Taxpayers Must Receive Formal Penalty Order After GST Payment, Ensuring Right to Challenge Administrative Actions

HC ruled that GST authorities must issue a formal penalty order (Form GST MOV-09) even after penalty payment. The court found that without an official order, the taxpayer is unable to challenge the penalty, thus violating procedural rights. HC quashed the respondents' previous order and directed issuance of the penalty order within three weeks, ensuring the petitioner's right to potential legal recourse.

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The Allahabad High Court, through Hon'ble Chief Justice Arun Bhansali and Hon'ble Justice Vikas Budhwar, addressed a writ petition challenging the respondents' failure to pass a penalty order under Section 129 of the GST Act, 2017. The petitioner had deposited the penalty amount "under protest," as evidenced by Form GST DRC-03 dated 14.09.2024, and sought issuance of Form GST MOV-09 to formalize the penalty order. The respondents rejected this application, reasoning that no order was necessary once the penalty was paid and goods released.The Court held that "once the amount has been deposited under protest," the authorities are obligated to pass a penalty order in Form GST MOV-09. The absence of such an order "deprives the petitioner of filing the appeal" and thus violates the right to challenge the penalty. The Court emphasized that "unless the penalty order is passed by the authorities, the parties are deprived of challenging the action."Accordingly, the Court quashed the respondents' order dated 28.11.2024 and directed respondent No. 3 to pass the penalty order in Form GST MOV-09 within three weeks, enabling the petitioner to pursue appropriate legal remedies thereafter.

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