Srinagar, July 23, KDC: Ruling that a GST penalty order passed even one day beyond the seven day deadline prescribed under Section 129(3) of the Jammu and Kashmir Goods and Services Tax Act, 2017 cannot be sustained, the High Court of Jammu and Kashmir and Ladakh has quashed a penalty imposed by the State Taxes Department, holding that the statutory timeline is mandatory and not merely directory. The Court said the provision was enacted to prevent arbitrary detention, prolonged seizure and harassment of traders and must be enforced through strict compliance.
A Division Bench comprising Acting Chief Justice Sanjeev Kumar and Justice Mohd Yousuf Wani allowed a writ petition filed by transporter Mohd Hazzak Lohar and JMC Transport Company challenging notices and a penalty order issued under Section 129 of the GST Act after their vehicle carrying goods was intercepted at Heerpora in Shopian in September 2025.
According to the petitioners, the show cause notice was served on September 14, 2025, requiring them to explain why penalty should not be imposed for transporting goods without proper documents. While the notice was issued within the statutory period, the final penalty order was passed on September 22, one day beyond the seven day period stipulated under Section 129(3).
The State defended the delay by submitting that the petitioners had sought revaluation of the seized goods and that the proceedings were interrupted after the Jammu and Kashmir Pollution Control Board found part of the consignment to comprise prohibited plastic carry bags. It argued that these unforeseen developments had delayed the final order.
Rejecting the contention, the Division Bench held that the language of Section 129(3) leaves no room for treating the prescribed timelines as merely directory. It observed that the legislature deliberately used the expression “shall” while prescribing both the period for issuing the notice and the period for passing the penalty order, making compliance mandatory. The Bench further held that fiscal statutes must be strictly construed and that the absence of an express consequence for delay does not dilute the mandatory nature of the provision.
The Court observed that statutory timelines regulating coercive powers are intended to safeguard valuable rights. It said treating the timelines as directory would defeat the legislative purpose of preventing arbitrary detention, prolonged seizure and harassment of traders. The Bench added that whenever a statute authorises coercive action such as detention or seizure, courts insist on strict adherence to the prescribed procedure.
Although the delay in the present case was only one day and arose because of intervening developments relating to the prohibited goods, the Bench held that the statutory mandate could not be relaxed. It observed that the authorities were still under an obligation to pass the penalty order within the prescribed period in respect of the remaining goods.
The High Court accordingly quashed the penalty order dated September 22, 2025, while clarifying that its decision would not prevent the authorities from initiating or continuing any proceedings otherwise permissible under the GST Act.
The petitioners were represented by Advocate M. Tufail. The respondents were represented by Senior Additional Advocate General Mohsin Qadri, assisted by Maha Majeed. (KDC)
