Summary and Analysis of M/S ASP Traders vs State of Uttar Pradesh & Ors

1. Heading of the Judgment

M/S ASP Traders vs. State of Uttar Pradesh & Ors.
(Civil Appeal No. 9764 of 2025)
Core Issue: Whether tax authorities must pass a formal order after penalty payment under GST laws.

2. Related Laws & Sections

• CGST Act, 2017:
  Section 129(3): Mandates issuance of notice + reasoned order for tax/penalty on detained goods.
  Section 129(5): States proceedings "deemed concluded" if penalty paid.
  Section 107: Grants right to appeal against orders.

• CGST Rules, 2017:
  Rule 142(5): Requires uploading summary of orders in Form GST DRC-07.

• Constitutional Provision:
  Article 265: Prohibits tax/penalty collection without legal authority.

• Key GST Forms:
  MOV-07 (Notice), DRC-03 (Payment), MOV-05 (Release), MOV-09 (Final Order).

3. Basic Case Details

AspectDetailsPartiesAppellant: M/S ASP Traders (Karnataka-based trader).
Respondents: UP Tax Authorities.Incident17,850 kg of arecanut detained in transit (Jan 2022) over 7 missing bags and consignee discrepancies.Tax ActionPenalty of ₹7.2 lakhs paid by appellant under Form DRC-03 to release goods.Appellant’s GrievanceAuthorities refused to issue formal order (MOV-09), blocking right to appeal.High Court RulingDismissed petition, citing automatic case closure per Section 129(5) after payment.Supreme Court OutcomeAllowed appeal; directed authorities to pass formal order.

4. Explanation of the Judgment

Background

• Goods were detained due to alleged GST violations (quantity mismatch + dubious consignee).

• Appellant paid penalty under protest to avoid business losses but contested the levy.

• Authorities released goods (MOV-05) but skipped mandatory Form MOV-09 (final order).

Key Arguments

• Appellant:
  Payment ≠ admission of guilt; formal order needed to exercise appeal rights (Section 107).
  Circular No. 41/2018 (CBIC) mandates MOV-09 even after payment.

• Respondents:
  Payment auto-concludes case per Section 129(5); no further order needed.

Supreme Court’s Reasoning

• Payment ≠ Waiver of Rights:
  Paying penalty under business pressure doesn’t forfeit right to challenge legality.
  GST portal lacks option to record "payment under protest" – this shouldn’t harm taxpayers.

• Order Mandatory for Natural Justice:
  Section 129(3) uses "shall pass an order" – this is compulsory, not optional.
  Without MOV-09, appeal rights (Section 107) become useless.

• Precedents Cited:
  Kranti Associates v. Masood Ahmed Khan (2010): Quasi-judicial authorities must give reasoned orders.
  Bhau Ram v. Baij Nath Singh (1961): Statutory appeal rights can’t be denied via technicalities.

Final Decision

1. High Court Order Set Aside.

2. Directions to Tax Authorities:
   Pass reasoned order in Form MOV-09 within 1 month.
   Upload summary in Form DRC-07.
   Allow appellant to appeal if aggrieved.

Key Takeaway

"Deemed conclusion" of case (Section 129(5)) doesn’t override the state’s duty to pass orders. Taxpayers retain appeal rights even after penalty payment. Authorities must issue formal orders to uphold due process and transparency.