In a recent ruling dated August 21, 2025, the Allahabad High Court addressed the procedural violations concerning the imposition of penalties under the Goods and Services Tax (GST) framework. The case involved M/s MLV Constructions, whose goods were seized on June 21, 2025, followed by penalty proceedings initiated through notices and orders issued to the driver or transporter rather than the owner of the goods. The petitioner contended that the mandatory notice under Section 129(3) of the CGST Act was not served to them, a claim the department could not adequately refute as they failed to provide proof of such service.

The court found that the Assistant Commissioner breached Section 129(3) by directly issuing penalty orders against the driver or transporter without properly notifying the owner. This procedural lapse led the court to set aside the impugned orders, citing them as clear violations of statutory provisions. Furthermore, the court noted that misleading instructions were presented, and the officer involved demonstrated a lack of understanding of the relevant legal framework. Consequently, the court mandated the officer undergo three months of training before resuming such duties.

The State authorities were instructed to issue a fresh show cause notice to the petitioner, ensuring proper service through registered post, SMS, and email. The court emphasized the necessity of issuing a reasoned order after hearing the petitioner's case, underscoring the importance of adhering to statutory requirements in penalty proceedings under the GST regime.