AGARTALA, NOV 15: Tax authorities in Tripura face judicial censure and possible disciplinary action after the High Court found they collected a Rs 4.96 lakh penalty from a goods transporter without following statutory procedures, including failing to pass an order confirming the penalty despite repeated requests from the affected firm.
The Tripura High Court bench of Chief Justice M.S. Ramachandra Rao and Justice S. Datta Purkayastha delivered the strongly worded judgment on November 5, 2025, ordering a complete refund of the penalty amount with nine percent annual interest and imposing costs of Rs 25,000 on the Superintendent of State Taxes for the procedural violations.
M/S R.G. Group, represented by proprietor Rakesh Debnath, had approached the court challenging the penalty collection that occurred after their consignment of electrical goods was detained on July 9, 2024, at Bagma, Gomati, Tripura. The Inspector of State Taxes detained the goods and issued Form GST MOV-01 and MOV-02 on the same day, stating that “the person-in-charge of goods/conveyance tendered documents such as expired E-Waybills and there was a mismatch with vehicle.”
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On July 10, 2024, the Inspector conducted a physical verification of the goods and issued a report in Form GST MOV-04. The petitioner stated that this report “categorically recorded that no discrepancies were found between the physical goods and those described in the accompanying tax E-Invoices and also as mentioned in the E-Way Bill.”
However, the Superintendent of State Taxes issued a detention order under Section 129 of the CGST Act, 2017, in Form GST MOV-06 on July 10, 2024, followed by a show cause notice in Form MOV-07 on July 11, 2024, proposing to impose a penalty of Rs 4,96,850 under Section 129(1) of the CGST Act, 2017.
The firm submitted a comprehensive reply on July 18, 2024, raising legal and factual objections. These included non-uploading on the common portal of the EWB 03 Part A and B, that GSTR-1 copy of the supplier was produced wherein all such invoices in question were already lodged into the GST system, and that in MOV-4, the final report of inspection, no mismatch was observed amongst the quantities present in the invoice as matched with physical verification. The petitioner prayed that “the allegation of evasion of Tax should be dropped.”
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A significant admission came on July 23, 2024, when the Superintendent of State Taxes issued a letter admitting that “copy of the EWB 03 Part A and B was not uploaded on the common portal owing to a technical glitch in the MS E Way bill portal for SSO integration phase.”
With the goods and vehicle remaining in detention and incurring mounting demurrage costs, the petitioner initially approached the High Court on July 22, 2024, in WP(C) No. 495 of 2024. The court disposed of that petition on July 24, 2024, directing the authorities to conclude the proceedings strictly in accordance with the law and observing that if the petitioner furnishes the security as required under Section 129 of the CGST Act, 2017, the detained goods and conveyance may be released.
To secure immediate release, the petitioner paid the full penalty amount of Rs 4,96,850 on July 26, 2024, through Form DRC-03 instead of furnishing security. Crucially, the petitioner simultaneously addressed a letter to the Superintendent of State Taxes on the same date, stating that he was “paying the full penalty amount in dispute and specifically requesting the said officer to pass MOV-09 order within the time frame so that he can challenge it in appeal before the appellate authority.”
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Section 129(3) of the CGST Act mandates that “the proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section(1).”
The court noted that while the show cause notice in Form GST MOV-7 complied with the first part of Section 129(3), “the later part of the said sub-section i.e., to pass an order justifying the penalty proposed and confirming the penalty, obviously by dealing with petitioner’s explanation dt.18.7.2024 and giving reasons why it is not proper, has also to be done by respondent no.4.”
When the case came up before the bench on November 3, 2025, the court specifically asked counsel for the respondents to produce the copy of any order passed in MOV-09 under Section 129(3) of the Tripura State Goods and Services Tax Act, 2017. On November 5, 2025, counsel for respondents reported that since the petitioner had paid the penalty voluntarily, the goods were released and no order under Section 129(3) in MOV-09 was passed or was required to be passed. Counsel pointed out that a similar reply had been given on August 14, 2024, by the Superintendent of State Taxes to the petitioner.
The court expressed strong disapproval of this position, stating that it was “shocked to hear the submission on behalf of the counsel for the respondent.” The bench observed that “notwithstanding the statutory mandate under Section 129(3) of the Tripura State Goods and Services Tax Act, 2017, no order was passed by respondent No.4 justifying the imposition of penalty on the petitioner till date, for more than 16 months.”
The court emphasized that the petitioner’s letter dated July 26, 2024, “clearly indicates that the payment of the penalty was made by petitioner only to secure the release of the goods and vehicle and was not intended to be an acceptance of the liability to suffer the penalty since the petitioner clearly indicated his intention to challenge the penalty order in appeal before the appellate authority.”
In its judgment, the court held that “such a payment of penalty under economic duress cannot be treated by the respondents as a voluntary payment of penalty exonerating the respondents from passing an order as mandated by the later part of sub-section (3) of Section 129 justifying imposition of penalty on the petitioner.”
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The bench further held that “in the absence of an order passed by respondent no.4 confirming the penalty proposed on the petitioner with reasons after considering petitioner’s representation dt. 18.7.2024 to the show cause notice dt.11.7.2024 issued to it, the very levy and collection of penalty under Section 129(1) on/from the petitioner by respondents is without authority of law and violates Art.14. Art.19(1)(g), Art.265 and Art.300-A of the Constitution of India.”
The writ petition was allowed, with the court directing respondents to refund the entire amount of penalty paid by the petitioner within two months with interest at nine percent per annum from the date of payment till the date of refund. The Superintendent of State Taxes has been ordered to pay costs of Rs 25,000 to the petitioner “for not passing an order justifying the penalty under Sub-Section (3) of Section 129 of the Tripura State Goods and Services Tax Act, 2017, and compelling it to pay the penalty to secure the release of the goods.”
In a significant directive, the court ordered that the Secretary of Finance Department and Commissioner of Tripura State Taxes “shall look into this conduct of the respondent no.4 in not complying with the mandatory provisions of the Tripura State Goods and Services Tax Act, 2017, and if necessary, initiate disciplinary action against him.”
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The petitioner was represented by advocates Samar Das and Kaushik Paul. Senior Government Advocate P. Gautam, Deputy Solicitor General B. Majumder, and advocate S. Choudhury appeared for the respondents.