The Kerala High Court has upheld the right to file an appeal even after opting to pay tax and penalty for release of detained goods under Section 129(1)(a) of the CGST/SGST Acts.
The bench of Justice Gopinath P addressed a critical question: whether payment of tax and penalty to secure release of seized goods automatically concludes all legal recourse available to the taxpayer. The State Government had argued that such payment, as per Section 129(5) of the Act, ends the matter conclusively, blocking further appeal.
The bench however, ruled that even after payment under Section 129(1)(a), the taxpayer retains the right to appeal under Section 107 of the CGST/SGST Acts. The absence of a demand summary in Form DRC-07—necessary for filing appeals—cannot be grounds to deny this statutory right, the court held. It emphasized that procedural lapses in the tax portal or departmental processes cannot override the legislative intent or constitutional guarantees under Article 265.
The petitioners, Hindustan Steel and Cement and B M Steel Agencies had paid dues voluntarily after the detention of their goods by GST mobile squads in Kozhikode. They alleged that without the issuance of Form DRC-07, their right to challenge the detention was effectively blocked, as the GST portal did not accept appeals in the absence of this form.
The court found merit in the petitioners’ arguments, referencing Rule 142(5) of the CGST Rules and Circular No. 41/15/2018-GST issued by the Department of Revenue. These provisions mandate that a summary of the demand must be uploaded in Form DRC-07 even when payment is made voluntarily under MOV-09 orders.
Justice Gopinath concluded that “Whether or not a payment is made under Section 129(1)(a) or security is provided under Section 129(1)(c), the person who is the subject of such proceedings has the right to challenge the same before the appellate authority.”
The High Court directed the concerned authorities to take necessary steps within a month to enable the petitioners to file their appeals. It also ordered the Commissioner of State GST, Thiruvananthapuram, to issue a circular ensuring uniform compliance and to prevent similar issues in the future.
Case Details
Case Title: Hindustan Steel And Cement Versus Assistant State Tax Officer
Case No.: WP(C) NO. 17454 OF 2022
Date: 20/07/2025
Counsel For Petitioner: R.Jaikrishna
Counsel For Respondent: Adv Government Pleader
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