M/s ASP Traders vs State of Uttar Pradesh & Ors.

2. No final order was passed, pursuant to the notice dated 21.01.2022 issued u/s.129(3) of the CGST Act – Evidently, the discharge order merely records that the detained goods and vehicle were released upon payment of the proposed tax and penalty – It makes no mention of any withdrawal of objections or of the conclusion of proceedings initiated u/s.129(3) of the CGST Act, 2017 – In the present case, payment was made under protest, and objections had already been filed by the appellant – Once objections are filed, adjudication is not optional, it becomes imperative to pass a speaking order to justify the demand of tax and penalty, to safeguard the right of appeal u/s.107 of the CGST Act, 2017 – The language of s.129(3) is categorical in stating that the officer “shall issue a notice… and thereafter, pass an order” – The use of the words “and thereafter” reinforces the mandatory nature of passing a reasoned order, regardless of payment, particularly where protest or dispute is raised – Significantly, the GST payment portal permits payments only through Form GST DRC-03, which is automatically classified as a voluntary payment, and does not provide any mechanism for an assessee to indicate that the payment is being made under protest – In the absence of such an option, payments made under commercial compulsion or business necessity—such as for securing release of detained goods–may be erroneously construed as voluntary, resulting in undue prejudice – Such procedural limitations cannot be allowed to defeat the rights of the taxpayer, particularly where the detention of goods is ultimately found to be unlawful – Therefore, this Court is of the considered opinion that the payment made by the appellant in the present case cannot be treated as voluntary – Further, the payment by an assessee will not absolve the responsibility of the proper officer to pass an order justifying the demand of tax and penalty – The payment, by itself, cannot be treated as a waiver or abandonment, especially when the appellant has clearly objected to the demand and when there is a statutory mandate to pass an order and a corresponding right to appeal – An appeal can lie only against an ‘order’, and in the absence of a reasoned order passed u/s.129(3) of the Act, the taxpayer is effectively deprived of the statutory remedy of appeal – Such a deprivation undermines the foundational principles of fairness, due process, and access to justice, rendering the right of appeal illusory or nugatory – The proper officer could not be absolved of the statutory obligation to pass a reasoned order – Such adherence is in consonance with the constitutional mandate u/Art.265 of the Constitution of India – Thus, respondent no.3 is directed to pass a reasoned final order u/s.129(3) of the CGST Act, 2017. [Paras 11, 13.1, 15, 16, 16.1, 16.2, 20]

Central Goods and Services Tax Act, 2017 – ss.129, 168 – CGST Rules, 2017 – r.142 – IGST Act, 2017 – s.20 – SGST/UTGST Act, 2017 – Whether section 129(5) absolves the responsibility of the proper officer to pass an order concluding the proceedings: Held: It is a well settled principle that every show cause notice must culminate in a final, reasoned order – While Section 129(5) of the CGST Act, 2017 provides that proceedings shall be deemed to be concluded upon payment of tax and penalty, this deeming fiction cannot be interpreted to imply that the assessee has agreed to waive or abandon the right to challenge the levy–a right that is protected by the very enactment itself – The term “conclusion” as used in Section 129(5) merely signifies that no further proceedings for prosecution will be initiated – It does not absolve the responsibility of the proper officer to pass an order concluding the proceedings – Therefore, the proper officer is dutybound to pass a formal order in Form GST MOV-09 and upload a summary thereof in Form GST DRT 07 as mandated under Rule 142(5) and the Circular dated 13.04.2018, so as to enable the taxpayer to avail the appeal remedy as per law. [Para 14] Constitution of India – Art. 265 – Central Goods and, Services Tax Act, 2017 – Right against the illegality committed by the proper officer – Whether payment can be treated as a waiver or abandonment:

Held: The assessee, even by election, cannot be treated to have waived his right against the illegality committed by the proper officer or acquiesced to the demand, as by the constitutional mandate u/Art.265 of the Constitution, no tax can be levied or collected except with the authority of law – There is not only a bar against levy but also against collection – Therefore, the action of the proper officer must always be justifiable and fall within the four corners of law, as it is well settled that there can be no acquiescence in tax – It must be much more than an abandonment of a right to plead waiver or acquiescence – The payment, by itself, cannot be treated as a waiver or abandonment, especially when the appellant has clearly objected to the demand and when there is a statutory mandate to pass an order and a corresponding right to appeal. [Paras 16.1 and 16.2]

Central Goods and, Services Tax Act, 2017 – s.129(3) and s.107 – Right to appeal – When there is an absence of a reasoned order:

Held: An appeal can lie only against an ‘order’, and in the absence of a reasoned order passed u/s.129(3) of the Act, the taxpayer is effectively deprived of the statutory remedy of appeal – Such a deprivation undermines the foundational principles of fairness, due process, and access to justice, rendering the right of appeal illusory or nugatory – Failure to issue a speaking order in response to a show cause notice creates a legal vacuum – Any consequential action including imposition of tax or penalty, would then be unsupported by authority of law, thereby potentially violating Art.

265 of the Constitution of India. [Para 18]

Central Goods and, Services Tax Act, 2017 – Waiver and Acquiescence – Distinction thereof – Discussed. [Para 16.2]