Jammu & Kashmir and Ladakh High Court Quashes GST Penalty Proceedings Over One-Day Delay In Notice

The High Court of Jammu & Kashmir and Ladakh has held that the seven-day timeline under Section 129(3) of the Central Goods and Services Tax Act, 2017 for issuing a notice after detention and seizure of goods is mandatory. The court set aside the orders in the case after finding that the notice was issued a day beyond the prescribed period.

“There was a delay of one day in issuing the notice, which vitiates the entire proceedings,” a Division Bench of Acting Chief Justice Sanjeev Kumar and Justice Mohd Yousuf Wani observed.

The bench was hearing a writ plea filed by Danish Hassan challenging an October 28, 2024, order of the Appellate Authority, Appeals I, State Taxes Department, Kashmir. The appellate authority had confirmed a September 17, 2024 order passed by the Deputy Commissioner, State Taxes Enforcement (Central), Kashmir, under Section 129(3) of the CGST Act.

Section 129 of the CGST Act covers the detention and seizure of goods or conveyances, while sub-section (3) sets timelines for issuing notice and passing a penalty order. The petitioner argued that the Proper Officer failed to serve the notice within seven days of the detention or seizure.

Counsel relied on the high court's July 23, 2026 judgment in Mohd. Hazzak Lohar & Anr. v. Commissioner State Taxes and Anr., where the court held that the timelines under Section 129(3) are mandatory

The court had explained that the timelines regulate the exercise of coercive statutory powers and are intended to prevent arbitrary detention, prolonged seizure, and harassment of traders.

It also noted that the legislature had used the word “shall” at two places in Section 129(3).

In the present case, the Proper Officer detained the goods along with the conveyance on September 2, 2024. The officer was therefore required to issue the show-cause notice within seven days of the seizure and detention.

The notice specifying the penalty was issued on September 11, 2024 and uploaded on September 12. The Proper Officer was also required to pass the penalty order within seven days of serving the notice.

Finding that the timeline had been breached, the court held that the one-day delay vitiated the proceedings. It allowed the petition and set aside the October 28, 2024, appellate order and the September 17, 2024 order of the Proper Officer.

The penalty deposited before the high court was ordered to be released after verification

The court clarified that quashing the notice and orders would not prevent the respondents from pursuing proceedings, if any, that are otherwise permissible under the CGST Act.