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

Section 129 of the Central Goods and Services Tax Act, 2017 gives powers to the proper officer to detain, seize and release of goods and consignments during transit. Section 129(3) of the Act provides that the proper officer detaining or seizing goods or conveyance shall issue a notice within 7 days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of 7 days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).

It is, therefore, the incumbent upon the authority after detaining or seizing of the goods or conveyances to issue a notice within 7 days from such detention, seizure, specifying the penalty payable and pass an order within 7 days from the date of service of such notice, for payment of penalty under Section 129(1) (a) or (b) of the Act. If the above said period is not complied with then the detention, seizure will be held invalid.

In KHATU ENTERPRISES Versus STATE OF GUJARAT & ORS. - 2025 (10) TMI 1341 - GUJARAT HIGH COURT, the High Court observed that the various High Courts confirmed the proposition of the law provided in Section 129(1)(a) or (b) of the Act. The High Court further agreed to the proposition that when the Department has failed to issue notice as required under Section 129(3) of the Act the detention order is liable to be quashed and set aside. In the present case the detention of goods order was issued on 06.05.2025 in Form GST MOV 06. The High Court quashed the impugned order since the same was not in compliance of the provisions of the Act. The High Court held that petitioner was required to reply to the notice in Form GST MOV 10 dated 06.08.2025. If reply is not filed by the petitioner within 15 days from the date of receipt of the copy of this order 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 Authority, after giving an opportunity of hearing to the petitioner.

In M/s. Allcargo Logistics Limited Through Its Distribution Manager Vijay Kumar Versus The State of Gujarat & Ors. - 2025 (12) TMI 1732 - GUJARAT HIGH COURT the petitioner took consignments from Ranpur to Changodar. During the course of travel, the vehicle was intercepted by the Department Officers at 07.30 pm at Bhamasara Bridge, Ahmedabad Bagodara Highway. The Officers issued GST MOV – 01, dated 05.11.2025 and GST MOV – 02 on the same day. It was alleged that nearly 55 E-Way bills were accompanied the consignment. Further the vehicle mentioned in E-Way Bills is different from that of the vehicle actually carrying the consignment. After issue of MOV – 01 and MOV – 02, the petitioner came to know that there was clerical error regarding the mentioning of incorrect vehicle number in the E-way bills.  The petitioner, immediately generated a consolidated E-Way bill reflecting the correct number of the vehicle. The same was produced before the detaining officer.

The petitioner submitted a detailed reply to the Authority explaining that the petitioner is only the transporter and not the owner of the consignment. The petitioner further explained that the interception occurred only because the wrong mentioned of the vehicle number because two vehicles were loaded at the same time.

The Department, thereafter, issued a notice in Form GST MOV – 07 on 10.11.2025 under Section 129 (3) of the Act on the same day. However, the same was not received by the petitioner through any mode. The said notice was delivered to the petitioner, when he visited the officer of the respondents. The Proper officer proceeded to pass order in Form GST MOV – 09 alleging that during interception and passed order on 19.11.2025 i.e., after 7 days from the date of issue of notice. The said order held that there was violation of the provisions of Section 68 of the Act read with Rule 138A and thereby confirmed the tax and penalty under the provisions of Section 129 of the Act.

The petitioner filed the present writ petition with the prayer to quash and set aside-

• the order dated 19.11.2025 passed in Form GST MOV – 09;
• notice issued on 10.11.2025 in Form GST MOV – 07 under Section 129(3) of the Act; and
• order of detention in Form GST MOV 06, dated 09.11.2025 under Section 129(1) of the Act.

The petitioner submitted the following before the High Court-

• The Department did not issue mandatory summary of show cause notice in Form DRC-01 along with Form GST MOV – 07 notice and also summary of order in Form GST MOV 09 order.
• The above documents have not been uploaded in the GST portal or communicated to the petitioner, which is in contravention 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 violating the principles of natural justice and thus render illegal, arbitrary and without jurisdiction.

The High Court held that in the present case, there is violation of the provisions of Section 129(3) of the Act. The order has been passed on 19.11.2025 beyond the period of 7 days from the service of the notice. Therefore, the High Court quashed the impugned order, dated 19.11.2025, notice in Form GST MOV – 07, dated 10.11.2025 and order of detention dated 09.11.2025.