Court holds delay beyond seven days in issuing notice of detention and passing penalty order vitiates proceedings; safeguards against prolonged seizure and arbitrary coercion emphasized.
In a significant judgment delivered on September 7, 2026, the Jammu & Kashmir and Ladakh High Court (Division Bench, Srinagar) in the case Danish Hassan v. UT of J&K and Ors. has reiterated the mandatory nature of the timelines prescribed under Section 129(3) of the Central Goods and Services Tax Act, 2017 (CGST Act). The Court quashed the impugned orders passed by the Deputy Commissioner, State Taxes Enforcement (Central), Kashmir, and the Appellate Authority, which had confirmed the penalty order against the petitioner, Danish Hassan, on the ground of non-compliance with the mandatory seven-day timeline for issuing notice after the detention/seizure of goods and conveyance.
The petitioner challenged the orders on the basis that the Proper Officer failed to issue the statutory notice within seven days from the date of seizure and detention of the goods, which is a mandatory requirement under Section 129(3) CGST Act. The Court relied on its prior ruling in Mohd. Hazzak Lohar & Anr. v. Commissioner State Taxes and Anr. (2026), which held that the timelines under Section 129(3) are mandatory and not directory.
The Court examined the statutory provision and highlighted several key reasons for its mandatory interpretation:
1. The provision regulates the exercise of coercive statutory power by the authorities.
2. It protects valuable primary rights of the assessee/trader.
3. The use of the word “shall” in the statute indicates a legislative intent to make the timelines mandatory.
4. Treating the timelines as directory would defeat the legislative purpose of preventing prolonged detention and seizure of goods or conveyance.
5. The legislative intent, object of the provision, and the nature of rights affected govern the mandatory character of the provision.
6. Courts insist on strict compliance with statutory procedure when coercive actions like seizure or detention are authorized.
In the facts of the case, the goods were detained on 2nd September 2024, and the Proper Officer was required to issue a show-cause notice within seven days. However, the notice was issued on 11th September 2024 and uploaded on 12th September 2024, thereby breaching the mandatory timeline by one day. The Court held that this delay vitiated the entire proceedings and set aside the orders. However, the Court allowed liberty to the State to initiate fresh proceedings in accordance with the law.
Additionally, the Court ordered the release of the penalty amount deposited by the petitioner, after due verification.
This judgment is a reaffirmation of the principle that procedural safeguards in tax laws must be strictly adhered to and timelines prescribed by the legislature for coercive actions must be complied with mandatorily to protect the rights of the taxpayers and prevent abuse of power.
Bottom Line:
Timelines prescribed under Section 129(3) of the Central Goods and Services Tax (CGST) Act, 2017 are mandatory in nature. Non-compliance with the prescribed timelines for issuing notice and passing orders renders the proceedings vitiated.
Statutory provision(s):
Central Goods and Services Tax Act, 2017 - Section 129(3)
Danish Hassan v. UT of J&K, (J&K and Ladakh)(DB)(Srinagar) : Law Finder Doc Id # 2976007
