Voluntary Payment of GST Penalty concludes all Proceedings u/s 129: Orissa HC [Read Order]

The Orissa High Court recently reaffirmed that all proceedings under Section 129 of the Central Goods and Services Tax Act, 2017 (CGST Act) once the arraigned entity voluntarily pays the proposed penalty.

A civil writ petition was filed before the High Court of Orissa at Cuttack by M/s Khanna Engineering, Rourkela. The facts follow the detention of a truck containing the consignment of a client of the petitioner on 5th July, 2024.

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Owing to the urgent nature of the consignment, the client paid the penalty of ₹5,37,656 and secured the release of the truck. However, it was averred that the detention by the authorities had been conducted illegally, furthermore, the fact that no order was made within a period of seven days from the date of service of the notice, as provided by section 129(3) of the Odisha GST Act, 2017 led to the present petition.

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C.R. Das, appearing for Khanna Engineering submitted that the petitioner had filed a petition dated 4th September, 2024 seeking passing of order in Form GST MOV-09, which was rejected by the authorities - the same was contended to be bad in law.

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S. Mishra and A. Kedia, submitted that the petitioner had paid the due penalty and the offence stood compounded then and there, following which the truck was released. In the instance that the petitioner admitted his liability, he may not be permitted to turn around and seek adjudication on merits later.

The Division Bench of Acting Chief Justice Arindam Sinha and Justice M.S. Sahoo examined the relevant statutory provisions and noted that under Section 129(5), “on payment of the amount referred to in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded.”

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The Bench observed that Khanna Engineering had received the notice, calculated the penalty under Section 129(1)(a), and paid the full amount the same day, thereby invoking sub-section (5) and extinguishing any ongoing proceedings.

Considering that the penalty was paid, there was no requirement for the authorities to issue a further order in Form GST MOV-09, and the petitioner could not turn around and challenge the detention on technical grounds. Finding no merit in the petition, the Orissa High Court proceeded to dismiss the matter.

To Read the full text of the Order CLICK HERE

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