Case Details
Case Title: S.S. Enterprises v. State of U.P. and Another
Court: High Court of Judicature at Allahabad
Petition No.: Writ Tax No. 3026 of 2025
Date of Judgment: 09.07.2025
Category of Dispute: Penalty under Section 129 – Ownership of Goods during Detention
Relevant Provisions: Section 129(1)(a), Section 129(1)(b), Section 129(3) of CGST/UPGST Act, Circular No. 76/50/2018-GST dated 31.12.2018
Facts (Paras 1–3, 5)
S.S. Enterprises challenged the penalty order dated 24.06.2025 passed under Section 129(3) of the UPGST Act, which treated it as not being the owner of the detained goods and imposed penalty under Section 129(1)(b). The petitioner had sought quashing of the penalty and release of goods and vehicle seized on 11.06.2025. The department argued that (i) the petitioner responded only through email without appearing in person, and (ii) on verification, no activity was found at the principal place of business, leading to suspension of registration.
Questions for Consideration
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Whether a reply filed through registered email without physical presence can be held against the petitioner in detention proceedings?
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Whether absence of business activity at the principal place of business can justify treating invoices as fake and denying ownership of goods under Section 129?
Observations (Paras 5–6)
The Court observed that replying through registered email on the GST portal is a valid response and cannot be treated as non-cooperation unless the petitioner was specifically summoned and failed to appear. The absence of business activity at the registered place of business cannot by itself lead to a presumption that the invoices were fake or that the petitioner was not the owner of the goods. Since the petitioner’s name appeared on the invoice and he sought release of goods, Circular No. 76/50/2018-GST (Clause 6) applied, deeming the petitioner as the owner. Reliance was placed on M/s Halder Enterprises v. State of U.P. (2024 (2) ADJ 660 DB), where similar issues were adjudicated.
Judgment (Paras 6–8)
The High Court quashed the penalty order dated 24.06.2025 and directed the authority to grant the petitioner a hearing and pass a reasoned order in accordance with law, keeping in mind the ratio of Halder Enterprises. The process was to be completed within eight weeks.
Case Law Referred
| Case | Court | Year | Principle / Verdict |
|---|---|---|---|
| M/s Halder Enterprises v. State of U.P. | Allahabad High Court (DB) | 2024 | Clarified that ownership of goods is to be recognized from invoices, and Circular No. 76/50/2018 applies. Absence of activity at principal place of business cannot negate ownership or render invoices fake. |
Between Fine Lines
For businesses, this judgment confirms that ownership of goods cannot be denied merely because the registered premises were inactive at the time of inspection. GST authorities cannot equate electronic replies with non-cooperation. As long as invoices bear the buyer’s name and Clause 6 of Circular No. 76/50/2018 is satisfied, the buyer will be treated as the owner of goods and penalty under Section 129(1)(b) is not sustainable.
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