No, held the Hon’ble Supreme Court in M/s ASP Traders v. State of Uttar Pradesh & Ors. [2025 TAXONATION 1876 (SUPREME COURT)]. In this case, goods and the vehicle of the appellant were detained during transit under Section 129 of the CGST Act. A notice under Section 129(3) was issued, to which the appellant filed objections and made payment of the proposed tax and penalty under protest. The authorities thereafter issued a discharge order in Form GST MOV-05, releasing the goods, but no final order under Section 129(3) was passed in Form GST MOV-09 or DRC-07. The appellant approached the High Court seeking a direction to the authorities to pass a speaking adjudication order, which was declined on the ground that the payment of tax and penalty deemed the proceedings to be concluded under Section 129(5). Aggrieved, the appellant approached the Hon’ble Supreme Court.
Allowing the appeal, the Apex Court held that the deeming conclusion under Section 129(5) merely signifies that no further prosecution shall be initiated upon payment of tax and penalty, but it does not absolve the proper officer from passing a final order when objections have been filed. The Court emphasized that the right to appeal under Section 107 is a substantive right and can be exercised only when a formal adjudication order is passed. Without such an order, the taxpayer is deprived of appellate remedy, violating the principles of natural justice. The Court held that where payment is made under protest and objections are on record, adjudication is not optional—it becomes mandatory. The expression "shall… and thereafter, pass an order" in Section 129(3) indicates the compulsory nature of a reasoned order even if tax and penalty are paid. The Court also explained that waiver of rights requires clear intention, which cannot be inferred in such cases. Accordingly, the Supreme Court set aside the High Court’s order, and directed the concerned officer to pass a speaking order under Section 129(3) in Form GST MOV-09 and upload its summary in Form DRC-07 within one month, after granting an opportunity of hearing under Section 129(4).
Author’s Comments:
This ruling reinforces that payment of tax and penalty—especially when made under protest—does not erase the requirement for a reasoned adjudication order under Section 129(3). The GST law may not expressly recognize “payment under protest” or allow pre-deposits beyond prescribed limits, but the constitutional guarantee of due process ensures that taxpayers can challenge demands even after such payments.
The difference between admission and confession is crucial. An admission is an acknowledgment of certain facts, which may contribute to establishing liability, whereas a confession is a complete acceptance of guilt, ending further inquiry. In tax matters, such “confessions” cannot be presumed merely from payment; the officer must verify that the taxpayer understood the legal nature of the alleged offence, and that the payment was not induced by coercion, threat, or misunderstanding.
Adjudication is not a formality—it safeguards the taxpayer’s statutory right to appeal under Section 107. Skipping it on the assumption that payment concludes proceedings not only undermines natural justice but also allows administrative convenience to override statutory mandates. As the Apex Court clarified, the obligation to pass a speaking order is absolute when objections are on record.
GST Case Law M/s ASP Traders v. State of Uttar Pradesh & Ors.
Citation-2025 TAXONATION 1876 (SUPREME COURT)(Click here to read full case law)
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