High Court · 2025

Judgment

1. This writ petition has been filed by the petitioner aggrieved of the order dated 08.10.2024 (Annexure-1) rectifying the order dated

06.10.2024 passed under Section 129(3) of the Goods and Services Tax Act, 2017 (‘the Act’) and the demand through the order dated

06.10.2024 has been made ‘NIL’.

2. It is, inter alia, indicated that a vehicle loaded with goods was intercepted by respondent no. 3 for checking the goods as well as papers accompanying the goods on 29.08.2024. On being intercepted, the driver of the vehicle produced documents accompanying the

goods and the authority formed an opinion that prima facie there was difference in quantity of goods loaded in the vehicle and described in the document. The petitioner submitted letter dated 29.09.2024 seeking to explain the reasons for difference in quantity and as the goods were perishable in nature, requested for release of the goods. The goods in question were detained by issuing order in MOV-06 on

01.10.2024 for further action on account of mismatch in weight and show-cause notice was issued on the same date as to why penalty under Section 129(1)(a) may not be confirmed against the petitioner.

3. A reply to the show cause notice was submitted claiming that the mismatch was on account of an inadvertent mistake and as the goods were perishable, request was made for release of the goods. It is 2 further claimed that as the response filed was not accepted, on

05.10.2024, petitioner generated payment challan for the amount of penalty, however, it was advised to generate DRC-03, i.e., payment made voluntarily or against the show-cause notice and as neither the goods were being released provisionally nor order under Section 129(3) of the Act was being passed, the amount was deposited through DRC-03 by indicating that ‘the amount of penalty is paid under protest and without prejudice to our legal right to appeal’.

4. On the same day, the respondent no. 2 passed order under Section 129(3) of the Act demanding penalty under Section 129(1)(a) by rejecting the explanation furnished by the petitioner. The goods were released by passing release order MOV-05 on 08.10.2024.

5. After release of goods, the respondents passed order in DRC- 08, i.e., summary of rectification/ withdrawal order and withdrew the order dated 06.10.2024 by treating the payment made by the petitioner as voluntary payment. Aggrieved of the said action, the present petition has been filed.

6. Learned counsel for the petitioner made submissions that action of the respondents in passing the rectification order and rectifying the order dated 06.10.2024 is wholly unjustified. It is submitted that while making payment through DRC-03, a specific endorsement regarding the same being under protest was made and, therefore, the passing of the rectification order was unwarranted and illegal. Submissions have been made that on account of passing of the order dated 08.10.2024, the outstanding demand is being shown as ‘NIL’ and the portal of the department is not accepting the appeal against the order dated

06.10.2024, which takes away the right of appeal of the petitioner. Submissions have been made that the conditions precedent for exercise of power under Section 161 of the Act were absent and, as such, the order passed is wholly without jurisdiction. 3

7. Further submissions were made that as the petitioner has already lost limitation, as prescribed under Section 107 of the Act qua the order dated 06.10.2024, the same may be ordered to be extended.

8. Learned counsel for the respondents supported the order impugned. Submissions have been made that the petitioner was admittedly transporting quantity of goods different from the accompanying documents and, as such, action under Section 129(1)(a) of the Act was initiated on which before the order under Section 129(3) of the Act was passed, the amount of penalty was deposited through DRC-03, which deals with the voluntarily payments and, as such, there was no necessity of passing order under Section 129(3) of the Act and consequently the order under Section 161 of the Act rectifying the same was passed on 08.10.2024 and no exception can be taken to the same and, therefore, the petition deserves dismissal.

9. We have considered the submissions made by counsel for the parties and have perused the material available on record.

10. It is not in dispute that an order of detention under Section 129(1) of the Act qua the goods being transported by the petitioner was passed and show cause notice under Section 129(1)(a) of the Act proposing a penalty of Rs. 22,37,220/- was issued. Reply to the show cause notice was filed by the petitioner whereafter though challan under PMT-06 for deposit of GST was generated, the amount was deposited through DRC-03 in cash. The reason at the footnote clearly indicated that ‘the amount of penalty is paid under protest and without prejudice to our legal right of appeal’. Whereafter the order under Section 129(3) was passed on 06.10.2024 indicating a demand of Rs. 22,37,220/- and form GST DRC-07 qua the demand was also generated. However, apparently, by way of an afterthought, exercising power under Section 161 of the Act, the order dated 06.10.2024 was passed purportedly rectifying the order and the demand was indicated as ‘NIL’. 4

11. Though in terms of the requirement on part of the respondent to pay the amount penalty, it is true that the demand was NIL, but the deposit was under protest. The passing of the order rectifying the order passed under Section 129(3) of the Act has the implication that on account of the demand being ‘NIL’, the petitioner cannot file appeal against the demand raised and deposited under protest by him. The mere fact that the amount was deposited through DRC-03 of the Act with specific endorsement regarding the payment being under protest, the same cannot be termed as a voluntary payment so as to permit the respondents to rectify the order and deprive the petitioner from questioning the validity of the said order by filing statutory appeal.

12. In view of the above discussion, the writ petition is allowed. The order dated 08.10.2024 (Annexure-1) passed by respondent no. 3 is quashed and set aside. In view of the fact that on passing of the order dated 08.10.2024, the petitioner has been deprived of the right to file appeal, the period starting from 08.10.2024 till passing of this order, shall be excluded for computing the period of limitation for filing the appeal against the order dated 06.10.2024 passed under Section 129(3) of the Act. Order Date :- 19.2.2025 P.Sri. (Kshitij Shailendra, J) (Arun Bhansali, CJ) PUNEET SRIVASTAVA High Court of Judicature at Allahabad

goods and the authority formed an opinion that prima facie there was difference in quantity of goods loaded in the vehicle and described in the document. The petitioner submitted letter dated 29.09.2024 seeking to explain the reasons for difference in quantity and as the goods were perishable in nature, requested for release of the goods. The goods in question were detained by issuing order in MOV-06 on

01.10.2024 for further action on account of mismatch in weight and show-cause notice was issued on the same date as to why penalty under Section 129(1)(a) may not be confirmed against the petitioner.

3. A reply to the show cause notice was submitted claiming that the mismatch was on account of an inadvertent mistake and as the goods were perishable, request was made for release of the goods. It is 2 further claimed that as the response filed was not accepted, on

05.10.2024, petitioner generated payment challan for the amount of penalty, however, it was advised to generate DRC-03, i.e., payment made voluntarily or against the show-cause notice and as neither the goods were being released provisionally nor order under Section 129(3) of the Act was being passed, the amount was deposited through DRC-03 by indicating that ‘the amount of penalty is paid under protest and without prejudice to our legal right to appeal’.

4. On the same day, the respondent no. 2 passed order under Section 129(3) of the Act demanding penalty under Section 129(1)(a) by rejecting the explanation furnished by the petitioner. The goods were released by passing release order MOV-05 on 08.10.2024.

5. After release of goods, the respondents passed order in DRC- 08, i.e., summary of rectification/ withdrawal order and withdrew the order dated 06.10.2024 by treating the payment made by the petitioner as voluntary payment. Aggrieved of the said action, the present petition has been filed.

6. Learned counsel for the petitioner made submissions that action of the respondents in passing the rectification order and rectifying the order dated 06.10.2024 is wholly unjustified. It is submitted that while making payment through DRC-03, a specific endorsement regarding the same being under protest was made and, therefore, the passing of the rectification order was unwarranted and illegal. Submissions have been made that on account of passing of the order dated 08.10.2024, the outstanding demand is being shown as ‘NIL’ and the portal of the department is not accepting the appeal against the order dated

06.10.2024, which takes away the right of appeal of the petitioner. Submissions have been made that the conditions precedent for exercise of power under Section 161 of the Act were absent and, as such, the order passed is wholly without jurisdiction. 3

7. Further submissions were made that as the petitioner has already lost limitation, as prescribed under Section 107 of the Act qua the order dated 06.10.2024, the same may be ordered to be extended.

8. Learned counsel for the respondents supported the order impugned. Submissions have been made that the petitioner was admittedly transporting quantity of goods different from the accompanying documents and, as such, action under Section 129(1)(a) of the Act was initiated on which before the order under Section 129(3) of the Act was passed, the amount of penalty was deposited through DRC-03, which deals with the voluntarily payments and, as such, there was no necessity of passing order under Section 129(3) of the Act and consequently the order under Section 161 of the Act rectifying the same was passed on 08.10.2024 and no exception can be taken to the same and, therefore, the petition deserves dismissal.

9. We have considered the submissions made by counsel for the parties and have perused the material available on record.

10. It is not in dispute that an order of detention under Section 129(1) of the Act qua the goods being transported by the petitioner was passed and show cause notice under Section 129(1)(a) of the Act proposing a penalty of Rs. 22,37,220/- was issued. Reply to the show cause notice was filed by the petitioner whereafter though challan under PMT-06 for deposit of GST was generated, the amount was deposited through DRC-03 in cash. The reason at the footnote clearly indicated that ‘the amount of penalty is paid under protest and without prejudice to our legal right of appeal’. Whereafter the order under Section 129(3) was passed on 06.10.2024 indicating a demand of Rs. 22,37,220/- and form GST DRC-07 qua the demand was also generated. However, apparently, by way of an afterthought, exercising power under Section 161 of the Act, the order dated 06.10.2024 was passed purportedly rectifying the order and the demand was indicated as ‘NIL’. 4

11. Though in terms of the requirement on part of the respondent to pay the amount penalty, it is true that the demand was NIL, but the deposit was under protest. The passing of the order rectifying the order passed under Section 129(3) of the Act has the implication that on account of the demand being ‘NIL’, the petitioner cannot file appeal against the demand raised and deposited under protest by him. The mere fact that the amount was deposited through DRC-03 of the Act with specific endorsement regarding the payment being under protest, the same cannot be termed as a voluntary payment so as to permit the respondents to rectify the order and deprive the petitioner from questioning the validity of the said order by filing statutory appeal.

12. In view of the above discussion, the writ petition is allowed. The order dated 08.10.2024 (Annexure-1) passed by respondent no. 3 is quashed and set aside. In view of the fact that on passing of the order dated 08.10.2024, the petitioner has been deprived of the right to file appeal, the period starting from 08.10.2024 till passing of this order, shall be excluded for computing the period of limitation for filing the appeal against the order dated 06.10.2024 passed under Section 129(3) of the Act. Order Date :- 19.2.2025 P.Sri. (Kshitij Shailendra, J) (Arun Bhansali, CJ) PUNEET SRIVASTAVA High Court of Judicature at Allahabad