Permender Singh vs. Union Of INDIA And Ors.

Facts

The petitioner, owner of two goods vehicles, hired them out to transport MS Scrap. The goods moved under e-tax invoices and e-way bills. On July 11, 2025, the vehicles were intercepted. The supplier's GST registration was suspended on July 10, 2025, and later found non-functional. The respondents treated the tax invoices and e-way bills as invalid, detaining the vehicles and goods under Section 129(1) on July 14, 2025. Notices in FORM GST MOV-07 were issued on July 17, 2025, proposing penalty. The supplier's earlier petition before the Guwahati High Court led to the cancellation of its registration being set aside, but the seizure issue was not pressed. On January 15, 2026, the second respondent passed orders under Section 129(3), confirming penalties of Rs. 12,67,640/- and Rs. 12,55,600/- for the respective vehicles. These orders are under challenge.

Held

The Court held that the demand orders dated January 15, 2026, were indeed passed beyond the statutory time limits prescribed by Section 129(3) of the CGST/WBGST Act, 2017. The provision requires the proper officer to serve a notice within seven days of detention and pass an order within seven days of the service of that notice. In this case, the notice was served on July 17, 2025, and the order should have been passed by July 24, 2025. However, the order was passed on January 15, 2026, approximately 175 days after the statutory period expired. The Court found this delay to be fatal, rendering the orders barred by limitation and without jurisdiction. The reason provided in the demand orders, citing the sub-judice matter before the Gauhati High Court, was rejected as the petitioner was not a party to those proceedings, and no court order had stayed the Section 129 proceedings. The Court relied on the principles laid down in Kedia Enterprises, Khatu Enterprises, and Satguru Impex, emphasizing that non-compliance with the time limits under Section 129(3) is fatal. The Court also held that while an alternative remedy under Section 107 exists, a writ petition is maintainable when the impugned order is passed without jurisdiction. The Court quashed the penalty orders and directed the release of the vehicles within seven days without insisting on payment of any alleged duty. The Court clarified that this would not prevent proceedings against the supplier or recipient.

Key Issues

1. Whether the demand orders dated January 15, 2026, were passed within the time limits prescribed by Section 129(3) of the CGST/WBGST Act, 2017, making them barred by limitation and without jurisdiction? Petitioner's Arguments: The petitioner argued that Section 129(3) mandates service of notice within seven days of detention and passing of the order within seven days of service. In this case, notice was served on July 17, 2025, meaning the order should have been passed by July 24, 2025. However, the order was passed on January 15, 2026, approximately 175 days later, rendering it barred by limitation and without jurisdiction. Reliance was placed on Kedia Enterprises v. State of Bihar, Khatu Enterprises v. State of Gujarat, and Satguru Impex v. State of Tripura. The petitioner also highlighted that they are merely vehicle owners and not involved in invoice preparation, and their vehicles have been detained since July 2025. Revenue/State's Arguments: The State respondents filed a report generally denying allegations and asserting the writ petition's non-maintainability. The report provided no explanation for the significant delay between the notice appearance date and the demand orders, nor did it refer to Section 129(3). No submission was made to distinguish the cited judgments or present contrary authorities.