Facts of the Case

M. A. Traders and 7 others challenged an order dated 30.05.2025 passed under Section 129(3) of the UP GST Act by the Assistant Commissioner, Commercial Tax Mobile Unit-11, Kanpur, and a subsequent rectification order dated 05.06.2025 under Section 161. The impugned order imposed penalty under Section 129(1)(b) of the CGST Act, treating the petitioners as not being the owners of the detained goods, and sought a mandamus directing release of the goods and vehicle seized under Section 129(1)(a).

Issues Involved

  1. Whether penalty on detained goods should have been levied under Section 129(1)(a) (goods owner comes forward) or Section 129(1)(b) (owner does not come forward), where the invoice covering the goods was in fact presented.

Petitioner's Arguments

  • The invoice for the goods was presented at the time of detention; consequently, penalty ought to have been levied under the lower Section 129(1)(a) rate applicable to an owner of goods, not Section 129(1)(b).
  • Relied on the Court's own Division Bench ruling in M/s Halder Enterprises v. State of U.P. and others, 2024 (2) ADJ 660 (DB), which examined this precise distinction along with the relevant departmental circular.

Respondent's Arguments

  • No independent substantive defence beyond the impugned order is recorded; the State's Standing Counsel appeared but the order proceeds on the strength of the petitioner's cited precedent, which was not shown to be inapplicable.

Court Order / Findings

  • Following the ratio in M/s Halder Enterprises, the Court held that since the invoice was presented in the present case, the authority erred in law by imposing penalty under Section 129(1)(b) instead of Section 129(1)(a).
  • The impugned order dated 30.05.2025 was quashed and set aside, with a direction to the authority to grant the petitioners an opportunity of hearing and thereafter pass a reasoned order in accordance with law, keeping in mind the principle in Halder Enterprises, within eight weeks.

Important Clarification

  • The rate of penalty under Section 129 turns on whether the owner of the goods comes forward, not merely on whether the transporter/consignee disputes ownership — presentation of a valid invoice covering the goods is a key fact pointing to Section 129(1)(a), the lower penalty provision, rather than Section 129(1)(b).
  • Officers imposing detention penalties must correctly classify the case between clause (a) and clause (b) of Section 129(1), failing which the order is liable to be quashed even without going into the underlying detention grounds.

Sections Involved

  • Section 129(1)(a), CGST Act, 2017 — penalty where the owner of the goods comes forward for payment.
  • Section 129(1)(b), CGST Act, 2017 — higher penalty where the owner does not come forward.
  • Section 161, CGST Act, 2017 — rectification of errors apparent on the face of the record.

Decision – In Favour of

In favour of the Assessee — the penalty order is quashed for misapplication of Section 129(1)(b) instead of 129(1)(a), and remanded for a fresh, reasoned order after hearing.

Case Details

High Court of Judicature at Allahabad; Writ Tax No. 3002 of 2025; Neutral Citation No. 2025:AHC:108691-DB; Coram: Hon'ble Shekhar B. Saraf, J. and Hon'ble Praveen Kumar Giri, J.; Order dated 09.07.2025.

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