TaxTMI 
TaxTMI 
2026 (4) TMI 1206
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....MOV-06 dated 16.02.2026 and consequential notice in Form GST DRC-01 dated 16.02.2026 passed by the respondent no.2 (Annexure- 8 & 9 to the writ petition). D. Issue a writ, order or direction in the nature of mandamus directing the respondents to release the goods and vehicle forthwith without demanding any security. E. Issue a writ, order or direction in the nature of mandamus directing the respondent authorities not to take coercive steps against the petitioner pursuant to the impugned order." 3. The facts in brief are, the petitioner is a partnership firm registered in the State of Bihar, under the Bihar GST Act, 2017. It claims to have entered into a transaction for supply of walnuts to M/s G.M. Enterprises, New Delhi, another firm registered under the Delhi GST Act, 2017. According to the petitioner, the goods were being transported on vehicle bearing registration no. RJ 14 GT-2755. They were accompanied with Tax Invoice and the E-way bill. The goods were to transit through the State of Uttar Pradesh. In that circumstance, respondent no. 2 intercepted the goods loaded on the said vehicle, on 10.02.2026, at about 1.34 PM. MOV-02 for physical verification of ....
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....arted from that pre-existing statutory provision. It has provided a rigid/fixed time line to issue show cause notice- within 7 days from detention and to pass penalty orders within 7 days from issuance of such show cause notice. Relying on ASP Traders vs. State of Uttar Pradesh and Others, 2025 INSC 890, it has been submitted that by use of words "and thereafter" under sub-section (3) of section 129 of the Act, the legislature has clearly provided that the order be passed within 7 days from the show cause notice. 9. Further, reliance has been placed on the decision of the Gujarat High Court in M/s All Cargo Logistic Limited Vs. State of Gujarat and Others, R/Special Civil Application No. 16748 of 2025 decided on 22.12.2025 after following earlier division bench decision of that High Court, in Khatu Enterprises vs. State of Gujarat and Others, 2025:GUJHC:62863-DB. 10. Also, reliance has been placed on a decision of the Patna High Court in Pawan Carrying Corporation vs State of Bihar and Another, (2024) 85 NTN DX 121. Further reliance has been placed on a decision of Orissa High Court in M/s RSL Overseas LLP, Kolkata and Another vs. State of Odisha and Others, W.P. (C) No. 2154....
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....he amendment, sub-section (2) has been initiated and section 129(3) reads as below: "(3) 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 under clause (a) or clause (b) of sub-section (1)." (emphasis supplied) 16. A bare perusal of that statutory provision clearly brings out that the legislature has still not provided for any consequence that may follow inaction on part of the "proper officer", if he fails to issue show cause notice within 7 days from detention or seizure of goods or conveyance or if he fails to pass an order within 7 days from the date of issuance of such notice. 17. Therefore, it falls for our consideration- if by the use of words "shall" and by employing the phrase "and thereafter pass an order within a period of seven days", the legislature has caused a mandatory effect in law that such show cause notice must be issued (without fail) within 7 days from the date of detention etc., the penalty order must necessari....
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....and under which circumstance is those words may create a mandatory or a directory effect in law. 20. Two discernible tests exist - one based on 'object and purpose' of the statutory provision, and also based on the 'consequence' of non-compliance of that statutory provision and third applicable to procedure. 21. In State of U.P. Vs. Babu Ram Upadhya; 1960 SCC Online SC 5, the Supreme Court observed as below: "29. The relevant rules of interpretation may be briefly stated thus : When a statute uses the word "shall", prima facie, it is mandatory, but the Court may ascertain the real intention of the legislature by carefully attending to the whole scope of the statute. For ascertaining the real intention of the Legislature the Court may consider, inter alia, the nature and the design of the statute, and the consequences which would follow from construing it the one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstance, namely, that the statute provides for a contingency of the non-compliance with the provisions, the fact that the non-compliance with the provisions ....
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.... (emphasis supplied) 23. In Raza Buland Sugar Co. Ltd Vs. Municipal Board, Rampur; 1964 SCC Online SC 119, that rule was applied - determine if the provision was mandatory or directory. In that regard, it was observed as below: "7. We shall first consider the ground as to publication and three questions fall to be decided in that behalf : (firstly) is publication as provided in Section 13(3) mandatory or directory, for it is contended on behalf of the respondent that publication under Section 131(3) is merely directory; (secondly), was the publication in this case strictly in accordance with the manner provided in Section 94(3); and (thirdly), if the publication was not strictly in accordance with the manner provided in Section 94(3), is the defect curable under Section 135(3)? 8. The question whether a particular provision of a statute which on the face of it appears mandatory, inasmuch as it uses the word "shall" as in the present case - is merely directory cannot be resolved by laying down any general rule and depends upon the facts of each case and for that purpose the object of the statute in making the provision is the determining factor. The purpose for ....
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....vesting a residuary power in judges to act ex debito justitiae where the tragic sequel otherwise would be wholly inequitable. ... Justice is the goal of jurisprudence - processual, as much as substantive." (emphasis supplied) 26. Further, in Dove Investments (P) Ltd. Vs. Gujarat Industrial Investment Corporation; (2006) 2 SCC 619, the purpose of the statutory provision was examined to determine if its non-compliance would render the whole exercise futile. 27. Next, in Ram Deen Maurya (Dr.) Vs. State of U.P., (2009) 6 SCC 735, it has been observed as below : "52. While considering the non-compliance with procedural requirement, it has to be kept in view that such a requirement is designed to facilitate and furthers its ends and, therefore, if the consequence of non-compliance is not provided, the requirement may be held to be directory." (emphasis supplied) 28. Last, in Mahadev Govind Gharge Vs. LAO, (2011) 6 SCC 321, it was observed that procedure should be construed as directory unless there exists a condition precedent. 29. Then, in Sharif-ud-Din Vs. Abdul Gani Lone, (1980) 1 SCC 403, the 'consequence' test was applied to determine whether the s....
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....vent of non-compliance were found to be directory. In that regard, it was observed as below : "12. We would like to observe that the decision of this Court in the cases of National Sewing Thread Co. [(1953) 1 SCC 794 : AIR 1953 SC 357] and Vasantlal Maganbhai Sanjanwala [AIR 1961 SC 4] would not be applicable to the case in hand. In those cases it was held that a power which is vested in the court can be exercised repeatedly in the absence of intention to the contrary contained in the statute. Such a question is not involved in the present case. The power to extend time under clause (a) is with a rider that the extension may not exceed 15 days. We have, however, already held that the provision saying that extended time may not exceed 15 days is directory in nature. It does not mean that orders extending the time to file reply may be passed repeatedly unmindful of and totally ignoring the provision that the extension may not exceed 15 days. This provision has always to be kept in mind while passing an order extending the time to file a reply to the petition. It is another matter, as we have found that in case time is extended exceeding 15 days, it may not be a kind of illeg....
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....time permitted or fixed by the court, as the case may be, the court shall pronounce judgment against him, or make such order in relation to the suit as it thinks fit and on the pronouncement of such judgment a decree shall be drawn up: Provided further that no court shall make an order to extend the time provided under Rule 1 of this Order for filing of the written statement." A perusal of these provisions would show that ordinarily a written statement is to be filed within a period of 30 days. However, grace period of a further 90 days is granted which the Court may employ for reasons to be recorded in writing and payment of such costs as it deems fit to allow such written statement to come on record. What is of great importance is the fact that beyond 120 days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the Court shall not allow the written statement to be taken on record. This is further buttressed by the proviso in Order 8 Rule 10 also adding that the court has no further power to extend the time beyond this period of 120 days." (emphasis supplied) 32. In Rama Devi vs. State of U.P. And Oth....
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....w of the case in that aspect decide whether the matter is what is called imperative or only directory.' ................ 37. Procedural laws, like the Code, are intended to control and regulate the procedure of judicial proceedings to achieve the objects of justice and expeditious disposal of cases. The provisions of procedural law which do not provide for penal consequences in default of their compliance should normally be construed as directory in nature and should receive liberal construction. The Court should always keep in mind the object of the statute and adopt an interpretation which would further such cause in light of attendant circumstances. To put it simply, the procedural law must act as a linchpin to keep the wheel of expeditious and effective determination of dispute moving in its place. The procedural checks must achieve its end object of just, fair and expeditious justice to parties without seriously prejudicing the rights of any of them." (emphasis supplied) 33. Further, yet another coordinate bench in Vivek Kumar Sharma and Another vs. High Court of Judicature At Allahabad And 16 Others, 2023:AHC:159984-DB, had the occasion to consider....
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.... whereby the necessity of complying with the provisions in question is avoided; the circumstances, namely, that the statute provides for a contingency of the non-compliance with the provisions; the fact that the non-compliance with the provisions is or is not visited by some penalty; the serious or the trivial consequences, that flow therefrom; and above all, whether the object of the legislation will be defeated or furthered. If object of the enactment will be defeated by holding the same directory, it will be construed as mandatory, whereas if by holding it mandatory serious general inconvenience will be created to innocent persons without very much furthering the object of enactment, the same will be construed as directory." (pp. 339-40)" (emphasis supplied) 35. In Commissioner, Customs and Central Excise vs. Sri Ram Piston & Rings, 2019 (369) ELT 631 (All.), a coordinate bench had the occasion to consider the issue in the context of CENVAT Rules. In that regard, it was discussed as below: "19. In this background it needs to be examined whether the requirement of Rule 4A of Service Tax Rules read with Rules 7 & 9 of CENVAT Rules is imperative/ mandatory or directo....
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.... Nanchappa Chettiar [(1928) MWN 441] by Russel, J., in In re Rustom [(1901) ILR 26 Bom 396 : (1901) 3 Bom LR 653] by Venkatasubba Rao, J., in Jethaji Peraji Firm v. Krishnayya [(1929) ILR 52 Mad 648, 656] and by the Judicial Committee in Burjore and Bhavani Pershad v. Mussumat Bhagana [(1883) LR II IA 7]. 21. Then, in the case of P.T. Rajan v. T.P.M. Sahir, (2003) 8 SCC 498, the Supreme Court considered the purpose and object of the relevant provision and whether the provision itself was part of a procedural/machinery provision or substantive provision-to interpret whether the word 'shall' appearing therein was imperative/mandatory or directory. Further, it was found that procedural provision would not be mandatory despite word 'shall' being employed, unless prejudice was caused. 22. In that case a dispute had arisen whether the word 'shall' used in section 23(3) of the Representation of the Peoples Act, 1950 was imperative/mandatory or merely directory. Under that provision if satisfied, the Electoral Registration Officer shall direct the name of an applicant to be registered in the electoral roll. However that exercise was to be completed....
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.... Furthermore, even if the statute specifies a time for publication of the electoral roll, the same by itself could not have been held to be mandatory. Such a provision would be directory in nature. It is a well-settled principle of law that where a statutory functionary is asked to perform a statutory duty within the time prescribed therefor, the same would be directory and not mandatory. (See Shiveshwar Prasad Sinha v. District Magistrate of Monghyr [AIR 1966 Pat 144 : ILR 45 Pat 436 (FB)], Nomita Chowdhury v. State of W.B. [(1999) 2 Cal LJ 21] and Garbari Union Coop. Agricultural Credit Society Ltd. v. Swapan Kumar Jana [(1997) 1 CHN 189].) 49. Furthermore, a provision in a statute which is procedural in nature although employs the word "shall" may not be held to be mandatory if thereby no prejudice is caused. (See Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur [AIR 1965 SC 895 : (1965) 1 SCR 970], State Bank of Patiala v. S.K. Sharma [(1996) 3 SCC 364 : 1996 SCC (L&S) 717], Venkataswamappa v. Special Dy. Commr. (Revenue) [(1997) 9 SCC 128] and Rai Vimal Krishna v. State of Bihar, (2003) 6 SCC 401." 23. Then in Dove Investments (P) Ltd. v. Gujarat Industr....
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....atute creates a duty, the special remedy is prescribed for non-performance of the duty. In Craies on Statute Law (7th Edn.), it is stated that the court will, as a general rule, presume that the appropriate remedy by common law or mandamus for action was intended to apply. General rule of law is that where a general obligation is created by statute and statutory remedy is provided for violation, statutory remedy is mandatory. The scope and language of the statute and consideration of policy at times may, however, create exception showing that the legislature did not intend a remedy(generality) to be exclusive. Words are the skin of the language. The language is the medium of expressing the intention and the object that particular provision or the Act seeks to achieve. Therefore, it is necessary to ascertain the intention. The word ''shall' is not always decisive. Regard must be had to the context, subject-matter and object of the statutory provision in question in determining whether the same is mandatory or directory. No universal principle of law could be laid in that behalf as to whether a particular provision or enactment shall be considered mandatory or directory. ....
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....ce of notice under Section 129 is an ex-parte action on part of the Proper Officer, and is part of the procedural law, without providing for a 'consequence' of lapse of jurisdiction, if the prescribed timeline is violated/non-adhered, we see no reason why issuance of such notice may be biased (by law), if it is issued outside that timeline indicated by the statute i.e. 7 days from detention. To that extent, the statutory timeline only emphasizes procedural efficiencies and discipline, to be maintained by the Proper Officer. 39. However, any violation of that timeline may invite departmental action and judicial wrath, in appropriate facts. To that extent, the concerned officers must ever remain vigilant and must ensure that such notices are issued within the timelines indicated by the statute. Failing that, they should be first made answerable, departmentally - for causing any unwarranted/unexplained delay. If any action is brought before the departmental and appellate authorities and Courts, the issue may be examined in individual facts of each case. 40. Insofar as the second stipulation of time of 7 days - to complete the action is concerned, that period of time is a....
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....diction under Article 226 of the Constitution of India on those counts, or to examine the conduct of the Proper Officer. 45. Insofar as the merit issue is concerned, here the petitioner claims, he was a registered dealer on the date of transaction being initiated and the Tax Invoice being issued. His registration in the State of Bihar has been suspended subsequently i.e. after interception of the goods. Therefore, the petitioner is a bonafide owner of the goods, as claimed. Resultantly, he is entitled to claim release of the goods against security to be furnished (against penalty under section 129(1)(a) of the Act). To that relief, we find the petitioner is entitled. Accordingly, leaving it open to the petitioner to avail other statutory remedy against penalty, in the entirety of the facts, let goods and the vehicle of the petitioner be released against the deposit of amount equal to penalty (under protest) in terms of section 129(1)(a) of the Act. Subject to such compliance, the goods and the vehicle may be released, forthwith. 46. Before we part, we may also note that similar petitions do arise before the Court, time and again. To the extent, the legislative intent to condu....