The case of ASP Traders vs. State of Uttar Pradesh examines the legal implications of GST compliance and the seizure of goods during transit. The Supreme Court‘s judgment addresses the procedural requirements for issuing notices and orders under the CGST Act, particularly focusing on the rights of the appellant in contesting penalties. This ruling is essential for businesses navigating GST regulations and understanding their rights in similar legal situations. Legal practitioners and businesses in India will find this judgment particularly relevant for compliance and dispute resolution regarding GST issues.

Key Points

  • Analyzes the Supreme Court ruling on GST compliance and seizure of goods
  • Highlights the procedural requirements under the CGST Act
  • Explores the rights of appellants in contesting penalties
  • Clarifies the implications of payment under protest in GST cases
Yashvi Anchalia
20 pages
Language:English
Type:Case Study
Western Civilization
Yashvi Anchalia
20 pages
Language:English
Type:Case Study
Western Civilization
109
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MANU/SC/0972/2025
Equiv alent/Neutral Citation: 2025(5) ALJ 117, 2025[100] G.S.T.L. 257, [2025]144GSTR693(SC ), 2025 INSC 890, (2026)2SC C 641
IN THE SUPREME COURT OF INDIA
Civil Appeal No. 9764 of 2025 (Arising out of S.L.P. (C) No. 17995 of 2022) +
Decided On: 24.07.2025
ASP Traders Vs. State of Uttar Pradesh and Ors. ..(+)
Hon'ble Judges/Coram:
J.B. Pardiwala and R. Mahadevan, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Pawanshree Agrawal, AOR and Aakriti Goel, Adv.
For Respondents/Defendant: Bhakti Vardhan Singh, AOR
Cases Reversed/Partly Reversed:
Asp Traders vs. State of U.P. and Ors. MANU/UP/3139/2022
Nature of Issue Involved:
Applicability of GST; Seizure of Properties; Release of Property
JUDGMENT
R. Mahadevan, J.
1. 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 Allahabad
1
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/-, 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
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Central Goods and Services Tax Act, 2017
2
, 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
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
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Rule 142(3) of the Rules, no mandamus can be issued to the
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 : MANU/GSCU/0016/2018 dated 13.04.2018 issued by the
CBIC, GST Policy Wing.
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
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FAQs

What was the main issue in ASP Traders Vs State of Uttar Pradesh case?
The main issue involved the applicability of GST and the seizure of properties during the transportation of goods. ASP Traders, a registered dealer, faced allegations of discrepancies in their consignment of Arecanut, which led to the detention of their goods and subsequent legal proceedings under the Central Goods and Services Tax Act, 2017.
What was the outcome of the Supreme Court's judgment in this case?
The Supreme Court set aside the High Court's order, directing the Respondent authorities to pass a reasoned final order under Section 129(3) of the CGST Act. The Court emphasized that the proper officer is obligated to issue a formal order even if the penalty is paid, thereby preserving the taxpayer's right to appeal.
How did ASP Traders respond to the allegations made against them?
ASP Traders submitted a detailed reply denying all allegations regarding discrepancies in their consignment. Despite this, due to business exigencies, they voluntarily deposited an amount towards IGST to secure the release of their goods, while asserting that the authorities were required to pass a reasoned order under Section 129(3) of the CGST Act.
What legal provisions were central to the ASP Traders case?
Central to the case were provisions from the Central Goods and Services Tax Act, 2017, specifically Section 129, which outlines the procedures for detention, seizure, and release of goods in transit. The Court analyzed these provisions to determine the obligations of the proper officer in issuing notices and final orders.
What did the Supreme Court say about the requirement of a reasoned order?
The Supreme Court highlighted that every show cause notice must culminate in a reasoned final order to enable the affected party to avail statutory remedies. The Court stressed that the absence of such an order creates a legal vacuum and undermines the taxpayer's right to appeal.
What was the significance of the payment made by ASP Traders?
The payment made by ASP Traders was significant as it was done under protest due to business exigencies. The Supreme Court ruled that such a payment should not be construed as a waiver of their right to contest the allegations, emphasizing that the proper officer must still issue a formal order.
What procedural aspects did the Supreme Court emphasize in its judgment?
The Supreme Court emphasized the necessity of adhering to procedural safeguards, including the requirement for the proper officer to pass a reasoned order and upload a summary of that order. This is crucial for ensuring transparency and accountability in tax administration.

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