Facts of the Case:

In this case, the appellant transported automobile parts on 18.04.2022 under two valid e-invoices aggregating to ₹3,46,450/-. The goods were intercepted by the Mobile Squad at Punalur. Although the driver produced the e-invoices, the corresponding e-way bill had not been generated. Consequently, the goods and conveyance were detained and a notice in Form GST MOV-07 was issued on 18.04.2022 proposing penalty under Section 129 of the CGST/KGST Act, 2017. 

The goods and conveyance were released on 20.04.2022 upon furnishing a bond and bank guarantee for ₹1,38,706/-. Thereafter, the summary in Form GST DRC-01 was uploaded on 20.04.2022. However, the order in Form GST MOV-09 confirming the penalty of ₹1,38,706/- was passed only on 04.06.2022, i.e. 47 days after issuance/service of the MOV-07 notice.

The First Appellate Authority upheld the penalty, observing that the transportation of goods without an e-way bill constituted a contravention of the GST provisions. Aggrieved, the appellant approached the GST Appellate Tribunal, inter alia contending that the order under Section 129(3) was passed beyond the statutory period of seven days and was therefore time-barred.

Issue:

Whether an order in Form GST MOV-09 passed 47 days after service of Form GST MOV-07 is barred by limitation and consequently illegal and without jurisdiction under Section 129(3) of the CGST/KGST Act, 2017?

Held That:

The GST Appellate Tribunal allowed the appeals and set aside the penalty proceedings, holding that the order in Form GST MOV-09 dated 04.06.2022, having been passed 47 days after service of MOV-07 dated 18.04.2022, was contrary to the mandatory requirement of Section 129(3) of the CGST/KGST Act, 2017.

The Tribunal first rejected the Revenue’s objection that the limitation issue was being raised for the first time before it. It observed that the dates of MOV-07 and MOV-09 were undisputed facts already forming part of the record and had even been recorded by the First Appellate Authority. Therefore, bringing the legal consequence of those admitted dates to the Tribunal’s notice did not amount to introducing an entirely new factual ground.

On interpretation of Section 129(3), the Tribunal emphasized the use of the expression “shall”, which requires the proper officer to issue the notice within seven days and thereafter pass the order within seven days from the date of service of such notice. In the Tribunal’s view, the provision reflects a clear legislative intention that the prescribed timeline must be complied with.

The Tribunal further held that Section 129 confers coercive powers of detention and seizure over goods and conveyances in transit. Consequently, the statutory safeguards and timelines governing exercise of such powers must be strictly followed. The fact that Section 129(3) does not expressly state the consequence of failure to comply with the seven-day period does not make the timeline directory.

The Tribunal relied upon the judicial trend reflected in decisions such as Mohd Hazzak Lohar, Allcargo Logistics Ltd., Khatu Enterprises, Deepam Roadways, Pawan Carrying Corporation and K.P. Sugandh Ltd., which, as recorded in the order, recognize the mandatory character of the statutory timeline under Section 129(3).

The Tribunal also considered the substantive circumstances of the case. It noted that the appellant had generated two e-invoices, subsequently reported the transactions in its GST returns and paid the applicable GST. Since the transactions were therefore disclosed to the Department and tax had been paid, the Tribunal found no mens rea or attempt to evade tax merely because the corresponding e-way bill had not been generated.

Accordingly, the Tribunal concluded that the Respondent had failed to pass the order under Section 129(3) within the mandatory seven-day period. The MOV-09 order dated 04.06.2022 was therefore held to be illegal and without jurisdiction. The Order-in-Appeal was set aside and the appeals were allowed with consequential relief. The Respondent was directed to release the bank guarantee immediately upon receipt of the Tribunal’s order.

Case Name: Siddhi Vinayak Automobiles Versus The Commissioner Of Kerala State GST, Thiruvananthapuram. dated 14.08.2026

Citation No. 2026 Taxo.online 2439