2026-VIL-369-ALH
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SGST High Court Cases

GST - Time limit for issuing show cause notice and passing penalty order under Section 129 of CGST Act, 2017 - Whether the timelines prescribed under Section 129(3) for issuance of show cause notice within 7 days and passing of penalty order within 7 days are mandatory or directory – HELD - The timeline of 7 days prescribed under Section 129(3) of the CGST Act for issuing show cause notice and passing penalty order is directory and not mandatory. The provision is procedural in nature and does not provide for any consequence of non-compliance with the timeline - While the Proper Officer must ensure that the notice is issued and the order is passed within the prescribed timelines to maintain procedural efficiency and discipline, any delay beyond the timelines does not render the proceedings invalid or time-barred. However, the Proper Officer must record the reasons for the delay in the order sheet and any habitual or regular delays should be dealt with by the superior administrative authorities – In absence of any consequence provided under the Act either that no show-cause notice may be issued beyond 7 days from the date of detention of goods or that proceedings initiated on the strength of any such notice, may not be continued beyond 7 days from the date of issuance of such notice, the Court is unable to hold that the provisions of Section 129(3) are mandatory. The Court is unable to subscribe the view taken by the Patna High Court, the Gujarat High Court and the Orissa High Court and respectfully, disagree with the same - The petitioner is entitled to the release of the goods and vehicle upon furnishing security equal to the penalty amount under Section 129(1)(a) of the CGST Act - The writ petition is partly allowed - Release of goods and vehicle - HELD - The petitioner claims to be a bona fide owner of the goods as it was a registered dealer at the time of the transaction. Since the registration was subsequently suspended, the petitioner is entitled to the release of the goods and vehicle upon furnishing security equal to the penalty amount under Section 129(1)(a) of the CGST Act. The penalty order remains open to challenge by the petitioner through other statutory remedies.
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