Court rules penalty orders passed 175 days after notice under Section 129(3) CGST/WBGST Act are barred by limitation and without jurisdiction; directs release of vehicles without payment of alleged duty.
In a significant judgment delivered on October 14, 2026, the Calcutta High Court invalidated penalty orders issued by GST authorities against the petitioner, Mr. Permender Singh, relating to the detention of two goods vehicles carrying scrap. The Court held that the penalty orders passed nearly six months after the statutory deadline prescribed under Section 129(3) of the Central Goods and Services Tax Act, 2017 (CGST Act) and West Bengal Goods and Services Tax Act, 2017 (WBGST Act), were barred by limitation and without jurisdiction.
Background:
The petitioner owned two goods vehicles which he had hired out to a transporter for carrying MS scrap from Guwahati, Assam to Purnea, Bihar. The vehicles were detained on July 14, 2025, after GST authorities intercepted them and found that the supplier's GST registration had been suspended as of July 10, 2025. Notices proposing penalties under Section 129(1)(a) and (b) were served on July 17, 2025, but the penalty orders were only passed on January 15, 2026, a delay of 175 days beyond the statutory limit.
Key Legal Issue:
Section 129(3) of the CGST and WBGST Acts mandates that once goods or vehicles are detained, the proper officer must issue a notice within seven days and thereafter pass an order imposing penalty within seven days of the notice. The petitioner challenged the penalty orders on the ground that the delay rendered the orders invalid.
Court's Analysis:
The Court examined the timeline and found that while the notices were issued within the prescribed seven-day period, the penalty orders were passed well beyond the seven-day limit, thus violating the statutory mandate. The respondents argued that the delay was due to the pendency of related proceedings before the Gauhati High Court concerning the supplier's GST registration. However, the Court observed that the petitioner was not a party to those proceedings, and there was no stay on the Section 129 proceedings. Hence, the statutory limitation continued to run.
The Court relied on authoritative precedents including Kedia Enterprises v. State of Bihar (Patna High Court), Khatu Enterprises v. State of Gujarat (Gujarat High Court), and Satguru Impex v. State of Tripura (Tripura High Court), which emphasized the strict adherence to the timelines under Section 129(3) and held that non-compliance renders the penalty orders illegal and without jurisdiction.
The Court further noted that the petitioner was merely the owner of the vehicles and had no involvement in the preparation of tax invoices or e-way bills. Given that the vehicles were the petitioner's sole livelihood source and had been detained since July 2025, the Court found it just and equitable to quash the penalty orders and direct immediate release of the vehicles without requiring payment of the alleged duty.
Conclusion and Directions:
The Calcutta High Court allowed the writ petition, quashed the penalty orders dated January 15, 2026, and ordered the respondents to release the two vehicles within seven days of the order without insisting on payment of any alleged GST dues. The Court clarified that this order does not preclude the authorities from initiating proceedings against the supplier or recipient of the goods if permissible.
This judgment reinforces the principle that tax authorities must strictly comply with statutory timelines in GST detention and penalty matters and offers relief to vehicle owners who are not directly responsible for alleged GST violations by suppliers.
Bottom Line:
GST - Detention of goods and vehicles under Section 129 of the CGST/WBGST Act - Order under Section 129(3) must be passed within seven days of service of notice - Penalty orders passed nearly six months later held barred by limitation and without jurisdiction - Availability of alternative remedy under Section 107 does not bar writ where impugned orders are without jurisdiction.
Statutory provision(s):
Central Goods and Services Tax Act, 2017 Section 129(1), Section 129(3), Section 107; West Bengal Goods and Services Tax Act, 2017 Section 129(1), Section 129(3)
Permender Singh v. Union of India, (Calcutta) : Law Finder Doc Id # 2996869
