GST Update No 310 on detention order passed beyond prescribed time

The disputes regarding detention and seizure of vehicle and goods have its tentacles since inception of GST regime which remains unresolved till date. Time and again the revenue authorities intercept and detains the goods on flimsy grounds without following the proper procedure in accordance with Law. This increases the adversity of taxpayers manifold and on the other hand demonstrates the lacuna on the part of adjudicating authorities. Recently, one such case was reported before Madras High Court in the case of A.IRUDAYARAJU V/S THE STATE TAX OFFICER. The decision imparted in this case is subject matter of discussion of our present update.
The petitioner challenged the detention order dated 11.08.2022 and order demanding tax and penalty was passed as on 13.09.2022. The goods were transported and intercepted as on 01.08.2022. The statements of drivers were recorder in MOV-01 on same day and thereafter, MOV-02 being order of physical verification was also issued on 01.08.2022. The petitioner submitted that no permission was sought and received in MOV-03 regarding extension of 3 days for issuance of order in MOV-02. Further, no detention order was passed within prescribed time under Section 129 of the Act and neither show cause notice was issued. The petitioner placed reliance on decision of this court in the case of D.K. ENTERPRISES V/S THE ASSISTANT/DEPUTY COMMISSIONER. Further reference was also drawn to the statutory timeline under Section 129 of CGST Act, 2017. It was the duty of the adjudicating authority to look into the matter which was however, not done.
The Counsel for revenue argued that the show cause notice dated 16.08.2022 was challenged in the court earlier as well. It was stated that the petitioner is at liberty to file reply to the show cause notice. It was therefore, submitted that since the petitioner is permitted to file the reply, the question of delay is already acknowledged and condoned by the Court. Therefore, the order is perfectly proper.The court referred to the decision of same court in the case of D.K. Enterprises V/s The Assistant/Deputy Commissioner and another wherein the timeline of events was stipulated commencing from the date of order of penalty. It was stated that it becomes necessary for the authority to pass an order of detention. However, presently, neither order was passed nor any show cause notice was issued in time. The date of interception is 01.08.2022, date of order is 11.08.2022 and date of show cause notice is 16.08.2022. The timelines as prescribed under Section 129 of the Act have vitiated the proceedings. The Court further submitted that there is no merit in the submissions of the revenue department. Therefore, it indicates the lacuna on the part of department in adhering to the statutory and stipulated timelines. The Writ Petition is therefore allowed.
The above decision is yet another example wherein the Courts have put a step ahead and acted as a protective shield for the taxpayers against the improper procedure followed by the departmental authorities resulting in hampering of business activities. The had been plethora of cases in the past as well wherein the Courts have highlighted the importance of following proper and legal adjudicating procedure. It is high time that judicial rulings like these should be followed unconditionally by the departmental officers to avoid any further litigations and disputes, thus wasting the time of Courts.

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GST Update No 310 on detention order passed beyond prescribed time

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