In this case, the authorities detained a vehicle carrying electrical items and demanded nearly ₹5 lakh as penalty, claiming issues with the e-way bill and vehicle details. Although the transporter paid the amount to get the goods released, the tax department never issued the required final order under Section 129(3), which must outline the reasons and the basis for the penalty.

The court noted that without this order, the penalty had no legal foundation. It also stated that taking money from a taxpayer without following due process violates constitutional protections related to equality, the right to conduct business and the rule that no tax or penalty can be collected without lawful authority.

As a result, the High Court directed the government to return the entire penalty amount, along with 9% interest from the date of payment. The judges further said that the department may initiate action against the officials responsible for ignoring the statutory procedure.

The verdict reinforces that GST authorities must strictly follow the law when detaining goods and imposing penalties, and that taxpayers cannot be forced to pay amounts that are not supported by proper legal orders.

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