The Hon’ble Allahabad High Court in the case of Aries Agro Ltd. v. State of Uttar Pradesh [Writ Tax No. 1790 of 2025 dated April 30, 2025] held that the Department must issue a penalty Order in Form GST MOV-09 even though the Assessee had paid the penalty under protest for release of goods detained in transit. The Court ruled that the non-issuance of the MOV-09 Order violates the Assessee’s right to appeal and directed the Department to issue the Order.
Facts:
M/s Aries Agro Limited (“the Petitioner”) the vehicle was intercepted by the Revenue Department (“the Respondent”) which led to the detention of goods and conveyance. The Petitioner with a view to take the delivery of the goods and paid the penalty under the protest, as reflected in Form GST DRC-03 dated September 14, 2024.
Subsequently, the Respondent did not pass any order. The Petitioner moved the application dated October 03, 2024, seeking the issue of Form-GST MOV-09. However, the said application was rejected on vide Order dated November 28, 2024 (“the Impugned Order”), inter alia observing that once the amount has been deposited by the Respondent, there was no necessity to issue an order in Form GST MOV-09.
The Petitioner contended that the action of the Respondent in not passing an order in Form GST MOV-09 is wholly unjustified inasmuch as the amount was deposited by the Petitioner for the purpose of seeking release of goods ‘under protest’. Once the amount has been paid under protest, the Petitioner was entitled to an order so as to question its validity before the appropriate authority. Non-issuance of the order in Form GST MOV-09 has deprived the Petitioner of filing the appeal. Therefore, the Respondents be directed to issue order in Form GST MOV-09.
However, the Respondent contended that the procedure prescribed in GST law does not envisage passing of an order under Form GST MOV-09, once amount pursuant to the order has been deposited and goods have been released.
Hence, aggrieved by the circumstances, the Petitioner filed the present writ petition.
Issue:
Whether Form GST MOV-09 is mandatory to be issued by the GST Department despite payment of penalty has been made?
Held:
The Hon’ble Allahabad High Court in Writ Tax No. 1790 of 2025 held as under:
- Observed that, the Petitioner had already deposited the penalty under protest, as recorded in Form GST DRC-03.
- Noted that, once the amount has been deposited under protest and even if the same was not deposited under protest, the authorities cannot deprive themselves from passing order of penalty under Form GST MOV-09. Unless the penalty order is passed by the authorities, the parties are deprived of challenging the action of the Respondents. Therefore, they cannot be deprived of their right to file an appeal.
- Subsequently, the Respondent did not pass any Order.
- Held that, the Impugned Order passed by the Respondent was quashed and set aside. The Respondent was directed to pass an order in Form GST MOV-09 within a period of three weeks from passing the present order.
Our Comments:
Section 129 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) governs “Detention, seizure and release of goods and conveyances in transit”. Further, Section 129(3) of the CGST Act prescribes that the proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable. Thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).
Circular No. 41/15/2018-GST dated April 13, 2018 clarified that 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 section 129(1)(a) 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 Section 129(1)(b) of the CGST Act, 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 Central Goods and Service Tax Rules, 2017 (“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 (“ECL”) or the Electronic Credit Ledger (“ECrL”) of the concerned person in accordance with the provisions of section 49 of the CGST Act.
In a pari materia case of Khanna Engineering v. Commissioner of CT & GST, Cuttack [W.P.(C) No. 3055 of 2025 dated February 18, 2025], the Hon’ble High Court of Orissa held that the proceeding under Section 129(3) of the CGST Act were already initiated by issuing notice which was received by petitioner, since petitioner had paid penalty, proceeding was deemed to be concluded. There was no illegality in not issuing order in Form GST MOV-09 within 7 days.
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