Case Details
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Case Title: M/s Shivaji Udhyog v. Additional Commissioner Grade-2 Appeal-II and Another
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Court: High Court of Judicature at Allahabad
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Petition No.: Writ Tax No. 1234 of 2024
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Date of Judgment: 09.01.2025 (Reserved on 19.12.2024)
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Judge: Hon’ble Justice Piyush Agrawal
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Category of Dispute: Detention & Seizure of Goods (Section 129 – Intention to Evade Tax)
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Relevant Sections: Section 129(3), Sections 153 & 154, Rule 142(6) of CGST/UPGST Act & Rules
Facts (Paras 2–6)
The petitioner, M/s Shivaji Udhyog, a partnership firm manufacturing edible oils, supplied R.B. oil to M/s Shiv Shakti Enterprises, Bihar. E-invoice and e-way bill were duly generated. Goods, while in transit from Gwalior to Bihar, were intercepted in Auraiya (UP) on 12.06.2023. Authorities alleged the goods were not R.B. oil but mustard oil. Without issuing mandatory notice in MOV-07 or drawing samples for laboratory testing, a detention order (MOV-06) and summary order under Section 129(3) were passed. The first appeal was dismissed, prompting the writ petition.
Questions Before the Court
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Whether goods could be seized without drawing samples and obtaining expert reports to establish mis-description.
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Whether proceedings under Section 129(3) are valid in absence of any finding of intention to evade tax.
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Whether non-issuance of MOV-07 before raising demand via MOV-09 and DRC-07 vitiates proceedings.
Court’s Observations (Paras 9–14)
The Court noted that:
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Goods were moving inter-State with valid invoice and e-way bill.
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Authorities assumed goods to be mustard oil instead of R.B. oil merely on visual inspection, without sampling or expert opinion. This was impermissible as officers are not experts.
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Section 129(3) proceedings require proof of intention to evade tax. Neither the seizure order nor the appeal order recorded such intention.
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DRC-07 is only a summary of an order, not a substitute for proper proceedings under MOV-07/MOV-09.
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The procedure adopted was contrary to statutory requirements, rendering proceedings without jurisdiction.
Judgment (Paras 15–16)
The High Court held that absence of a finding on tax evasion intention and failure to follow proper procedure vitiated the entire proceedings. Accordingly:
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The appellate order dated 12.03.2024,
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The detention order (MOV-06) dated 14.06.2023, and
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The summary order under Section 129(3) dated 14.06.2023
were quashed.
The writ petition was allowed in favour of the petitioner.
Table of Cases Referred
| Case | Court’s reliance / ratio |
|---|---|
| Circular dated 13.04.2018 (CBIC) | Mandates issuance of MOV-07 before MOV-09, reinforcing procedural lapses in this case. |
| No specific judicial precedent cited in judgment | Court based decision on statutory interpretation of Section 129(3), Rule 142, and requirement of proving intent. |
Between Fine Lines (Practical takeaway)
For industry, this judgment reinforces that mere suspicion or visual observation cannot justify detention of goods. Authorities must prove intention to evade tax and follow the mandatory statutory procedure (issuance of MOV-07, sample testing, expert opinion) before raising penalty demands. For businesses, keeping documents in order (invoice + e-way bill) and challenging arbitrary detentions can safeguard against unlawful penalties.
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