Seven-Day Timeline for Passing MOV-09 Order Mandatory: GSTAT

Section 129(3) of CGST Act: GSTAT Holds Seven-Day Timeline for Passing MOV-09 Order Mandatory

Summary: The Thiruvananthapuram Bench of GSTAT, in Siddhi Vinayak Automobiles Vs The Commissioner of Kerala State GST, Thiruvananthapuram 2026-VIL-52-GSTAT-TVP, held that the seven-day period prescribed under Section 129(3) of the CGST Act, 2017 for passing an order in MOV-09 from service of MOV-07 is mandatory. The appellant’s goods were detained on 18.4.2022 for non-production of an e-way bill, although two e-invoices accompanied the consignment. MOV-07 was issued and the goods were released against Bond and Bank Guarantee of Rs. 1,38,706, but MOV-09 confirming the same penalty was passed on 4.6.2022, 47 days later. Relying on the statutory language and judicial precedents, including decisions concerning Section 129(3), the Tribunal held that the proceedings were barred by limitation where no cogent reason prevented compliance with the seven-day timeline. The Tribunal also found that the limitation issue could be raised before it because the relevant dates were undisputed and on record. It further found no mens rea to evade tax where e-invoices had been generated and GST was paid, and set aside the First Appellate Authority’s order.

Section 129(3) of CGST Act: GSTAT Holds Seven-Day Timeline for Passing MOV-09 Order Mandatory

The Thiruvananthapuram bench of Goods and Services Appellate Tribunal (GSTAT) passed the Final Order No. 02/TVP/KERALA/2026 wherein it examined a critical issue relating to the flexibility of limitation to pass the Detention Order in MOV-09 post issuance of notice under MOV-07. In the instant case, the appellant challenged the order of the first Appellate Authority dated 4.11.2022 and submitted that the Order MOV-09 under Section 129(3) of the CGST Act, 2017 was passed after 47 days of issuance of Notice under MOV-07 while the limitation to pass such an order for payment of penalty is seven days from date for service of such notice. The Tribunal observed that timelines of Section 129(3) are mandatory in nature. The statutory language in this regard is clear and definite. In absence of any cogent reasons preventing the state tax authority from adhering the time limit of 7 days, the proceedings were held to be barred by limitation and the penalties were found to be unsustainable.

GSTAT’s Decision

Statutory Limitations are often overlooked if no prejudice is caused to either of the parties on account of the legal principle that procedural requirements cannot override substantive rights provided by a statute. However, where the law makes the limitation clear and definite, leeway cannot be provided if there were no cogent reasons preventing the tax authority from complying to such time limit.

The same idea was relied upon by the Hon’ble Tribunal in its decision in Siddhi Vinayak Automobiles Vs The Commissioner of Kerala State GST, Thiruvananthapuram 2026-VIL-52-GSTAT-TVP. The Hon’ble Tribunal held that delay of 47 days in passing the order which ought to be passed within 7 days is illegal and without jurisdiction.

The factual background that resulted in the legal dispute began when the appellant, a registered person under the GST Department, supplied automobile parts and spare parts on a transport which was intercepted by the Assistant State Tax Officer. While the vehicle was accompanied by two tax e-invoices, the driver could not produce the e-way bill for such transportation. On 18.4.2022, goods were detained and a notice in MOV-07 was issued to appellant.

The said goods and conveyance were released on furnishing of Bond and Bank Guarantee for amount of Rs. 1,38,706. Subsequently, Order in Form GST MOV-09 was passed on 4.6.2022 confirming the penalty of Rs. 1,38,706/- under Section 129(3) of the CGST Act, 2017. Aggrieved by this order, the Appellant filed an appeal before the first appellate authority, which sustained the penalty on the ground that e-way bill is a mandate under Section 68 of the GST Acts read with Rule 138A of the GST Rules and in absence of such bill, the transaction contravenes the provision of the Act.

Statutory Interpretation

It is pertinent here to understand the nature of the statutory language provided in Section 129 of the CGST Act, 2017. Section 129 of the CGST Act, 2017 deals with detention, seizure and release of goods and conveyance in transit. It provides that if any person transports any goods in contravention to the provisions of this act or rules made thereunder, all such goods and conveyance shall be liable to detention or seizure. These goods will only be release on payment of penalty as provided in clauses (a), (b) and (c).

While Section 129(1) stipulates the penalties for transit of goods in contravention of the GST Act, Section 129(3) specifies for the procedure to be followed for issuance of Notice and passing of order of penalty. Section 129(4) protects the opportunity to be heard; Section 129(5) provides for conclusion of proceedings on payment as per sub-section (1); Section 129(6) lists down consequences of non-payment of penalty. From the bare reading of the provision, it can be understood that the sub-sections cannot be read in isolation from each other. All the sub-sections are intertwined to produce structure of legal proceedings in context of detention and seizure of goods. Implementing one part of the provision while dispensing the other would render the entire provision ineffective.

The use of the word ‘shall’ assumes significance

As per Section 129(3), the proper officer detaining or seizing the goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty.

The word “shall” here deserves peculiar attention. The Tribunal observed that use of expression of word “shall” in respect of both show cause notice and the order has clarified its intent that adherence to the time limitation is mandatory. The Tribunal also noted that since CGST Act is a fiscal statute, it must be given strict interpretation.

Taxing/penal provisions are generally construed according to the statutory language, and courts cannot enlarge or dilute a clear statutory prescription. Any misinterpretation may result in unwanted losses of monies to the assessee/revenue. For instance, if the Department is given the liberty to bypass this mandate, it might pass the order with inadvertent delays. Consequently, the assessee will bear the costs of the goods in detention as they were supposed to be sent to other party but they are now lying in the possession of the department. Say, if the detention is proven to be illegal in future, the costs borne by the assessee were just a waste of his hard-earned money.

It is observed that absence of consequence in case of non-adherence of Section 129(3) does not conclude that seven days’ period is not mandatory in nature. The statutory timeline cannot be disregarded at the discretion of the proper officer.

Judicial Precedents

It is worth noting that the Hon’ble Tribunal reached the aforementioned conclusion by taking into account various notable and well-reasoned decisions of different courts to support its decision. A line of Jurisprudence regarding the Limitation under Section 129(3) has been defined by the Hon’ble Tribunal through this decision which will serve as a guiding light for forthcoming cases on same line of facts.

The relied upon precedents are as discussed below:

• Mohd Hazzak Lohar & Others vs Commissioner of State Tax, J&K cited in 2026 (7) TMI 1769 – J&K and Ladakh HC: The J&K and Ladakh High Court clarified the position in this regard and provided detailed reasoning behind the nature and operation of Section 129(3). The Court reasoned the necessity of the time limit by holding that this provision overlooks coercive statutory power and protects the valuable rights. Treating the timelines in Section 129(3) as directory would defeat the legislative purpose. Absence of express consequences to non-adherence is not decisive. The legislative intent and purpose are determining tests. It also observed that whenever statute authorizes penal/coercive action, courts insist on strict compliance with the statutory procedure. The court observed that the legislative intent behind the timeline was to prevent arbitrary detention, prolonged seizure and harassment of the trader. This is also reflected through use of the word “shall”. Reliance was also placed on Gujarat High Court’s decision in M/s. Allcargo Logistics Limited vs State of Gujarat 2025 (12) TMI 1732 – Gujarat HC. It is noteworthy that in instant case, there was delay of only one day and there were some intervening circumstances too yet the notice/order for payment was quashed due to the contravention of Section 129(3).
• Deepam Roadways vs Deputy State Tax Officer, Chennai, cited in (2023) 3 Centax 37 (Mad.):In this case, consequential order for payment of penalty was passed beyond the period of seven-day limit from date of service of notice. Relying upon the decision in Udhayam Steels (P.) Ltd. v. Deputy Tax Officer (Int.) dated 28-12-2022 in W.P.No.34268 of 2022 and D.K. Enterprises v. Assistant/Deputy Commissioner (ST) 2023 (70) G.S.T.L. 277 (Mad.) = [2022] 143 taxmann.com 201 (Mad.) dated 29-8-2022 in W.P.No.22646 of 2022, the tribunal categorically held that the impugned orders have to be “necessarily quashed” as it is contrary to the provision of Section 129(3) of the CGST Act, 2017.
• K.P. Sugandh Ltd vs Chief Commissioner of CT & GST, Odisha cited in (2025) 26 Centax 62 (Ori.): This case also adds another dimension to the position. Herein, the Tribunal observed that mere passing of the order within the seven-day limit is not sufficient to evidence compliance of Section 129(3) by the Department. The view that communication can be made on any later date would enlarge the limitation thereby defeating the legislative intent of such strict time limit. The tribunal also relied on the Indian Contract Act, 1872, to observe that communication of a proposal (order under MOV-09) under section 4 is only complete when it comes to the knowledge of person to whom it is made. Since, in the instant case, communication was made on the 8^thday from date of service of notice, the requirement under Section 129(3) was held to be unfulfilled. The impugned order was, therefore, set aside.
• Pawan Carrying Corporation vs State of Bihar, cited in (2024) 16 Centax 405 (Pat.): While emphasizing the Section 129(3), the Tribunal observed that the limitation provided in the provision is clear and definite. It is also pertinent to mention here that the Department also contended that the taxpayer had sought time. The Tribunal found that nothing prevented the department from rejecting such request and passing the order especially if the matter was still pending. The orders passed for detention of vehicle were set aside immediately.
• M/s. Allcargo Logistics Limited vs State of Gujarat cited in 2025 (12) TMI 1732 – Gujarat HC: The Gujarat High Court reiterated the same principle. In this case, notice was in MOV-07 was issued on 10.11.2025 and the order in MOV-09 was passed on 19.11.2025. On the sole ground of delay of 29 days, the impugned order, notice and order of detention was quashed and set aside.
• Khatu Enterprises vs State of Gujarat cited in 2025 (10) TMI 1341 – Gujarat HC: Similar stance was taken by the Gujarat High Court in this case while quashing the detention order passed beyond the seven-day limit.

In view of the consistent line of judgments passed by Hon’ble High Courts, the court reiterated that limitation under Section 129(3) is clear and definite. In the instant case, since the officers of the tax authority did not comply with the provision while there was nothing preventing them to act accordingly especially if the matter was kept pending, proceedings were held to be barred by limitation.

Ground raised before GSTAT and not before First Appellate Authority

The Department raised another contention that the issue of limitation under Section 129(3) was raised for the first time before the GSTAT without raising it before the First Appellate Authority. The Hon’ble Tribunal found that the facts pertaining to date of issuance of notice under MOV-07 and passing of order under MOV-09 along with the delayed period was an undeniable fact, always on record and the first appellate authority was aware of it too since it had recorded the dates in impugned Order-in-Appeal. Hence, this issue was set aside.

E-Invoice Present, E-way Bill absent: Penalty or no Penalty?

Another notable issue that was discussed in the instant case was regarding non-production of e-way bill during the transit of goods though they were accompanied by two e-invoices. The Appellant contended that the omission of e-way bill occurred due to the newly applicable e-invoicing system. It was also argued that since e-invoice had been generated, the transaction stood duly disclosed. Payment of tax was evident from the e-invoices exhibiting that there was no clandestine removal of goods. The Appellant had duly filed his GST returns.

The tribunal, in this regard, found that appellant had supplied goods under cover of duly generated e-invoices and paid the appropriate GST in the GST returns filed for the month of April 2022. It also observed that e-invoice data is reported through the GST system and can flow into the supplier’s GSTR-1, while the recipient’s corresponding inward-supply information is reflected through the relevant auto-populated statements. The tribunal concluded that in view of these facts, there was no mens rea on part of appellant to evade tax merely because e-way bill was not prepared along with e-invoice. The order of the First Appellate Authority was, therefore, set aside.

Conclusion

The Thiruvananthapuram Bench has very-well clarified the position with regard to compliance with statutory time-limits in case of exercise of coercive power. The case, not only settles the issue pertaining to limitation under section 129(3) of the CGST Act, 2017, but also establishes the principle that When the legislature prescribes a definite timeline for exercise of coercive statutory power, the authority cannot treat that timeline as merely administrative. The Judgment is not stand alone; it is backed by a proper high court jurisprudence wherein even orders passed on the 8^th day were set aside for non-compliance. This exhibits courts’ inclination towards complying with statutory discipline. These time limits are not mere procedural requirements; they protect the rights of the taxpayer and safeguards them from prolonged proceedings.

Cases Discussed

• M/s. Allcargo Logistics Limited vs State of Gujarat 2025 (12) TMI 1732 – Gujarat HC
• Mohd Hazzak Lohar & Others vs Commissioner of State Tax, J&K cited in 2026 (7) TMI 1769 – J&K and Ladakh HC
• Deepam Roadways vs Deputy State Tax Officer, Chennai, cited in (2023) 3 Centax 37 (Mad.):In this case, consequential order for payment of penalty was passed beyond the period of seven-day limit from date of service of notice. Relying upon the decision in Udhayam Steels (P.) Ltd. v. Deputy Tax Officer (Int.) dated 28-12-2022 in W.P.No.34268 of 2022 and D.K. Enterprises v. Assistant/Deputy Commissioner (ST) 2023 (70) G.S.T.L. 277 (Mad.) = [2022] 143 taxmann.com 201 (Mad.) dated 29-8-2022 in W.P.No.22646 of 2022, the tribunal categorically held that the impugned orders have to be “necessarily quashed” as it is contrary to the provision of Section 129(3) of the CGST Act, 2017.
• K.P. Sugandh Ltd vs Chief Commissioner of CT & GST, Odisha cited in (2025) 26 Centax 62 (Ori.)
• Pawan Carrying Corporation vs State of Bihar, cited in (2024) 16 Centax 405 (Pat.): While emphasizing the Section 129(3), the Tribunal observed that the limitation provided in the provision is clear and definite. It is also pertinent to mention here that the Department also contended that the taxpayer had sought time. The Tribunal found that nothing prevented the department from rejecting such request and passing the order especially if the matter was still pending. The orders passed for detention of vehicle were set aside immediately.
• M/s. Allcargo Logistics Limited vs State of Gujarat cited in 2025 (12) TMI 1732 – Gujarat HC:The Gujarat High Court reiterated the same principle. In this case, notice was in MOV-07 was issued on 10.11.2025 and the order in MOV-09 was passed on 19.11.2025. On the sole ground of delay of 29 days, the impugned order, notice and order of detention was quashed and set aside.
• Khatu Enterprises vs State of Gujarat cited in 2025 (10) TMI 1341 – Gujarat HC:Similar stance was taken by the Gujarat High Court in this case while quashing the detention order passed beyond the seven-day limit.