The Allahabad High Court, Lucknow Bench, has directed the Commissioner of State GST to send an Assistant Commissioner for three months of training after the officer passed a penalty order based on a “presumption” that the owner of the goods would be informed by the transporter, rather than serving a formal notice as required by law. While quashing the penalty order for this “clear violation,” the court strongly observed that the officer “apparently does not know anything about the Act.”
The division bench of Justice Sangeeta Chandra and Justice Brij Raj Singh set aside the orders after finding that the proper officer failed to serve a show-cause notice on the owner of the goods before passing the penalty order. The Court was hearing a writ petition filed by M/S Mlv Constructions challenging an order in Form GST MOV-09 dated 03.07.2025 and a preceding notice in Form GST MOV-07.
Background of the Case
The case arose from the detention and seizure of goods and a vehicle belonging to the petitioner. Following the seizure on 21.06.2025, the Assistant Commissioner issued a notice and subsequently an order for payment of penalty. The petitioner challenged these actions, leading to the writ petition before the High Court.
Court Proceedings and Contradictory Submissions
During the proceedings, the court noted significant contradictions in the submissions made on behalf of the State Tax department. Initially, on 19.08.2025, instructions sent by Mr. Ramesh Kumar, Assistant Commissioner, State Tax, claimed that a show-cause notice had been issued to the consignor and consignee firm as the owner of the goods, but they did not come forward or submit a reply, leading to an ex-parte order against the driver.
However, the court observed that these instructions did not include any enclosure as proof of service of such a notice. Doubting the submission, the court summoned the officer to appear in person and produce the notice.
In a subsequent hearing on 21.08.2025, the officer presented new instructions that contradicted the earlier statement. The court recorded that the officer now explained “that he had presumed that driver or the transporter shall be contacted by the owner of the goods and the owner of the goods would thereafter come forward to claim the goods after paying the penalty.”
Court’s Analysis and Findings
The bench concluded that the officer’s actions were in direct contravention of the statutory mandate. The judgment states, “…it is apparent that there is clear violation of sub-section (3) of Section 129 of the Central Goods and Services Tax Act, 2017.”
The court elaborated on the legal requirement, noting that Section 129(3) provides 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, and thereafter, pass an order within a period of seven days from the date of service of such notice.” Furthermore, sub-section (4) mandates that no penalty can be determined without giving the person concerned an opportunity of being heard.
The court found that “no service of notice was ensured under sub-section (3) of Section 129 of the Act on the owner of the goods i.e. the petitioner.” It also noted that a “misleading instruction was sent to the office of the Chief Standing Counsel” in the earlier hearing.
Making a strong observation on the conduct of the officer, the court stated: “The officer has appeared and he apparently does not know anything about the Act and perhaps even he has not read the provision under which he has taken the action.”
Decision and Directions
Finding that the impugned orders were passed in “clear violation” of the law, the High Court allowed the writ petition and set aside the notice in Form GST MOV-07 dated 27.06.2025 and the order in Form GST MOV-09 dated 03.07.2025.
The court issued the following directions:
- The department must issue a fresh show-cause notice to the petitioner as per the provisions of Section 129(3) of the Act within one week.
- The notice must be sent via Registered Post, SMS, and e-mail to the assessee/consignor/consignee.
- The petitioner shall reply to the notice within the time prescribed under the Act.
- The authorities must consider the reply and pass a reasoned and speaking order. If a penalty is to be imposed, a personal hearing must be given to the petitioner.
Additionally, the court directed the Commissioner, State Goods and Services Tax, Lucknow, “to ensure that Mr. Ramesh Kumar, Assistant Commissioner is sent for training for three months and is well versed with the provisions of the Act before he is made in-charge of any unit seizing the goods.”
