The Supreme Court in the case of M/S ASP TRADERS VERSUS STATE OF UTTAR PRADESH & ORS. Vide CIVIL APPEAL NO. 9764 OF 2025 [Arising out of S.L.P. (C) No. 17995 of 2022] dated 24.07.2025, held that even if the taxpayer has made payment of tax and penalty under protest pursuant to a notice under Section 129(3) of the CGST Act, the proper officer is statutorily bound to pass a reasoned, speaking final order under Section 129(3). The absence of an order in Form GST MOV-09 and its summary in Form DRC-07 violates Rule 142(5) and the Circular dated 13.04.2018. Further, the Court held that High Court’s refusal to direct the passing of a final order was set aside and the officer was directed to pass a final order within one month.

The Court stated that” The deeming fiction of conclusion under Section 129(5) does not substitute the mandatory requirement of a speaking order under Section 129(3); appeal under Section 107 lies only against such an adjudicated order.”

Facts of the Case: In this case, the petitioner transported 17,850 kg of dry arecanut (₹51.73 lakh) to Delhi via Jhansi, but 7 bags went missing in transit. The vehicle was intercepted and a statement was recorded and a physical inspection uncovered discrepancies. The goods were detained and a detention order in Form GST MOV-06 was issued, alleging shortage of 7 bags, non-existence of the consignee firm and incorrect address of the consignor.

Further, a notice under Section 129(3) in Form GST MOV-07 was issued proposing tax and penalty. The appellant filed a detailed reply refuting the allegations. However, due to business necessity the petitioner paid ₹7,20,440 via Form GST DRC-03 on 27.01.2022 under protest, and the goods were released using Form GST MOV-05. No final adjudication order under Section 129(3) was passed by the department.

The appellant repeatedly requested an order in Form GST MOV-09 to preserve its right to appeal, but the department replied that no further action was needed as the amount had been voluntarily deposited. Further, the High Court also dismissed the writ petition, holding that payment concluded the matter as per Section 129(5).

The matter reached the Supreme Court for final adjudication.

Issue: Whether the proper officer is mandatorily required to issue a final, reasoned order under Section 129(3) CGST, even when the tax and penalty have been paid within the stipulated period—i.e., whether the deeming fiction under Section 129(5) relieves the officer of issuing a speaking order, especially where the taxpayer filed a reply and paid under protest.

Held that: The Supreme Court observed that Section 129(3) mandates that after issuing a notice specifying tax and penalty, the officer shall pass an order. The words “and thereafter” underscore this as a non‑optional, statutory responsibility, even if payment has been made.

While Section 129(5) states that proceedings are deemed concluded upon payment, that fiction does not absolve the officer from passing a final adjudicative order. It merely bars further prosecution and not appellate rights. Further, adjudication must culminate in a reasoned order (i.e. in Form GST MOV‑09) with summary uploaded in Form DRC‑07, as prescribed by Rule 142(5) and CBIC Circular dated 13.04.2018, to enable statutory appeals.

The Court stated that payment made under protest i.e. due to commercial exigency should not be construed as a waiver, and the duty to issue a final adjudication remains intact when objections have been submitted. A written objection obligates the authority to consider it and record reasons. Failure to do so violates the doctrine of fairness, and leaves the taxpayer without any opportunity to appeal. Without a final order, there is effectively no appealable “order” under Section 107 CGST. Denying this right undermines due process and may infringe Article 265 of the Constitution (levy or collection of tax only by authority of law).

The Supreme Court held that even if the taxpayer has made payment of tax and penalty under protest pursuant to a notice under Section 129(3) of the CGST Act, the proper officer is statutorily bound to pass a reasoned, speaking final order under Section 129(3). The absence of an order in Form GST MOV-09 and its summary in Form DRC-07 violates Rule 142(5) and the Circular dated 13.04.2018.

The Court set aside the impugned Allahabad High Court order denying mandamus for a final adjudication. Also, directed the proper officer to pass a reasoned order under Section 129(3) in Form GST MOV‑09, after hearing, and upload its summary in Form GST DRC‑07 within one month from receipt of the judgment.

The appellant is thereafter free to pursue statutory legal remedies, including appeal under Section 107 CGST.

Extract of Relevant legal provisions

“Section 129 – Detention, seizure and release of goods and conveyances in transit:

(1) ….

(2) ….

(3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c).

(4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.

(5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded.

(6) …..”

To read the complete judgment 2025 Taxo.online 1599