Maa Annapurna Traders Vs State of Uttar Pradesh (Allahabad High Court)
Summary: The Allahabad High Court partly allowed the writ petition filed by M/S Maa Annapurna Traders challenging the order dated 3.7.2026, demand and penalty order dated 12.6.2026, and detention order dated 6.6.2026 passed in proceedings under Section 129 of the CGST Act read with Section 20 of the IGST Act.
The petitioner submitted that it was a proprietorship concern which, in the normal course of business, had received an order from M/s Mahadev Traders, New Delhi for supply of watermelon seed. The goods were being transported from Sitamarhi, Bihar to New Delhi in Vehicle No. HR58 C 9615 along with a tax invoice and RR. The vehicle was intercepted by respondent no. 3 at Purvanchal Expressway Dhaba, Azamgarh on 31.5.2026. The driver’s statement was recorded and Form GST MOV-2 was issued on the ground that the e-way bill had not been tendered for the goods in movement.
According to the petitioner, during the interception proceedings the respondent authority made an inquiry from the petitioner’s assessing authority. Thereafter, by order dated 5.6.2026, the petitioner’s GST registration was suspended and information was given to the seizing authority that the petitioner was an unregistered dealer. On that premise, proceedings were initiated under Section 129(1)(b), rather than Section 129(1)(a). A show cause notice in GST DRC-01 was issued on 6.6.2026. The petitioner stated that it submitted a detailed reply, but the impugned order dated 12.6.2026 was passed without considering the reply and penalty was demanded for release of the goods and vehicle. The petitioner’s appeal against that order was dismissed by order dated 3.7.2026.
The petitioner further submitted that its registration was subsequently restored by order dated 7.8.2026 and the suspension order was revoked. It was therefore contended that at the time of the transaction the petitioner was a registered dealer and the proceedings ought to have been conducted under Section 129(1)(a).
In support of its case, the petitioner relied upon the judgment of the Allahabad High Court in Shri Raju Ujir /M/s R.R. Enterprises Vs. State of UP and others, Neutral Citation No. 2025:AHC:132173.
The State authorities opposed the writ petition. The learned A.C.S.C. submitted that no e-way bill was presented at the time of interception and therefore proceedings had rightly been initiated. It was further submitted that an inquiry from the counterpart GST authority at Sitamarhi, Bihar had reported the petitioner as an unregistered dealer, justifying the proceedings.
The Court noted that the goods in transit had been intercepted and seized after information from the counterpart GST Authority at Sitamarhi, Bihar that the petitioner was an unregistered dealer, pursuant to which an order had been passed under Section 129(1)(b). However, the record showed that by order dated 7.8.2026 the cancellation proceedings had been dropped and the petitioner’s registration had been restored.
The Court also noted that the goods were accompanied by the tax invoice and, on that basis, the petitioner could be said to be the owner of the goods in question. The respondent authority had not accepted the contention of ownership on the ground that the petitioner was an unregistered dealer. The Court further recorded that the cancellation of registration was subsequently revoked and the registration restored. It held that once the registration had been restored, it could not be said that the consignor or consignee was bogus.
The Court then relied upon its earlier decision in Shri Raju Ujir /M/s R.R. Enterprises. In the portion quoted in the present order, that decision considered the effect of the tax invoice accompanying goods in transit and Clause 6 of the Circular dated 31.12.2018. The earlier decision had held that where the prescribed tax invoice or other specified document accompanies the consignment, either the consignor or consignee should be deemed to be the owner of the goods. It further observed that where the tax invoice accompanied the goods, the petitioner could be treated as the owner.
The quoted decision also dealt with a situation where registration had been suspended after movement of the goods but was subsequently restored. It held that where registration was valid at the time movement commenced and was subsequently restored, no adverse effect could be illegally drawn against the petitioner on the ground of the intervening suspension. It further stated that, where the specified document accompanies the goods in transit, proceedings under Section 129(1)(a) ought to have been initiated, referring to H/S Halder Enterprises and M/s Shahil Traders.
The present Court held that the issue before it was squarely covered by the aforesaid decision. Consequently, it found that the impugned orders required modification to the extent that the penalty imposed against the petitioner ought to have been enforced under Section 129(1)(a), instead of Section 129(1)(b), of the Act.
Accordingly, the writ petition was partly allowed. The Court did not otherwise record a direction quashing the proceedings in their entirety; rather, the operative relief was modification of the impugned orders so that the penalty was to be treated as imposed under Section 129(1)(a) instead of Section 129(1)(b).
Cases Discussed
- Shri Raju Ujir /M/s R.R. Enterprises Vs. State of UP and others, Neutral Citation No. 2025:AHC:132173 — relied upon by the Court as squarely covering the issue concerning restoration of GST registration, ownership of goods accompanied by a tax invoice, and application of Section 129(1)(a).
- H/S Halder Enterprises — referred to in the quoted portion of the earlier decision concerning proceedings under Section 129(1)(a) where specified documents accompanied goods in transit.
- M/s Sanjay Sales Agency — referred to in the quoted portion of the earlier decision in connection with the treatment of proceedings under Section 129 where the prescribed documents accompanied goods in transit.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Rejoinder affidavit filed today, is taken on record.
2. Heard Mr. Aditya Pandey, learned counsel for the petitioner and learned Additional Chief Standing Counsel for the State-respondents.
3. By means of instant writ petition, the petitioner is assailing the order dated 3.7.2026, demand and penalty order dated 12.6.2026 as well as detention order dated 6.6.2026 passed by respondent no.2 in the proceedings under Section 129 of CGST Act read with Section 20 of the IGST Act.
4. Learned counsel for the petitioner submits that the petitioner is a proprietorship concern and in the normal course of business, the petitioner has received an order for supply of watermelon seed from M/s Mahadev Traders, New Delhi. He submits that the goods were being transported from Sitamarhi Bihar to New Delhi on Vehicle No. HR58 C 9615 along with tax invoice and RR but on its way to New Delhi, the same was intercepted by the respondent no. 3 at Purvanchal Expressway Dhaba, Azamgarh on 31.5.2026. Thereafter the statement of the driver was recorded and Form GST MOV-2 was issued on 31.5.2026 on the ground that ‘e-way bill not tendered for the goods in movement’. He further submits that at the time of interception of the goods, the respondent authority has made an inquiry from the assessing authority of the petitioner. Thereafter the order dated 5.6.2026 has been passed suspending the registration of the petitioner and information has been given to the seizing authority that the petitioner was an unregistered dealer and on that premise, the seizing authority has initiated to pass the order under Section 129 (1) (b) instead of Section 129 (1) (a) of the GST Act. He submits that on 6.6.2026, a show cause notice was issued in GST DRC -01 to which the petitioner has submitted detailed reply but without considering the same impugned order dated 12.6.2026 has been passed without jurisdiction, demanding penalty for the release of the goods as well as vehicle. Being aggrieved to the said order, the petitioner filed an appeal, which has also been dismissed vide order dated 3.7.2026 without considering the material on record.
5. Learned counsel for the petitioner submits that registration of the petitioner was restored by the order dated 7.8.2026 and suspension order has been revoked. He further submits that at the time of transaction in question the petitioner was a registered dealer, therefore, the order ought to have been passed under Section 129 (1) (a) of the Act.
6. In support of his submission, learned counsel for the petitioner has placed reliance upon the judgement of this Court in Shri Raju Ujir /M/s R.R. Enterprises Vs. State of UP and others ( Neutral citation No. 2025: AHC:132173).
7. Per contra, learned A.C.S.C. supports the impugned orders and submits that at the time of interception of the goods in transit, no e-way bill was present, therefore, the proceedings have rightly been initiated. He further submits that upon inquiry on the counter part GST authority at Sitamarhi, Bihar, it was reported that the petitioner is an un-registered dealer, therefore, the proceedings are justified.
8. After hearing the parties, the Court has perused the record.
9. It is not in dispute that the goods in transit were intercepted and seized after information received from the counterpart of the GST Authority of Sitamarhi, Bihar that the petitioner is an un-registered dealer and order has been passed under Section 129 (1) (b) of the Act. The record shows that vide order dated 7.8.2026 the proceedings for cancellation of registration has been dropped and registration of the petitioner has been restored. Further, the record shows that the goods in question were accompanied with the tax invoice, therefore, the petitioner can be said to be the owner of the goods in question. But the said contention was not accepted by the respondent authority on the ground that the petitioner was an unregistered dealer. The record further shows that later on the cancellation of the registration of the petitioner has been revoked and registration has been restored. Once the registration has been restored, it cannot be said by any stretch of imagination that the consignor or consignee was bogus.
10. Further, this Court in the case of Shri Raju Ujir /M/s R.R. Enterprises (supra) has held as under:-
“19. So far as the requisite document as prescribed under the GST Act is concerned i.e. tax invoice was accompanied with the goods in transit, in view of the Clause 6 of the Circular dated 31.12.2018 wherein it has specifically been stated that if tax invoice or any other specified document are accompanied with the consignment then either the consignor or the consignee should be deemed to be the owner of the goods.
20. In the case in hand, the tax invoice was accompanied with the goods in transit and therefore, the owner of the goods can be said to be the petitioner. The said contention was not accepted at the lower stage only on the ground that after the movement of goods and at the time of detention of the goods, the registration of the purchasing dealer has been suspended, but later on, the same was revoked and the registration has been restored. Once the registration has been restored, it cannot be said bad by stretch of imagination that the consignor or consignee are bogus.
21. The record further shows that at the time of movement of goods, the registration was valid but before it reach to its destination, the registration of the purchaser was suspended, but later on it has been restored. No adverse effect can illegally been drawn against the petitioner on the said ground as the purchaser was a registered dealer before its movement started.
Further, once in the Circular dated 31.12.2018, it has specifically been stated that any of the specified document is accompanied with the goods in transit, the proceedings under Section 129 (1) (a) ought to have been initiated in view of the judgment of the cases of H/S Halder Enterprises (supra) & M/s Shahil Traders (supra).
22. In view of the peculiar facts and circumstances of case as stated above, the writ petition is partly allowed. The impugned orders are modified to the extent that the impugned orders must be treated as passed under Section 129 (1) (a) of the GST Act.
11. The issue in hand is squarely covered by the aforesaid decision of this Court.
12. In view of above, the impugned orders require modification to the extent that penalty imposed against the petitioner ought to have been enforced under Section 129 (1) (a) instead of Section 129 (1) (b) of the Act.
13. Accordingly, the writ petition is partly allowed.
