In a significant ruling in M/s ASP Traders v. State of U.P., the Hon’ble Supreme Court clarified that payment of tax and penalty under Section 129(1) of the CGST Act does not absolve GST authorities from passing a formal order under Section 129(3), especially when objections have been filed or payment is made under protest.

Key Takeaways:

The Court held that every show cause notice must culminate in a reasoned order, even if payment is made to secure release of goods.

Mere payment through Form DRC-03 cannot be deemed voluntary if it is driven by business exigencies.

The absence of a speaking order violates the taxpayer’s right to appeal under Section 107 and goes against principles of natural justice and Article 265 of the Constitution.

The Court mandated issuance of Form MOV-09 and DRC-07 for proper legal closure.

⚖️ Verdict: The High Court’s dismissal was overturned. Authorities were directed to pass a reasoned order within one month, ensuring the assessee’s right to contest the demand remains intact.

This judgment reinforces procedural fairness in GST enforcement and ensures that statutory remedies remain accessible to taxpayers.

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