Madras High Court quashes delayed GST detention order issued after statutory seven-day period

The Madras High Court, in TVl. Udhayan Steels Private Limited Vs Deputy State Tax Officer (Int.) (Madras High Court), examined the consequences of missing the strict timelines embedded in Section 129(3) of the GST law for detention of goods and conveyances. The Court held that when the adjudication order under Section 129(3) is passed even a day beyond the statutorily prescribed seven-day window from the date of service of notice, the entire proceedings stand vitiated.

The assessee had approached the Court questioning both the adjudication order dated 15.12.2022 passed by the Assistant Commissioner (ST), Adjudication, Coimbatore and the connected detention order in Form GST MOV-06 dated 07.12.2022. The primary contention was that the proceedings were non est in law due to violation of the mandated time limit under Section 129(3) of the GST Act, 2017.

The Court accepted this contention and, relying on its earlier rulings, set aside the impugned orders and directed immediate release of the detained goods/vehicle.

Statutory framework: Section 129 of the GST Act

Section 129 of the GST Act, 2017 prescribes the legal framework for:

  • Detention or seizure of goods and conveyance in transit, and
  • Levy of penalty in cases where goods are transported in contravention of GST provisions.

Under Section 129(3):

  • A notice specifying tax and penalty is required to be issued following detention or seizure.
  • An order determining tax and penalty is to be passed within seven days from the date of service of such notice.

These time limits are not merely procedural; the Court has treated them as mandatory, forming an essential part of the statutory scheme governing interception of goods in transit.

Challenge in TVl. Udhayan Steels Private Limited case

The assessee, TVl. Udhayan Steels Private Limited, filed a writ petition before the Madras High Court seeking to invalidate:

  • The order dated 15.12.2022 passed under Section 129(3) by the Assistant Commissioner (ST), Adjudication, Coimbatore, and
  • The detention order in Form GST MOV-06 dated 07.12.2022 issued by the detaining authority.

The assessee’s core argument was:

  • The adjudication order was passed beyond the seven-day time limit laid down in Section 129(3), reckoned from the date of service of the notice.
  • Consequently, the entire proceedings, including the continued detention of goods/vehicle, lacked legal validity.

Court’s reliance on earlier decisions under Section 129

Counsel for the assessee placed strong reliance on the earlier decision of the Madras High Court dated 10.10.2022 in W.P.No.25931 of 2022, which had interpreted the timeline and procedural flow under Section 129.

In that decision, the Court had in turn referred to and followed its earlier order in:

D.K. Enterprises v. The Assistant/Deputy Commissioner, W.P.No.22646 of 2022, order dated 29.08.2022

In D.K. Enterprises, the Court had elaborated the sequence and deadlines under Section 129, starting from interception of the vehicle up to issuance of final penalty order. The Court emphasized that: