section (3) shall be deemed to
be concluded.
(6) ...."
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1475
M/s ASP Traders v. State of Uttar Pradesh & Ors.
9.3. Rule 142 of the CGST Rules, 2017 indeed reinforces and
operationalizes the provisions of Section 129 of the CGST
Act, 2017, particularly, with regard to the procedural aspects of
issuance of notices, orders, and payment of tax and penalty in
cases involving detention, seizure, and release of goods and
conveyances in transit. Sub-rule (3) states that on payment of
tax and penalty under section 129(1), intimation shall be given
in Form DRC-03 and the proper officer shall issue an order
in Form DRC-05 concluding the proceedings. Sub-rule (5)
mandates uploading a summary of the final order in Form
GST DRC-07. For the sake of reference, the said provisions
are extracted below:
"142. Notice and order for demand of amounts
payable under the Act.
...
(3) Where the person chargeable with tax makes
payment of tax and interest under sub-section (8) of
section 73 or, as the case may be, tax, interest and
penalty under sub-section (8) of section 74 within thirty
days of the service of a notice under sub-rule (1), or
where the person concerned makes payment of the
amount referred to in sub-section (1) of section 129
within fourteen days of detention or seizure of the
goods and conveyance, he shall intimate the proper
officer of such payment in FORM GST DRC-03 and
the proper officer shall issue an order in FORM GST
DRC-05 concluding the proceedings in respect of
the said notice.
...
(5) A summary of the order issued under section 52
or section 62 or section 63 or section 64 or section 73
or section 74 or section 75 or section 76 or section
122 or section 123 or section 124 or section 125
or section 127 or section 129 or section 130 shall
be uploaded electronically in FORM GST DRC-07,
specifying therein the amount of tax, interest and
penalty payable by the person chargeable with tax."
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10. During the course of hearing, the learned counsel for the appellant
drew our attention to Circular No.41/15/2018-GST dated 13.04.2018
issued by the Central Board of Indirect Taxes and Customs, GST
Policy Wing, and the same reads as under:
"Circular No. 41/15/2018-GST
CBEC-20/16/03/2017-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
****
New Delhi, Dated the 13th April, 2018
To
The Principal Chief Commissioners/Chief Commissioners/
Principal Commissioners/ Commissioners of Central Tax
(All)/The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Procedure for interception of conveyances
for inspection of goods in movement, and detention,
release and confiscation of such goods and
conveyances -Reg.
Sub-section (1) of section 68 of the Central Goods and
Services Tax Act, 2017 (hereinafter referred to as the "CGST
Act") stipulates that the person in charge of a conveyance
carrying any consignment of goods of value exceeding a
specified amount shall carry with him the documents and
devices prescribed in this behalf. Sub-section (2) of the
said section states that the details of documents required
to be carried by the person in charge of the conveyance
shall be validated in such manner as may be prescribed.
Sub-section (3) of the said section provides that where
any conveyance referred to in sub-section (1) of the said
section is intercepted by the proper officer at any place,
he may require the person in charge of the conveyance
to produce the documents for verification, and the said
[2025] 7 S.C.R.
1477
M/s ASP Traders v. State of Uttar Pradesh & Ors.
person shall be liable to produce the documents and also
allow the inspection of goods.
1.1 Rules 138 to 138D of the Central Goods and Services
Tax Rules, 2017 (hereinafter referred to as the "CGST
Rules") lay down, in detail, the provisions relating to e-way
bills.....
1.2 Section 129 of the CGST Act provides for detention,
seizure and release of goods and conveyances in transit
while section 130 of the CGST Act provides for the
confiscation of goods or conveyances and imposition of
penalty.
2. In this regard, various references have been received
regarding the procedure to be followed in case of
interception of conveyances for inspection of goods
in movement and detention, seizure and release and
confiscation of such goods and conveyances. In order to
ensure uniformity in the implementation of the provisions
of the CGST Act across all the field formations, the Board,
in exercise of the powers conferred under section 168 (1)
of the CGST Act, hereby issues the following instructions:
(a) The jurisdictional Commissioner or an officer authorised
by him for this purpose shall, by an order, designate an
officer/officers as the proper officer/officers to conduct
interception and inspection of conveyances and goods in
the jurisdictional area specified in such order.
(b) The proper officer, empowered to intercept and
inspect a conveyance, may intercept any conveyance for
verification of documents and/or inspection of goods. On
being intercepted, the person in charge of the conveyance
shall produce the documents related to the goods and the
conveyance. The proper officer shall verify such documents
and where, prima facie, no discrepancies are found, the
conveyance shall be allowed to move further. An e-way bill
number may be available with the person in charge of the
conveyance or in the form of a printout, sms or it may be
written on an invoice. All these forms of having an e-way
bill are valid. Wherever a facility exists to verify the e-way
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bill electronically, the same shall be so verified, either by
logging on to http://mis.ewaybillgst.gov.in or the Mobile
App or through SMS by sending EWBVER <EWB_NO>
to the mobile number 77382 99899 (For e.g. EWBVER
120100231897).
(c) ....
(d) Where the person in charge of the conveyance fails
to produce any prescribed document or where the proper
officer intends to undertake an inspection, he shall record
a statement of the person in charge of the conveyance in
FORM GST MOV 01. In addition, the proper officer shall
issue an order for physical verification/inspection of the
conveyance, goods and documents in FORM GST MOV02, requiring the person in charge of the conveyance to
station the conveyance at the place mentioned in such
order and allow the inspection of the goods. The proper
officer shall, within twenty four hours of the aforementioned
issuance of FORM GST MOV-02, prepare a report in Part
A of FORM GST EWB-03 and upload the same on the
common portal.
(e) Within a period of three working days from the date
of issue of the order in FORM GST MOV-02, the proper
officer shall conclude the inspection proceedings, either
by himself or through any other proper officer authorised
in this behalf. Where circumstances warrant such time
to be extended, he shall obtain a written permission
in FORM GST MOV-03 from the Commissioner or
an officer authorized by him, for extension of time
beyond three working days and a copy of the order of
extension shall be served on the person in charge of the
conveyance.
(f) On completion of the physical verification/inspection of
the conveyance and the goods in movement, the proper
officer shall prepare a report of such physical verification
in FORM GST MOV-04 and serve a copy of the said report
to the person in charge of the goods and conveyance. The
proper officer shall also record, on the common portal,
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1479
M/s ASP Traders v. State of Uttar Pradesh & Ors.
the final report of the inspection in Part B of FORM GST
EWB-03 within three days of such physical verification/
inspection.
(g) Where no discrepancies are found after the
inspection of the goods and conveyance, the proper
officer shall issue forthwith a release order in FORM
GST MOV-05 and allow the conveyance to move further.
Where the proper officer is of the opinion that the
goods and conveyance need to be detained under
section 129 of the CGST Act, he shall issue an order of
detention in FORM GST MOV-06 and a notice in FORM
GST MOV-07 in accordance with the provisions of subsection (3) of section 129 of the CGST Act, specifying
the tax and penalty payable. The said notice shall be
served on the person in charge of the conveyance.
(h) Where the owner of the goods or any person
authorized by him comes forward to make the payment
of tax and penalty as applicable under clause (a) of
sub-section (1) of section 129 of the CGST Act, or where
the owner of the goods does not come forward to make
the payment of tax and penalty as applicable under
clause (b) of sub-section (1) of the said section, the
proper officer shall, after the amount of tax and penalty
has been paid in accordance with the provisions of
the CGST Act and the CGST Rules, release the goods
and conveyance by an order in FORM GST MOV-05.
Further, the order in FORM GST MOV-09 shall be
uploaded on the common portal and the demand
accruing from the proceedings shall be added in the
electronic liability register and the payment made
shall be credited to such electronic liability register by
debiting the electronic cash ledger or the electronic
credit ledger of the concerned person in accordance
with the provisions of section 49 of the CGST Act.
(i) ....
(j) Where any objections are filed against the proposed
amount of tax and penalty payable, the proper officer
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shall consider such objections and thereafter, pass
a speaking order in FORM GST MOV-09, quantifying
the tax and penalty payable. On payment of such
tax and penalty, the goods and conveyance shall be
released forthwith by an order in FORM GST MOV-05.
The order in FORM GST MOV 09 shall be uploaded on
the common portal and the demand accruing from the
order shall be added in the electronic liability register
and, upon payment of the demand, such register shall
be credited by either debiting the electronic cash
ledger or the electronic credit ledger of the concerned
person in accordance with the provisions of section
49 of the CGST Act.
(k) In case the proposed tax and penalty are not paid
within seven days from the date of the issue of the order
of detention in FORM GST MOV-06, action under section
130 of the CGST Act shall be initiated by serving a notice
in FORM GST MOV 10, proposing confiscation of the
goods and conveyance and imposition of penalty.
(l)...
(m) No order for confiscation of goods or conveyance, or
for imposition of penalty, shall be issued without giving
the person an opportunity of being heard.
(n) An order of confiscation of goods shall be passed in
FORM GST MOV-11, after taking into consideration the
objections filed by the person in charge of the goods
(owner or his representative), and the same shall be
served on the person concerned. Once the order of
confiscation is passed, the title of such goods shall
stand transferred to the Central Government. In the said
order, a suitable time not exceeding three months shall
be offered to make the payment of tax, penalty and fine
imposed in lieu of confiscation and get the goods released.
The order in FORM GST MOV-11 shall be uploaded on
the common portal and the demand accruing from the
order shall be added in the electronic liability register
and, upon payment of the demand, such register shall
be credited by either debiting the electronic cash ledger
or the electronic credit ledger of the concerned person
[2025] 7 S.C.R.
1481
M/s ASP Traders v. State of Uttar Pradesh & Ors.
in accordance with the provisions of section 49 of the
CGST Act. Once an order of confiscation of goods is
passed in FORM GST MOV-11, the order in FORM GST
MOV-09 passed earlier with respect to the said goods
shall be withdrawn.
(o)..
(p)...
(q)...
(r)...
(s)...
(t)...
(u)...
(v) A summary of every order in FORM GST MOV-09 and
FORM GST MOV-11 shall be uploaded electronically in
FORM GST-DRC-07 on the common portal.
....
(Upender Gupta)
Commissioner (GST)"
This circular, which is binding on the department under Section
168 of the CGST Act, 2017 provides detailed instructions to ensure
uniformity in implementation of procedures for interception, detention,
seizure, and confiscation of goods in transit. It mandates that upon
payment of tax and penalty under Section 129 (1), the proper officer
must issue the release order in Form GST MOV-05. Additionally, the
officer is required to pass a formal order of demand in Form GST
MOV-09 and upload it on the common portal. A summary of this
order must be uploaded in Form GST DRC-07, so that the demand
is recorded in the taxpayer's electronic liability register.
11. In the present case, upon payment of the tax and penalty demanded
in the notice dated 21.01.2022 issued under Form GST MOV-07,
Respondent No.3 released the goods and vehicle by passing a
discharge order dated 27.01.2022 in Form GST MOV-05.