M/S ASP TRADERS v. STATE OF UTTAR PRADESH & ORS
CIVIL APPEAL NO. 9764 OF 2025 · CIVIL APPEAL NO. 9764 OF 2025
Coram: R. Mahadevan; J.B. Pardiwala
Yes. Compliance with Rule 142(5) of the CGST Rules, 2017 and the CBIC's binding Circular dated 13.04.2018 is essential to safeguard the taxpayer's appellate rights under Section 107, since an appeal lies only against an order; failure to pass such an order renders the right of appeal illusory.
Central Goods and Services Tax Act, 2017 — s.129(3), s.129(5) — CGST Rules, 2017 — Rule 142(5) — Detention and release of goods in transit — Mandatory adjudication order —
Central Goods and Services Tax Act, 2017 — s.129(3), s.129(5) — Deeming fiction on payment — Adjudication remains mandatory —
Held: Payment of tax and penalty under Section 129(3) to secure release of detained goods does not by itself conclude adjudication of the show cause notice. The deeming fiction in Section 129(5) concludes only proceedings for prosecution; it does not excuse the proper officer from passing a reasoned order under Section 129(3). (¶14)
Central Goods and Services Tax Act, 2017 — s.129(3) — Payment under protest — No waiver of right to object —
Held further: Payment made under protest, with objections already filed, cannot be treated as a voluntary waiver or abandonment of the right to challenge the levy. Once objections are on record, adjudication by a speaking order is not optional but imperative. (¶15)
CGST Rules, 2017 — Rule 142(5) — Form GST MOV-09 — Right of appeal under s.107 —
Held further: The proper officer must pass a formal order in Form GST MOV-09 and upload its summary in Form GST DRC-07, since an appeal under Section 107 lies only against an order and the High Court's refusal to direct one frustrated the appellant's statutory right of appeal. The impugned order is set aside and a reasoned order is directed within one month. (¶20, 21)
In the Court's own words
Paragraph 18The principles of natural justice mandate that when a taxpayer submits a response to a show cause notice, the adjudicating authority is required to consider such response and render a reasoned, speaking order. This is not a mere procedural formality, but a substantive safeguard ensuring fairness in quasi-judicial proceedings. The right to appeal under Section 107 of the CGST Act, 2017, is predicated upon the existence of a formal adjudication. An appeal can lie only against an ‘order’, and in the absence of a reasoned order passed under Section 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. It is now settled law that 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 Article 265 of the Constitution of India, which prohibits the levy or collection of tax except by authority of law. 28 18.1. In this context, useful guidance may be drawn from the decision in M/s. Kranti Associates (P) Ltd & Anr. v. Masood Ahmed Khan & Ors. 6, wherein, this Court emphasized that fairness, transparency, and accountability are inseparable from the duty to provide reasons. The Court held that failure to furnish reasons violates the principles of natural justice and renders the right of appeal or judicial review illusory. In paragraph 51 of the judgment, the Court distilled the following key principles:
Paragraph 19Therefore, even assuming that the payment was made by the appellant, voluntarily or otherwise, the proper officer could not be absolved of the statutory obligation to pass a reasoned order in Form GST MOV-09 and upload the corresponding summary in Form GST DRC-07. Compliance with these procedural requirements is essential not only for ensuring transparency and accountability in tax administration, but also for safeguarding the taxpayer’s 30 appellate rights under the CGST Act, 2017. Such adherence is in consonance with the constitutional mandate under Article 265 of the Constitution of India.
Paragraph 20In view of the foregoing discussion, and taking into account that objections were filed, payment was stated to have been made under protest due to business exigencies, and the appellant seeks to challenge the levy, the proper officer was under a clear statutory obligation to pass a final order under section 129(3) in Form GST MOV-09 and DRC-07. The refusal by the High Court to direct the passing of such an order, has the effect of frustrating the appellant’s statutory right to appeal and is contrary to well established legal principles governing tax adjudication and procedural fairness.
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