M/S Asp Traders vs State Of U.P on 24 July, 2025

Summary of Judgment

Case Title: M/S Asp Traders vs State Of U.P & Ors.
Citation: 2025 INSC 890 (Civil Appeal No. 9764 of 2025)
Date of Judgment: July 24, 2025
Coram: J.B. Pardiwala, J., R. Mahadevan, J.

1. Outcome

The Supreme Court allowed the appeal, setting aside the order of the Allahabad High Court. The Court directed the GST Proper Officer (Respondent No. 3) to:
1. Pass a reasoned, final adjudication order in Form GST MOV-09 under Section 129(3) of the CGST Act, 2017.
2. Provide the appellant an opportunity of being heard as mandated by Section 129(4).
3. Upload a summary of the order in Form GST DRC-07.
4. Complete this process within one month from the receipt of the judgment's copy.

This decision restores the appellant's right to pursue statutory remedies (i.e., an appeal) against the final order.

2. Core Issue

The central legal question was whether a GST officer is mandatorily required to pass a final, speaking order under Section 129(3) of the CGST Act after a taxpayer has paid the proposed tax and penalty, or if the proceedings are automatically concluded under the "deeming fiction" of Section 129(5) without any formal order.

3. Key Facts

1. Consignment & Detention: The appellant, a registered dealer, consigned goods which were transhipped to another vehicle during transit. This new vehicle was detained by the GST Mobile Squad in U.P. on 17.01.2022.
2. Notice Issued: A show-cause notice under Section 129(3) in Form GST MOV-07 was issued, alleging discrepancies like missing goods, a non-existent consignee, and an incorrect consignor address.
3. Payment & Release: The appellant filed a reply denying the allegations. However, due to "pressing business exigencies," they paid the demanded tax and penalty of Rs. 7,20,440/- via Form GST DRC-03. Consequently, the goods and vehicle were released via Form GST MOV-05.
4. No Final Order: The authorities did not issue a final adjudication order (Form GST MOV-09). They claimed the appellant's representative had orally withdrawn the reply, and thus, upon payment, the proceedings were "deemed concluded" under Section 129(5).
5. High Court's Decision: The appellant filed a writ petition seeking a final order to enable an appeal. The Allahabad High Court dismissed the petition, holding that payment under Section 129(5) concludes the proceedings, and no further order is required.
6. Appeal to Supreme Court: Aggrieved by the High Court's decision, the appellant approached the Supreme Court.

4. Arguments

Appellant (M/S Asp Traders):
* Every show-cause notice must culminate in a reasoned order to enable the affected party to avail statutory remedies, specifically the right to appeal under Section 107.
* The payment was made under protest and commercial compulsion to secure the release of detained goods, not as a voluntary admission of liability. The GST portal's auto-classification of DRC-03 as 'voluntary' is a procedural constraint that cannot prejudice the taxpayer.
* Section 129(3) ("...shall issue a notice... and thereafter, pass an order") imposes a mandatory duty on the officer to adjudicate, which is not negated by Section 129(5).
* The "deemed conclusion" under Section 129(5) only means that no further prosecution will be initiated; it does not eliminate the requirement for a formal adjudication order.
* CBIC Circular No. 41/15/2018-GST, which is binding on the department, explicitly requires the issuance of Form GST MOV-09 and DRC-07 even after payment.
* The absence of a final order renders the statutory right of appeal illusory and violates Article 265 of the Constitution.

Respondents (State of U.P.):
* The appellant's representative orally withdrew the objections and voluntarily paid the tax and penalty.
* Section 129(5) of the CGST Act is clear and unambiguous: upon payment, "all proceedings... shall be deemed to be concluded."
* Rule 142(3) of the CGST Rules reinforces this statutory position.
* Since the law itself provides for the conclusion of proceedings, no further order is necessary, and no mandamus can be issued to compel the officer to pass one.
* If the appellant intended to contest, they could have furnished security instead of making the payment.
* Relying on Dilip Kumar & Co., they argued that a clear and unambiguous statute must be interpreted literally.

5. Court’s Reasoning

The Supreme Court's reasoning was grounded in principles of natural justice, statutory interpretation, and constitutional law:
* Mandatory Nature of Adjudication: The language of Section 129(3) is categorical. The use of "and thereafter, pass an order" signifies a mandatory procedural step. Adjudication is not optional, especially when objections have been filed.
* Payment is Not Acquiescence: Payment made under business compulsion to release detained goods cannot be treated as a voluntary admission of liability or a waiver of the right to contest the demand. The Court noted the procedural limitation of Form DRC-03 and held it should not operate to the taxpayer's detriment.
* Harmonious Interpretation of Section 129: The "deemed conclusion" in Section 129(5) must be read harmoniously with the rest of the section. It signifies the conclusion of proceedings for the purpose of further prosecution, but it does not absolve the officer of the duty to pass a formal adjudication order that provides reasons for the demand.
* Preservation of Appellate Rights: The right to appeal under Section 107 is a fundamental statutory safeguard. This right can only be exercised against a formal order. Denying a final, reasoned order effectively renders the right to appeal illusory and nugatory, which is contrary to fairness and due process.
* Constitutional Mandate (Article 265): No tax can be levied or collected except by the authority of law. This requires that every levy must be supported by a reasoned order passed in compliance with due process, which can be tested in an appeal.
* Binding Departmental Circular: The Court gave weight to CBIC Circular No. 41/15/2018-GST, which explicitly outlines the procedure, including the issuance of Form GST MOV-09 and DRC-07 after payment, reinforcing the mandatory nature of the final order.
* Importance of a Speaking Order: Citing Kranti Associates, the Court reiterated that a reasoned, speaking order is a hallmark of fair quasi-judicial proceedings, ensuring transparency, accountability, and enabling effective judicial review.

6. Statutory References

• Constitution of India: Article 226, Article 265.
• Central Goods and Services Tax (CGST) Act, 2017: Sections 107, 129 (sub-sections 1, 3, 4, 5), 130, 168.
• Integrated Goods and Services Tax (IGST) Act, 2017: Section 20.
• Central Goods and Services Tax (CGST) Rules, 2017: Rule 142 (sub-sections 3, 5).
• GST Forms: MOV-01, MOV-05, MOV-06, MOV-07, MOV-09, DRC-03, DRC-05, DRC-07.
• Circulars: Circular No. 41/15/2018-GST dated 13.04.2018.

7. Precedents Cited

1. Commissioner of Customs (Import) Mumbai v. Dilip Kumar & Co. (2018) 9 SCC 1 – Cited by respondents, distinguished by the Court.
2. Kranti Associates (P) Ltd & Anr. v. Masood Ahmed Khan & Ors. (2010) 9 SCC 496 – On the necessity of reasoned, speaking orders.
3. Sha Mulchand & Co. Ltd. v. Jawahar Mills Ltd. AIR 1953 SC 98 – On the principles of waiver and abandonment.
4. Bhau Ram v. Baij Nath Singh and Ors. AIR 1961 SC 1327 – On the doctrine of 'approbate and reprobate' and the inability to waive a statutory right of appeal.