Allahabad High Court directs release of goods against bank guarantee while examining whether orders under Section 129 can be passed by Proper Officer instead of Adjudicating Authority

Case Details

• Case Title: M/S Jai Shree Traders v. State of U.P. and Others

• Court: High Court of Judicature at Allahabad, Court No. 40

• Petition No.: Writ Tax No. 1731 of 2024

• Date of Judgment/Order: 17.10.2024

• Bench: Hon’ble Shekhar B. Saraf, J. & Hon’ble Vipin Chandra Dixit, J.

• Category of Dispute: Seizure of goods and levy under Section 129 – Validity of adjudication by Proper Officer, delegation of powers

• Relevant Sections: Section 129(1)(a), Section 129(3), Section 107 of CGST/UPGST Act, Rule 140(1) of UPGST Rules, 2017

Facts (Paras 1–3)

The petitioner, M/s Jai Shree Traders, challenged orders dated 22.09.2024 issued in Form GST MOV-09 and DRC-07, both passed under Section 129 of the UPGST Act, 2017. The petitioner argued that the orders had been passed by the Proper Officer instead of the Adjudicating Authority, which deprived him of appellate remedy under Section 107. It was also contended that delegation of adjudication powers by way of Circular No. 278/GST/2017-18 dated 01.07.2017 was invalid, as the Commissioner himself is not an Adjudicating Authority and thus cannot sub-delegate such power.

Questions before the Court (Paras 2–3)

1. Whether an order under Section 129(3) of the UPGST Act passed by a Proper Officer instead of an Adjudicating Authority is sustainable in law.

2. Whether the Commissioner’s circular delegating such powers is valid in the absence of express statutory authority.

3. Whether appeal under Section 107 can be availed when the order is not by an Adjudicating Authority.

Observations (Paras 4–6)

The Court noted that the issues raised required deeper examination and directed exchange of affidavits. Meanwhile, it recorded that orders had already been passed under Section 129(1)(a) and Section 129(3). The petitioner expressed willingness to furnish security to secure release of goods.

The Court invoked Rule 140(1) of UPGST Rules and directed the release of seized goods upon furnishing of bank guarantee equivalent to the demanded liability. It ordered that goods be released within one week of furnishing such guarantee.

Judgment / Interim Relief (Paras 6–7)

• The matter was admitted for further consideration, listed for 06.01.2025.

• Counter-affidavit to be filed within four weeks and rejoinder within three weeks thereafter.

• Interim relief was granted by directing respondents to release goods within one week of furnishing bank guarantee under Rule 140(1).

Thus, while final adjudication is pending, the petitioner obtained release of goods, and the larger question of whether a Proper Officer can exercise adjudicatory powers under Section 129 remains open.

Table of Cases Referred

(No external precedents were cited in this order; matter admitted for detailed consideration.)

Between Fine Lines (Practical Takeaway)

For traders and transporters, this ruling underlines that even if the legality of orders under Section 129 is under judicial scrutiny, goods cannot be indefinitely withheld. Furnishing a bank guarantee under Rule 140(1) ensures immediate release, pending final resolution. The larger issue of jurisdiction between Proper Officer and Adjudicating Authority may set a precedent affecting appeal rights under Section 107.

Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”