Penalty Order Passed After 7 Days from Service of Notice Not Sustainable

By: Admin
October 08, 2024
Categories: Important Pronouncements
4 Min Read

In the case of M/s Kedia Enterprises v. State of Bihar [Civil Writ Jurisdiction Case No. 11021 of 2024], the Hon’ble Patna High Court ruled that a penalty order issued after the 7-day period following the service of a notice for the detention of goods and vehicle is not sustainable, as per Section 129(3) of the Central Goods and Services Tax Act, 2017 (“CGST Act”).

Facts:

M/s Kedia Enterprises (“the Petitioner”) had its vehicle and goods detained on March 30, 2024. A notice was issued on April 4, 2024, with a response deadline of April 11, 2024, which was a public holiday. The Petitioner filed the reply on April 12, 2024, but the penalty order was passed on April 18, 2024. The Petitioner argued that the order was not passed within the 7-day time frame mandated by Section 129(3) of the CGST Act, leading to the filing of a writ petition.

Issue:

Whether a penalty order passed more than 7 days after the service of notice is valid under the CGST Act.

Held:

The Patna High Court held that the delay in passing the penalty order violated Section 129(3) of the CGST Act. The order should have been passed within 7 days of the reply submission. Since the penalty was issued beyond the allowed time frame, the Court declared the order unsustainable and directed a refund of the amount paid by the Petitioner.

Our Comments:

Section 129 of the CGST Act governs the detention, seizure, and release of goods in transit. As per this section, timely notice and order are crucial for the validity of the penalty proceedings. Delays, such as those seen in this case, may render penalty orders invalid.

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