Tribunal Not Constituted – Penalty Stayed and Goods Released

Case Title: Ms. Santana Row Fashions LLP v. Additional Commissioner Grade-2 and Another
Court: High Court of Judicature at Allahabad
Petition No.: Writ Tax No. 71 of 2025
Date of Judgement: 15 April 2025
Category of Dispute: Penalty under Detention/Seizure of Goods
Relevant Sections: Section 129(1)(a), 129(3), 107(6), 112 of UP GST Act, 2017; Rule 140 of CGST Rules, 2017

Facts of the Case (Ref. Para 1–5)

1. The petitioner’s goods were detained, and proceedings were initiated under Section 129(3) of the UP GST Act, 2017, leading to imposition of penalty of ₹21,29,889/- under Section 129(1)(a) (para 2).

2. Against the order of the assessing authority, the petitioner filed an appeal under Section 107(6), depositing 25% of the penalty as required under the second proviso of Section 107(6) (para 3).

3. The appeal was rejected by the Additional Commissioner, State Tax, Agra on 29.11.2024 (para 4).

4. Remedy against such appellate order lies under Section 112 before the GST Appellate Tribunal, which has not yet been constituted in Uttar Pradesh (para 5).

Question(s) in Consideration (Ref. Para 6–8)

1. Whether penalty imposed under Section 129(1)(a) can be enforced when the Appellate Tribunal under Section 112 has not been constituted?

2. Whether the petitioner is required to make any further pre-deposit under Section 112 when only penalty is in dispute and no tax component is involved?

3. Whether seized goods can be directed to be released in absence of an operational tribunal?

Observations of the Court (Ref. Para 7–10)

1. Section 112 contemplates pre-deposit only in respect of the tax amount in dispute. Since no tax demand exists and only penalty is under challenge, no further pre-deposit is required (para 6–7).

2. In the absence of a constituted Tribunal, the penalty order shall remain stayed till further orders (para 8).

3. Seized goods should be released if the petitioner complies with Rule 140 of the CGST Rules, 2017, requiring furnishing of security/bank guarantee and execution of bond (para 9).

4. The 25% penalty already deposited while filing the first appeal must be adjusted against the required security (para 10).

Judgement of the Court (Ref. Para 11–12)

1. The writ petition is allowed to the extent that:

   • The impugned penalty order is stayed until the constitution of the Tribunal.

   • The seized goods shall be released subject to compliance with Rule 140 of CGST Rules, 2017.

   • The pre-deposit already made will be adjusted while determining security requirements.

Order Date: 15 April 2025

Between Fine Lines

• Penalty under Section 129(1)(a) was stayed due to non-constitution of the GST Tribunal.

• Since only penalty and not tax was disputed, no fresh pre-deposit under Section 112 was required.

• Seized goods were directed to be released under Rule 140 upon furnishing security.

• The 25% penalty already deposited will count towards security.

• The case underscores the hardship caused by the non-establishment of appellate tribunals under GST.

Summary of Referred Cases

(No referred cases mentioned in this judgement)

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