The Patna High Court in the case of M/S KEDIA ENTERPRISES VERSUS THE STATE OF BIHAR, THE JOINT COMMISSIONER OF STATE TAX, BHAGALPUR vide Order No. Civil Writ Jurisdiction Case No. 11021 of 2024 dated 25.09.2024, has held seven days limitation period prescribed under Section 129(3) of the Central Goods and Services Tax Act for passing an order of penalty, after notice has been issued to the goods owner/ transporter for violation of the CGST Act- is mandatory in nature. Reliance placed upon the judgment in Pawan Carrying Corporation vs Commissioner CGST & Central Excise & Ors, where the court had found that no penalty order could be passed beyond the limitation period.
Facts of the Case: The petitioner’s vehicle carrying goods was detained on 30.03.2024. A physical verification of the goods was conducted on the same day. A notice was uploaded on the GST portal on 04.04.2024, and served within the 7-day period from the detention of the vehicle on 30.03.2024. The petitioner was given until 11.04.2024 to file a reply, but 11.04.2024 was a public holiday. The petitioner filed the reply on 12.04.2024. The order was passed on 18.04.2024, whereas it should have been passed by 12.04.2024 i.e. after considering the public holiday on the 11th.
The petitioner contended that the delay in passing the order violated Section 129(3) of the CGST Act. The Petitioner relied on a prior decision in Pawan Carrying Corporation vs. Commissioner CGST & Central Excise & Ors (C.W.J.C No. 7985 of 2024), where the court held that a penalty order could not be passed beyond the limitation period under Section 129(3). It was argued that the authority failed to adhere to the stipulated time frame, which invalidated the order and the subsequent penalty.
Also, the petitioner relied on a circular issued under Section 68 of the CGST Act and Rule 138 of the CGST Rules, 2017. This circular mandates that detention orders in FORM GST MOV-06 and notices in FORM GST MOV-07 must comply with Section 129(3), which had not been followed here due to the delay.
The present writ petition was filed to challenge the impugned order passed u/s 129(3) of the CGST Act. The primary contention revolves around a delay in passing the order beyond the statutory period provided under Section 129(3), which mandates that an order should be passed within 7 days from the service of the notice.
Held: The Court relied upon the decision in the case of Pawan Carrying Corporation , wherein the court had invalidated a delayed order passed beyond the time limit under Section 129(3), which was similar to the present facts. The court held that the order passed on 18.04.2024 was in violation of Section 129(3), as the mandate to pass an order within 7 days of service of notice was not followed. Also, noted that Section 129(5) was inapplicable since the petitioner’s payment on 24.04.2024 was made against the already passed order on 18.04.2024, and not under Section 129(1)(a).
The impugned order set aside, due to the delay in passing the order beyond the statutory time frame under Section 129(3). Directed to refund of the amounts paid by the petitioner for the release of the vehicle.
To read the complete judgment 2024 Taxo.online 2238
