The Allahabad High Court has granted interim relief to a taxpayer by staying the operation of a GST detention order passed under Section 129 of the CGST/UPGST Act, while directing the release of the detained vehicle and goods upon deposit of ₹1.44 lakh.
The bench of Justice Arun Kumar Singh Deshwal found that the matter required consideration and sought a response from the State authorities.
The case arose from a writ petition challenging an order dated May 3, 2026, passed by the Assistant Commissioner, State Tax Mobile Squad, Lucknow, under Section 129(3) of the GST law, as well as the subsequent appellate order dated June 3, 2026. The petitioner sought quashing of these orders and immediate release of the vehicle carrying the goods.
Before the Court, the petitioner contended that the authorities had wrongly invoked Section 129(1)(b) instead of Section 129(1)(a) of the GST Act. It was argued that the goods had been arbitrarily reclassified as “Pan Masala” without conducting any laboratory examination, making the proceedings legally unsustainable. The petitioner further submitted that the conclusion regarding intention to evade tax was unsupported by evidence and contrary to the statutory scheme of Section 129.
The petitioner also pointed out that the alleged tax evasion involved an amount of only ₹48,000. According to the petitioner, even if the allegations were accepted, the maximum penalty could not exceed ₹96,000. The petitioner expressed willingness to deposit the tax and penalty amount to secure release of the vehicle and goods.
Reliance was placed on an earlier Division Bench judgment of the High Court in M/s M.D. Traders v. State of Uttar Pradesh and Another decided on October 8, 2025. The petitioner argued that the principles laid down in that decision supported its challenge to the detention proceedings.
The court observed that the matter required consideration. The Court directed the State authorities to file a counter affidavit within two weeks, while granting the petitioner one week thereafter to file a rejoinder affidavit. The matter has been directed to be listed afresh on July 21, 2026.
As an interim measure, the High Court stayed the effect and operation of the detention order dated May 3, 2026, subject to the petitioner depositing ₹1,44,000 within one week.
The Court further directed that upon such deposit, the detained vehicle along with the goods loaded therein shall be released in favour of the petitioner.
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