The High Court of Jammu & Kashmir and Ladakh at Srinagar has set aside GST penalty proceedings after finding that the tax authorities failed to issue the required notice within the statutory seven-day period under Section 129(3) of the Central Goods and Services Tax Act, 2017.
A Division Bench comprising Acting Chief Justice Sanjeev Kumar and Justice Mohd Yousuf Wani passed the order on September 7, 2026, in Danish Hassan v. UT of J&K & Ors.
Background of the Case
The petitioner challenged an appellate order dated October 28, 2024, which had upheld an order passed by the Deputy Commissioner, State Taxes Enforcement (Central), Kashmir, on September 17, 2024. The original proceedings arose under Section 129(3) of the CGST Act concerning detention and seizure of goods and the accompanying conveyance.
The petitioner argued that the proper officer had not issued the required notice within seven days from the detention and seizure of the goods. Reliance was also placed on the High Court's earlier decision in Mohd. Hazzak Lohar & Anr. v. Commissioner State Taxes and Anr., where the Court had treated the timeline under Section 129(3) as mandatory.
Court's Observation
The Bench noted that the goods and conveyance were detained on September 2, 2024. The statutory requirement was therefore to issue the show-cause notice within seven days. The notice was issued on September 11 and uploaded on September 12, after the prescribed period had expired.
The Court relied on its earlier ruling that the statutory timelines are intended to prevent arbitrary detention and prolonged seizure of goods.
"From the perusal of the provision in question in the context of the scheme of the Act of 2017, it is axiomatic that the timelines have been introduced to prevent arbitrary detention, prolonged seizure and harassment to the trader. It is in keeping with the aforesaid intention that the legislature has used the expression “shall” at two places in Section 129 (3) of the Act."
The Bench held that the one-day delay in issuing the notice amounted to a violation of the mandatory requirement and affected the validity of the proceedings.
Court's Decision
The High Court allowed the writ petition and set aside the appellate authority's order dated October 28, 2024, as well as the Deputy Commissioner's order dated September 17, 2024. The Court also directed that the penalty amount deposited before it be released to the petitioner after due verification.
The Court clarified that proceedings permissible under the 2017 Act could still be pursued by the respondents, if required.
Case Details:
Case Title: Danish Hassan v. UT of J&K & Ors.
Case Number: WP(C) 2538/2024
Judges: Sanjeev Kumar, Acting Chief Justice; Mohd Yousuf Wani, Judge
Decision Date: September 7, 2026
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