Case Title, Court, Petition No., Category, Date, Sections
Khaitan Foods India Pvt. Ltd. v. State of U.P. & Ors.
High Court of Judicature at Allahabad
Writ Tax No. 16 of 2025
Category: Penalty under GST detention (Section 129) / Appeal Rights
Date of Judgment: 19.02.2025
Relevant Sections: Section 129(1)(a), 129(3), 161, 107 of the CGST Act, 2017; Rule 142 (DRC-03, DRC-07, DRC-08)
Facts (Paras 1–5)
The petitioner’s vehicle carrying perishable goods was intercepted on 29.08.2024 due to an alleged mismatch between actual goods and invoice details. A detention order (MOV-06) and show cause notice under Section 129(1)(a) were issued. The petitioner explained that the mismatch was inadvertent and sought release due to perishability. When the reply was not accepted, the petitioner deposited penalty via DRC-03 on 05.10.2024 clearly stating “under protest and without prejudice.” On 06.10.2024, penalty order under Section 129(3) imposing ₹22,37,220 was passed and DRC-07 issued. Goods were released on 08.10.2024. However, the authority thereafter passed rectification order under Section 161 treating the payment as voluntary, making demand NIL, which disabled the petitioner from filing statutory appeal.
Questions before the Court (Paras 6–8)
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Whether rectification under Section 161 was valid when penalty was paid under protest.
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Whether treating such payment as voluntary, thereby extinguishing demand and depriving petitioner of right to appeal, was lawful.
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Whether limitation for appeal under Section 107 should be extended due to this rectification.
Observations (Paras 9–11)
The Court noted that though payment was made via DRC-03, it was clearly marked “under protest.” Therefore, it could not be treated as voluntary. Rectifying the penalty order to show NIL demand effectively prevented the petitioner from filing an appeal, depriving them of statutory remedy. Section 161 cannot be invoked in this manner, as it does not empower authorities to take away vested appeal rights. The Court observed that such rectification amounted to an afterthought by the department.
Judgment (Para 12)
The High Court allowed the writ petition, quashing the rectification order dated 08.10.2024. It directed that the period from 08.10.2024 (when rectification was passed) till the date of this judgment (19.02.2025) shall be excluded from computing limitation for appeal against the penalty order dated 06.10.2024.
Table of Referred Cases
(This judgment is largely self-contained and did not cite external case law. Hence, no case references were provided within the text.)
Between Fine Lines
For businesses, this ruling underscores that payments made under protest during GST detention proceedings cannot be construed as voluntary. Authorities cannot nullify demand by rectification to block appellate remedies. Traders should always mark such payments “under protest” to safeguard their right to challenge penalty orders.
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