S.129(3) CGST Act- 7 Days Limitation Period For Passing Penalty Order After Notice To Goods Owner/ Transporter Mandatory: Patna HC
Kapil Dhyani
8 Oct 2024 5:14 PM IST
The Patna High Court has made it clear that the 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. Stipulation in Section 129(3) CGST Act is that the proper officer detaining or...
The Patna High Court has made it clear that the 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.
Stipulation in Section 129(3) CGST Act is that the proper officer detaining or seizing goods or conveyances shall issue a notice in 'FORM GST MOV-07' within seven days of such detention or seizure, specifying the tax and penalty payable. Thereafter, the proper officer shall pass an order in 'FORM GST MOV-06' within a period of seven days from the date of service of such notice, for payment of penalty.
Bench of Chief Justice K. Vinod Chandran and Justice Partha Sarthy held that if after issuing notice (MOV-07), the proper officer grants the entire limitation period of seven days to the owner/ transporter to file its reply and the latter responds only on the seventh day, the proper officer will be bound to pass its order (MOV-06) on the same day, after considering the owner/transporter's reply.
In the case at hand, the vehicle carrying the petitioner's goods was intercepted on March 30 and after a physical verification, a notice was served on the petitioner on April 4. Petitioner was given 7 days' time, i.e. up to April 11, to file a reply. The 11th was a public holiday and hence the petitioner filed a reply on April 12.
After considering Petitioner's reply, the proper officer passed the penalty order (MOV-06) on April 18, whereas the seven days window under Section 129(3) had expired on April 12 itself.
Petitioner cited Pawan Carrying Corporation vs Commissioner CGST & Central Excise & Ors (2024) where, though a notice (MOV-07) was issued within the time provided in Section 129(3) of the Act, the order (MOV-06) was passed after about 19 days. A division bench of the High Court held in that case that no penalty order could have been passed beyond the limitation period under Section 129(3) of the Act.
Petitioner also referred to a Circular issued under Section 68 of the CGST Act, stipulating that a penalty order in FORM GST MOV-06 and a notice in FORM GST MOV-07 has to be in accordance with Section 129(3) of the CGST Act.
The High Court thus held, “Here, despite the notice having been issued within time, the petitioner was granted the entire limitation period for filing a reply. The petitioner did file the reply on the last date, in which event the Authority ought to have passed an order on that date itself, after considering the reply. The Authority having delayed the matter, the mandate of Section 129 (3) is not followed.”
Accordingly, the High Court quashed the impugned penalty order and directed refund of the amounts paid by the Petitioner.
Appearance: Advocate Anubhav Khowala for Petitioner; Standing counsel Vikash Kumar for Respondent
Case title: M/s Kedia Enterprises v. State of Bihar
LL Citation: 2024 LiveLaw (Pat) 74
Case no.: Civil Writ Jurisdiction Case No.11021 of 2024
