GST department has to issue form MOV 9 even if Penalty is paid to release of detained goods

Payment of penalty under protest for detained goods mandates issuance of Form GST MOV-09 for appeal purposes.

Issue:

Whether the tax authorities are obligated to issue an order in Form GST MOV-09, even after the assessee has paid the penalty under protest to secure the release of detained goods and conveyance, to enable the assessee to exercise their right to appeal.

Facts:

The assessee’s vehicle was intercepted by the department, leading to the detention of goods and the conveyance. To secure the release of these, the assessee paid the penalty under protest via Form GST DRC-03. Subsequently, the assessee applied to the department requesting the issuance of an order in Form GST MOV-09. However, this application was rejected by the department, which took the stance that since payment had already been made, no further order was required. The petitioner argued that payment made under protest specifically entitled them to an order for the purpose of filing an appeal. The respondents did not dispute that the deposit was made under protest.

Decision:

The petition was allowed, and the department was directed to pass an order in Form GST MOV-09. The court held that once an amount has been deposited under protest, the authorities are obligated to pass a formal order of penalty in Form GST MOV-09. The court reasoned that without such a penalty order, the parties would be deprived of their right to challenge the department’s action and consequently, their right to file an appeal.

Key Takeaways:

Payment of penalty under protest, particularly in cases of detention of goods and conveyances under Section 129 of the CGST/UPGST Act, 2017, signifies the assessee’s intention to challenge the levy.
When payment is made under protest, the tax authorities are legally bound to issue a formal penalty order (Form GST MOV-09) to enable the assessee to exercise their statutory right to appeal.
Depriving an assessee of a formal order, despite payment under protest, effectively curtails their right to appeal and challenge the departmental action, which is against principles of natural justice and statutory provisions.

HIGH COURT OF ALLAHABAD

Aries Agro Ltd.

State of Uttar Pradesh

Arun Bhansali, CJ.
and Vikas Budhwar, J.

WRIT TAX No. 1790 of 2025

APRIL 30, 2025

Rishi Raj Kapoor and Dushyant Kumarfor the Petitioner. Ankur Agarwal, S.C. for the Respondent.

ORDER

1. This writ petition has been filed by the petitioner aggrieved of the action of the respondents, in not passing a penalty order pursuant to the proceedings under Section 129 of the GST Act, 2017 (for short ‘the Act’).

2. Submissions have been made that the vehicle in question was intercepted by the respondent-authority and the petitioner, with a view to take the delivery of the goods, paid the amount of penalty under protest, which is reflected from Form GST DRC-03 dated 14.09.2024, whereafter when no order was passed by the respondents, the petitioner moved application dated 03.10.2024 seeking issue of Form- GST MOV-09, however, the said application was rejected on 28.11.2024, inter alia observing that once the amount has been deposited by the respondent, there was no necessity to issue order in Form GST MOV-09.

3. Learned counsel for the petitioner made submissions that the action of the respondents in not passing order in Form GST MOV-09 is wholly unjustified inasmuch as the amount was deposited by the petitioner for the purpose of seeking release of goods ‘under protest’. Once the amount has been paid under protest, the petitioner was entitled to an order so as to question its validity before the appropriate authority. Non-issuance of the order in Form GST MOV-09 has deprived the petitioner of filing the appeal and, therefore, the respondents be directed to issue order in Form GST MOV-09.

4. Learned counsel for the respondents made submissions that the procedure prescribed, does not envisage passing of an order under Form GST MOV-09, once amount pursuant to the order has been deposited and goods have been released. However, it is not disputed that the authorities, once the amount has been deposited under protest, must pass an order.

5. Having considered the submissions made by counsel for the parties and perusal of the record, it is apparent that the amount was deposited by the petitioner under protest, as is reflected from Annexure-4 contained in the Form-GST DRC-03. Once the amount has been deposited under protest and even if the same was not deposited under protest, the authorities cannot shy away from passing order of penalty under Form GST MOV-09. Unless the penalty order is passed by the authorities, the parties are deprived of challenging the action of the respondents and therefore, they cannot be deprived of their right to file appeal.

6. Consequently, the petition is allowed. The order dated 28.11.2024 (Annexure-7) is quashed and set aside and the respondent No. 3 is directed to pass an order in Form GST MOV-09 within a period of three weeks from passing of the order. Whereafter, the petitioner would be free to take appropriate proceedings in accordance with law.