Danish Hassan vs. Ut Of J And K (Sales Tax, Kashmir) And Ors

Facts

The petitioner, Danish Hassan, challenged an order dated 28.10.2024 by the Appellate Authority Appeals I-State Taxes Department Kashmir, which upheld an order dated 17.09.2024 by the Deputy Commissioner, State Taxes Enforcement (Central) Kashmir. The latter order was passed under Section 129(3) of the CGST Act, 2017. The petitioner argued that the Proper Officer failed to issue a notice within seven days of detaining/seizing goods and conveyance, violating Section 129(3) of the Act. This contention was supported by a prior judgment of the High Court in "Mohd. Hazzak Lohar & Anr. Vs. Commissioner State Taxes and Anr." (23.07.2026), which deemed the provisions of Section 129(3) mandatory. The goods were detained on 02.09.2024. The notice of detention and seizure, specifying the penalty, was issued on 11.09.2024 and uploaded on 12.09.2024.

Held

The Court held that the timelines prescribed under Section 129(3) of the CGST Act, 2017, are mandatory. The reasoning was based on several factors: the provision regulates the exercise of coercive statutory power, protects valuable primary rights, the legislature used the word "shall", treating the timelines as directory would defeat the legislative purpose of preventing prolonged detention and seizure, the absence of express consequences does not always make a provision directory, and the legislative intent, object, and nature of the right affected are governing tests. The Court insisted on strict compliance with statutory procedures when coercive action is authorized. Applying this to the case, the Proper Officer detained the goods on 02.09.2024 and was obligated to issue a show cause notice within seven days. The notice was issued on 11.09.2024 and uploaded on 12.09.2024, which was beyond the seven-day period. This delay of one day in issuing the notice violated the mandate of Section 129(3), vitiating the entire proceedings. Consequently, the impugned orders were set aside. The Court also directed the release of the penalty amount deposited by the petitioner. It was clarified that respondents could pursue permissible proceedings under the Act if required, notwithstanding the quashing of the notice/order.

Key Issues

1. Whether the timelines prescribed under Section 129(3) of the CGST Act, 2017, for issuing a notice of detention/seizure and passing an order for penalty are mandatory or directory? (Question of law) Petitioner's Arguments: - The Proper Officer failed to serve a notice within seven days from the date of detention/seizure of goods and conveyance, violating Section 129(3) of the CGST Act, 2017. - The provisions of Section 129(3) are mandatory in nature, as held by this Court in "Mohd. Hazzak Lohar & Anr. Vs. Commissioner State Taxes and Anr.". Revenue/State's Arguments: - No specific arguments are recorded for the revenue/State in the provided judgment.