Deutsche Cars Pvt Ltd Vs State of Haryana And Others (Punjab and Haryana High Court)
Payment of GST Penalty “Under Protest” for release of goods – Mandatory Requirement of Speaking Order under Section 129(3)
The Court held that passing a penalty order without considering the taxpayer’s reply and before the expiry of the response deadline violates principles of natural justice. The petitioner, a registered car dealer, transported a vehicle for display with valid documents, but it was detained and penalty imposed. Although a show cause notice allowed time until May 13, 2025 to respond, the authority passed the penalty order on May 6, 2025 itself, ignoring the reply filed under protest. The Department argued that payment of penalty concluded proceedings under Section 129(5) of the GST law. However, the Court, relying on ASP Traders v. State of Uttar Pradesh, held that payment under protest does not waive the right to contest and mandates a reasoned order after hearing. The impugned order was set aside and the matter remanded for fresh adjudication with proper opportunity of hearing.
Facts:
M/s Deutsche Cars Pvt. Ltd. (‘the Petitioner’) is a registered dealer engaged in trading of cars and an authorized dealer of BMW. The Petitioner transported a car for display purposes with proper documents including delivery challan and e-way bill.
