DETENTION ORDER UNDER SECTION 129(1) OF CGST ACT BEYOND 7 DAYS FROM THE DATE OF NOTICE SERVED – INVALID

Section 129 of the Central Goods and Service Tax Act, 2017 (‘Act’ for short) provides the procedure for detention, seizure and release of goods and conveyance. Section 129(1) provides that where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released-

(a) on payment of penalty equal to 200% of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to 2% of the value of goods or Rs. 25000/-, whichever is less, where the owner of the goods comes forward for payment of such penalty;

(b) on payment of penalty equal to 50% of the value of the goods or 2% of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to 5% of the value of goods or Rs. 25000/-, whichever is less, where the owner of the goods does not come forward for payment of such penalty.

(c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed

Section 129(3) of the Act provides that The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty.

Case laws

In ‘Khatu Enterprises v. State of Gujarat’ – 2025 (10) TMI 1341 - GUJARAT HIGH COURT the High Court analysed the provisions of Section 129(1) and 129(3). The High Court observed that it is incumbent on the part of the Department after detaining or seizing of the goods or conveyance, to issue a notice within 7 days from such detention or seizure, specifying the penalty payable and pass an order within a period of 7 days from the date of service of such notice, for payment of penalty under Section 129(1)(a) or (b) of the Act.

In view of the above the High Court quashed the impugned order of detention of goods and vehicles dated 06.05.2025 issued in Form No. GST MOV-06. The High Court further directed the Department to release the goods and vehicles detained in view of Section 129(3) of the Act. However the High Court the petitioner to reply to the show cause notice issued in Form GST MOV-10 dated 06.08.2025 by the Department, if not already filed, within 15 days from the date of receipt of the order of High Court along with an undertaking to pay the fine in lieu of confiscation of the goods and conveyance, if any order under Section 130 of the Act, is passed against the petitioner by the Department, after giving an opportunity of being heard, to the petitioner.

In ‘Allcargo Logistics Limited v. State of Gujarat’ – 2025 (12) TMI 1732 - GUJARAT HIGH COURT while the consignment of the petitioner was taken from Ranpur to Changodar, the vehicle was intercepted by the Department Offices on 05.11.2025. At that time only the petitioner came to know that there was a clerical error number in the E-Way Bill. On the same day at 07.47 pm the petitioner generated a consolidated E-Way Bill reflecting the correct vehicle number and produced the same before the detaining Officer.

The petitioner gave a reply to the notice on 10.11.2025. In that reply the petitioner indicated that the petitioner is only the transporter and not the owner of the consignment. The vehicle was intercepted only on account of wrong number of the vehicle was entered in the E-Way bills due to two vehicles were loaded at the same time.

However, the Department issued a notice of detention in Form GST MOV-7 under the Act on the same day. The same has not been delivered to the petitioner. The petitioner came to know this when he visited the office of the Department. At that time the notice was handed over to the petitioner.

On 19.11.2025 the Department passed detention order in which the Department held that there was a violation of provisions of Section 68 of the Act read with Rule 138A. It was further alleged that during the interception of the vehicle No. GJ01CT4597 on 05.11.2025, 55 E-way bills were produced in which the vehicle Number was indicated as GJ13AW9143 and there was no valid E-Way Bill, leading to the detention of the goods and conveyance. The Department, therefore, confirmed that tax and penalty under Section 129 of the Act.

The petitioner field the present writ petition before the High Court challenging the order dated 19.11.2025 and notice in Form No. GST MOV-7. The petitioner submitted the following before the High Court-

• The action taken by the Department, which is under challenge is beyond the limitation period and without jurisdiction and in violation of Section 129(3) of the Act.
• The Department did not issue the mandatory summary of show cause notice in Form DRC-01 along with MOV-07 notice, nor was the summary of the order in Form DRC-07 issued along with the MOV-09 order.
• The said documents were not uploaded in the portal or communicated to the petitioner through any of the modes, which is in violation of the procedure prescribed under Rule 142.
• The impugned order was passed in gross violation of the mandatory requirement under Section 129(3) of the Act, which mandates that the proper officer pass the order within 7 days from the issuance of the notice.
• In the present case, the notice was issued on 10.11.2025 and the order was passed on 19.11.2025 which is beyond 7 days. Therefore, there is a violation of the principles of Natural Justice and rendering the order illegal, arbitrary and without jurisdiction.
• The present petition is squarely covered by the case ‘Khatu Enterprises’ (supra).

The Department was unable to controvert the above submissions.

The High Court observed that there is violation of provisions of Section 129(3) of the Act as the order dated 19.11.2025 has been passed beyond the period 7 days from the date of service of notice. The notice in Form GST MOV-7 was issued on 10.11.2025 and the order was passed on19.11.2025, i.e., after the lapse of 7 days. The High Court set aside the impugned order in Form GST MOV-09, dated 19.11.2025, notice in Form GST MOV-07, dated 10.11.2025 under Section 129 of the Act and order of detention in Form GST MOV-06, dated 09.11.2025 under Section 129(1) of the Act.