2023 (1) TMI 1129 - HC - GST

Goods Detention Invalid: Penalty Order Exceeds Statutory 7-Day Timeline Under Section 129(3) CGST Act

SC examined compliance with section 129(3) of CGST Act, 2017 regarding detention and penalty orders. The court found the penalty order was issued beyond ... Detention, seizure and release of goods and conveyances in transit - notice of detention or seizure to be issued within seven days - time-limit for passing consequential order under section 129(3) - penalty under clause (a) or clause (b) of sub-section (1) - opportunity of being heard before determination of penaltyNotice of detention or seizure to be issued within seven days - time-limit for passing consequential order under section 129(3) - penalty under clause (a) or clause (b) of sub-section (1) - Whether the respondents complied with the time limits prescribed by section 129(3) of the Central Goods and Services Tax Act, 2017 in issuing notice of detention and in passing the consequential order for payment of penalty. - HELD THAT: - Section 129(3) requires the proper officer, after detaining or seizing goods or conveyance, to issue a notice specifying the penalty payable within seven days of such detention or seizure and thereafter to pass an order for payment of penalty within seven days from the date of service of that notice. In the present matter the vehicle and goods were detained on 26.10.2022; the notice was issued on 31.10.2022 which is within seven days of detention. However, the consequential order for payment of penalty was passed on 10.11.2022, which is beyond seven days from the date of service of the notice. The passing of the consequential order after the statutory seven-day period is contrary to the clear mandate of section 129(3). In view of that statutory non-compliance the impugned detention and consequential orders could not be sustained. The court relied on consistent precedent from Single Judges of this Court taking the same view and noted that those orders have attained finality, reinforcing the applicability of the statutory time-limit. [Paras 4, 5, 7]Non-compliance with the seven-day limit in section 129(3) renders the consequential order invalid; the impugned detention and penalty orders are quashed and the detained goods and conveyance are to be released.Final Conclusion: The writ petitions are allowed; the detention order dated 31.10.2022 and the consequential order dated 10.11.2022 are quashed for breach of the time-limit under section 129(3) of the CGST Act, 2017, and the respondents are directed to release the detained goods and conveyance within one week from receipt of this order. Issues:1. Adherence to section 129(3) of the Central Goods and Services Tax Act, 2017.Analysis:The judgment dealt with the challenge against a detention order and a consequential penalty order issued under section 129 of the CGST Act, 2017. The key issue was whether the respondents adhered to the requirements of section 129(3) of the Act. The petitioner's vehicle and goods were detained, and a penalty was imposed, but the penalty order was passed beyond the stipulated time frame of seven days from the date of service of notice, as mandated by section 129(3).The Court examined the provisions of section 129 of the CGST Act, particularly focusing on sub-section (3), which outlines the timeline for issuing a notice of detention or seizure and passing an order for the payment of penalty. It was observed that in the present case, although the notice was issued within the specified seven days, the penalty order was issued after the expiry of the seven-day period. This non-compliance with the statutory timeline rendered the impugned orders invalid.The Court referred to similar cases where other learned Single Judges had taken a consistent view on the interpretation and application of section 129(3) of the CGST Act. The absence of appeals against those judgments indicated that the interpretation had attained finality. Consequently, the Court quashed the detention and penalty orders, directing the release of the detained goods and conveyances within a week from the date of the order, without imposing any costs on the parties.In conclusion, the judgment emphasized the importance of strict adherence to statutory timelines and procedural requirements, especially in matters involving the detention and penalty imposition under the CGST Act. The decision underscored the significance of upholding procedural fairness and statutory compliance in such cases, ensuring that the rights of the parties involved are duly protected.