Madras High Court Quashes Arbitrary GST Notice for Exceeding Limitation Period

Case Name:

W.P.No.27140 of 2023 - Tvl.V.V.Iron and Steels vs. The State Tax Officer

Key Takeaways:

1. The petitioner challenged a notice issued under the GST Act, claiming that it was issued beyond the prescribed period of limitation.
2. The notice was dispatched to the petitioner after the expiration of the limitation period, as specified in Section 129(3) of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017.
3. The Madras High Court observed that the notice should have been issued within seven days of the detention or seizure of goods/conveyance.
4. The court concluded that the notice was issued beyond the prescribed period and quashed it accordingly.
5. The court directed the respondent to release the goods/conveyances of the petitioner, with the liberty to impose a penalty under other provisions of the Act.

Case Synopsis:

Based on the information provided, this is an excerpt from an order issued by the High Court of Judicature at Madras in W.P.No.27140 of 2023. The petitioner, Tvl.V.V.Iron and Steels, represented by its proprietor Saravana Pandian, filed a writ petition under Article 226 of the Constitution of India. The petitioner sought the issuance of a Writ of Certiorarified Mandamus to quash the notice in FORM GST MOV 07 dated 08.09.2023 as arbitrary and to direct the respondent, The State Tax Officer, Rs-VII, Intelligence-II, Chennai, to release the conveyance bearing Registration No.TN-21-AZ-7279 along with its goods forthwith.

The order states that Mr. C. Harsharaj, learned Additional Government Pleader, took notice on behalf of the respondent. The petitioner challenged the impugned notice in Form GST Mov-07 dated 05.09.2023. The petitioner argued that the notice was issued beyond the period of limitation prescribed under Section 129(3) of the Central Goods and Services Tax (CGST) Act, 2017.

The petitioner claimed that the goods/conveyance were intercepted on 30.08.2023, and statements were recorded. An order for physical verification/inspection of goods/conveyance and documents was issued in Form GST Mov-02 on the same date. The petitioner received the notice on 08.09.2023, which was beyond the statutory period of limitation.

The respondent, through the learned Additional Government Pleader, argued that the notice was dispatched to the petitioner through email on 07.09.2023 at about 5.54 p.m. The notice was also affixed on the vehicle on the same date.

The court considered the arguments of both parties. It noted that the impugned notice should have been issued to the petitioner within seven days of the detention/seizure of goods/conveyance, as prescribed under Section 129(3) of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017.

Section 129(3) of the TNGST Act, 2017 states that the proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable. The officer must then pass an order within a period of seven days from the date of service of such notice for the payment of the penalty.

The court observed that the language of Section 129(3) of the TNGST Act, 2017 is clear. The notice specifying the payment of penalty must be issued within seven days of the detention or seizure of goods. The issuance of the notice within seven days should be calculated from the date on which the seizure was to be effected, not from the following date.

In this case, the last date for the issuance of the impugned notice would have been 06.09.2023. However, the notice was dispatched through email on 07.09.2023, after the expiry of the limitation period.

Therefore, the court concluded that the impugned notice should be quashed on this ground alone. The court directed the respondent to release the goods/conveyances of the petitioner if they have not been released so far. However, the respondent is given the liberty to impose a penalty under any other provisions of the Act after complying with the same.

In conclusion, the writ petition filed by Tvl.V.V.Iron and Steels was allowed, and the impugned notice was quashed. The court ordered the release of the goods/conveyances of the petitioner and granted liberty to the respondent to impose a penalty under other provisions of the Act.

FAQ:

Q1: What was the writ petition about?

A1: The writ petition was filed by Tvl.V.V.Iron and Steels challenging a notice issued under the GST Act.

Q2: What was the petitioner’s argument?

A2: The petitioner argued that the notice was issued beyond the prescribed period of limitation.

Q3: What did the Madras High Court decide?

A3: The Madras High Court quashed the notice, as it was dispatched after the expiration of the limitation period.

Q4: What did the court direct the respondent to do?

A4: The court directed the respondent to release the goods/conveyances of the petitioner, with the liberty to impose a penalty under other provisions of the Act.

Mr.C.Harsharaj, learned Additional Government Pleader takes notice on behalf of the respondent.

2. The petitioner has challenged the impugned notice in Form GST Mov-07 dated 05.09.2023.

3. The specific case of the petitioner is that the impugned notice in Form GST Mov-07 has been issued beyond the period of limitation prescribed under Section 129(3) of the Central Goods and Services Tax (CGST) Act, 2017.

4. It is submitted that the goods/conveyance were intercepted on 30.08.2023 and thereafter, the statements were recorded and order for physical verification/inspection of goods/conveyance and documents were issued in Form GST Mov-02 on the same date i.e., on 30.08.2023.

5. It is further submitted that the notice was received by the petitioner on 08.09.2023 beyond the statutory period of limitation under the aforesaid provision.

6. It is therefore submitted that the impugned notice has to lapse in view of limitation prescribed under Section 129(3) of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017.

7. The learned Additional Government Pleader for the respondent on the other hand would submit that the notice was dispatched to the petitioner through e-mail at about 5.54 p.m. on 07.09.2023.

8. It is further submitted that on the same date i.e., on 07.09.2023, the notice was also affixed on the vehicle.

9. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Additional Government Pleader for the respondent.

10. The impugned notice ought to have been issued to the petitioner within seven days on the date of detention/seizure of goods/conveyance as is contemplated under Section 129(3) of the TNGST Act, 2017.

11. Sub-Section 3 to Section 129(3) of the TNGST Act, 2017 reads as under:-

"129. Detention, Seizure and Release of goods and conveyances in transit:

(3) The proper officer detaining or seizing 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 under clause (a) or clause (b) of sub-section (1)."

12. Section 129(3) of the TNGST Act, 2017 has not used the expression "within seven days from the date of detention or seizure". The language in Section 129(3) of the TNGST Act, 2017 is clear. Notice specifying payment of penalty has to be issued within seven days of detention or seizure of goods. Issuance of notice within seven days has to be calculated from the date on which seizure was to be effected and not from the following date. Thus, the last date for issuance of the impugned notice would have expired on 06.09.2023. However, the impugned notice has been dispatched through e-mail only on the following date i.e., on 07.09.2023 after the expiry of limitation.

13. Therefore, on this ground alone, the impugned notice has to go. Consequently, the impugned notice stands quashed with a direction to the respondent to release the goods/conveyances of the petitioner, if they have not been released so far. However, liberty is given to the respondent to impose penalty under any other provisions of the Act, after complying with the same.

14. In the result, this Writ Petition stands allowed. No costs.

14.09.2023