2023 (1) TMI 1129 - HC - GST

Detention of goods alongwith vehicle - whether section 129(3) of the Central Goods and Services Tax Act, 2017 was adhered to by the respondents or not? - HELD THAT - As seen from section 129(3) of the Central Goods and Services Tax Act, 2017, the proper officer after detaining the goods or conveyance shall issue a notice 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) of Section 129. In the instant case, after detaining the petitioner's vehicle and the goods on 26.10.2022, notice was issued by the respondents on 31.10.2022 within seven days from the date of detention. However, the consequential order for payment of penalty was passed only on 10.11.2022 which is beyond the period of seven days from the date of service of notice on the petitioner. Having passed the impugned order beyond the period of seven days from the date of service of notice on the petitioner which is contrary to section 129(3) of the CGST Act, 2017, the impugned orders have to be necessarily quashed and the writ petitions will have to be allowed. The impugned detention order dated 31.10.2022 as well as the impugned consequential order dated 10.11.2022 are hereby quashed and the writ petitions are allowed.

Summary

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.