A final, reasoned order under Section 129(3) must be issued despite payment to protect the taxpayer's right of appeal, ensuring adherence to principles of natural justice.

JUDGMENT :

R. MAHADEVAN, J.

Leave granted.

2. This appeal has been preferred by the appellant against the final judgment and order dated 18.07.2022 passed by the High Court of Judicature at Allahabad¹[Hereinafter referred to as “the High Court”] in Writ Tax No. 955 of 2022.

3. The relevant facts giving rise to the present appeal are as follows:

3.1. The appellant is a registered dealer in Red Arecanut operating from Channagiri, Davangere, Karnataka. On 14.01.2022, they consigned 17,850 kg of dry Arecanut valued at Rs.51,72,930/-, packed into 255 bags to one M/s. Diamond Trading Company, Delhi, through Vehicle No. UP-78-GN-7563 accompanied by E-Way bill No.141424463403.

3.2. During transit, the goods were transhipped and loaded onto another vehicle bearing Registration No. HR-38-U-0152 for onward journey to Delhi. However, only 248 bags were loaded onto the new vehicle, with 7 bags missing from the original consignment.

3.3. On 17.01.2022, the said vehicle was detained by the Mobile Squad at Lalitpur Bypass Road, Jhansi. The driver’s statement was recorded in Form GST MOV-01. Following physical inspection, a report was generated in Form GST MOV-04 on 20.01.2022 alleging certain deficiencies. A detention order in Form GST MOV-06 dated 20.01.2022 was also issued.

3.4. Subsequently, a notice dated 21.01.2022 under section 129(3) of the Central Goods and Services Tax Act, 2017²[For short, “the CGST Act, 2017”], was issued in Form GST MOV-07 highlighting the discrepancy of 7 missing bags and the resulting shortfall in quantity from 18220 kg to 17670 kg. It was further alleged that the consignee, M/s. Diamond Trading Company, was prima facie non-existent and that the address of the consignor was incorrect as per departmental records.

3.5. The appellant submitted a detailed reply dated 24.01.2022 to Respondent No.3, denying all allegations. However, in view of pressing business exigencies, the appellant deposited Rs.7,20,440/- towards IGST, as indicated in the show cause notice, through Form GST DRC-03 dated 27.01.2022. Accordingly, the detained goods were released under Form GST MOV-05 dated 27.01.2022.

3.6. Despite the release, no final order under Section 129 (3) was passed by the Mobile Squad. Accordingly, on 26.02.2022, the appellant submitted a representation seeking an order in Form GST MOV-09, to enable it to pursue statutory remedies. In response, by communication dated 03.03.2022, the Mobile Squad Official stated that one Mohd. Javed, the appellant’s representative, appeared on 27.01.2022, orally requested withdrawal of the earlier reply dated 24.01.2022, and sought release of goods, and hence, no further proceedings were deemed necessary.

3.7. The appellant denied having made any oral request to withdraw the reply or abandon further proceedings. Asserting that the authorities are statutorily bound to pass a reasoned order under section 129(3), the appellant sent further communications dated 13.04.2022, 29.04.2022 and 13.05.2022, seeking a copy of the order, if any, passed under said provision.

3.8. Receiving no response, the appellant approached the High Court by filing Writ Tax No.955 of 2022 praying for the following reliefs:

(i) A direction to Respondent No. 3 to furnish a copy of the order passed under Section 129(3) in compliance with Section 129(4) of the U.P. GST Act, pursuant to notice dated 21.01.2022 in Form GST MOV-07;

(ii) A direction to Respondent No.3 to pass a speaking order under Section 129 (3) after affording an opportunity of hearing.

3.9. By the impugned order, the H