Rambabu And Another Vs State of U.P. (Allahabad High Court)
Summary: The Allahabad High Court, Lucknow Bench, in Rambabu And Another Vs State Of U.P. Thru. Prin. Secy. Deptt. Of State Tax Lko. And Another, examined the legality of detention proceedings and a penalty of ₹18,15,902 imposed under Section 129(3) of the GST Act where the tax authorities allegedly failed to consider documents submitted by the person claiming ownership of the detained goods. The dispute concerned 14,130 kilograms of old battery scrap transported in vehicle No. UP53DT1358 under a tax invoice dated 11 August 2026 and an accompanying e-way bill. The goods were detained on 14 August 2026, followed by a detention order in FORM GST MOV-06 and a notice in FORM GST MOV-07 cum FORM GST DRC-01. During the pendency of the writ petition challenging these proceedings, the authorities passed a final order dated 20 August 2026 imposing the disputed penalty.
The petitioners contended that petitioner No. 2 had appeared before the authority, asserted ownership of the goods and produced the relevant documents, including the e-way bill, e-tax invoice and bilty. However, neither his submissions nor the supporting documents were duly considered before the penalty order was passed. The petitioners challenged the proceedings as arbitrary, unreasoned and contrary to the requirements of Section 129. They also relied upon CBIC Circular No. 76/50/2018-GST dated 31 December 2018, particularly clarification No. 6 concerning identification of the owner of goods for the purposes of Section 129(1). The State supported the action taken by the GST authorities and relied upon the penalty order.
After examining the detention notice, show cause notice and final penalty order, the Division Bench comprising Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary found that the authorities had proceeded without considering the fact that the person claiming ownership had appeared and produced relevant documents. The Court held that the e-way bill, e-tax invoice and bilty ought to have been examined in accordance with law. Accordingly, it quashed and set aside the impugned penalty order and directed the competent authority to reconsider the documents submitted by petitioner No. 2. The Court specifically instructed the authority to consider serial No. 6 of CBIC Circular No. 76/50/2018-GST while undertaking the exercise. The writ petition was disposed of with these directions. The Court did not itself finally determine ownership or expressly direct unconditional release of the goods.
FULL TEXT OF THE ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Pranjal Shukla, learned counsel appearing on behalf of the petitioners and Sri Sanjay Sarin, learned Additional Chief Standing Counsel appearing on behalf of the State.
2. This is a writ petition under Article 226 of the Constitution of India, wherein the writ petitioners have made the following main prayers:-
“a) Issue a writ, order or direction in the nature of Certiorari quashing the detention order in FORM GST MOV-06 dated 14.08.2026 and the impugned notice in FORM GST MOV-07 cum FORM GST DRC-01 bearing No. ZD090826121877S dated 14.08.2026, both passed/issued by Respondent No. 2, being arbitrary, illegal, without jurisdiction and violative of the principles of natural justice; (Annexure No.1 & 2 to this writ petition respectively).
a(1) issue a writ, order or direction in the nature of Certiorari quashing the subsequent order in FORM GST MOV-09 dated 20.08.2026 bearing Order No. ZD090826174416V, passed by Respondent No.2 under Section 129(3) of the CGST/UPGST Act, 2017, whereby penalty of Rs.18,15,902/- has been imposed upon the Petitioners, being arbitrary, non-speaking, unreasoned, without application of mind, contrary to Section 129(1) and violative of Articles 14 and 19(1)(g) of the Constitution of India;
b) Issue a writ, order or direction in the nature of Mandamus directing the respondents to forthwith release Vehicle No. UP53DT1358 along with the goods (Old Battery Scrap, 14,130 Kgs) covered by Tax Invoice No. SSB/26-27/857 dated 11.08.2026 and E-Way Bill No. 8017 2550 6804, without insisting upon any further tax, penalty or security;
c) Issue a writ, order or direction declaring that Petitioner No. 2, being the owner/consignor of the goods who had generated the tax invoice and e-way bill accompanying the consignment, was and is the owner of the goods for the purposes of Section 129 of the CGST/UPGST Act, 2017, in terms of CBIC Circular No. 76/50/2018-GST dated 31.12.2018.”
3. Learned counsel appearing on behalf of the petitioners submits that the goods were detained on August 14, 2026. Subsequently, a notice was issued under Section 129(1)(b) of the Uttar Pradesh Goods and Services Tax Act, 2017 (hereinafter referred to as “the Act, 2017”).
4. The writ petitioners have filed the present writ petition challenging the said notice. Subsequent to the filing of the present writ petition, an order under Section 129(3) of the Act, 2017 has been passed imposing a penalty upon the petitioners.
5. Learned counsel appearing on behalf of the petitioners also submits that in spite of the petitioner No.2 appearing before the authority and submitting that he is the owner of the goods, his submissions have not been taken on record, nor have the documents produced by him been taken into consideration. In view of the same, he submits that the entire process of detention, issuance of the show cause notice, as well as the passing of the final order under Section 129(3) of the Act, 2017, is arbitrary, whimsical and without any basis in law.
6. Learned Additional Chief Standing Counsel appearing on behalf of the State has supported the action of the authorities and relied upon the impugned order dated August 20, 2026 passed under Section 129(3) of the Act, 2017, in support of his submissions.
7. Upon perusal of the detention notice, the show cause notice issued thereafter, and the final order dated August 20, 2026, we are of the view that the authorities proceeded to act without taking into consideration the fact that the owner had appeared before the authorities and had produced the relevant documents.
8. In light of the same, we are of the view that since the owner has appeared and produced the e-way bill, e-tax invoice and bilty, the same ought to be considered by the authority in accordance with law.
9. Accordingly, the impugned order is hereby quashed and set aside, with a direction to the authority concerned to consider the documents produced by the petitioner No.2, who claims to be the owner of the goods, in accordance with law.
10. It may be kept in mind that the issue mentioned at serial No.6 of Circular No. 76/50/2018-GST dated 31.12.2018, issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, GST Policy Wing, shall also be taken into consideration.
11. With the above directions/ observations, the writ petition is disposed of.
