The Calcutta High Court has set aside GST penalty orders totalling ₹25.23 lakh imposed in connection with two detained trucks, holding that the authorities passed the orders beyond the mandatory statutory time limit prescribed under Section 129(3) of the Central Goods and Services Tax (CGST) Act, 2017. The Court also directed the release of the detained vehicles without insisting on payment of the disputed penalty.
The judgment reinforces an important principle of GST enforcement: tax authorities must comply with statutory timelines while exercising their powers to detain goods and impose penalties. Administrative delays cannot automatically justify action beyond the period prescribed by law.
Case Details
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Case Name: Permender Singh v. Union of India & Ors.
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Case Number: WPA No. 3350 of 2026
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Court: Calcutta High Court
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Date of Decision: 14 October 2026
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Bench: Justice Aryak Dutt
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Relevant Provision: Section 129(3) of the CGST Act, 2017, read with the West Bengal Goods and Services Tax (WBGST) Act, 2017
- Citation: 2026 LLBiz HC (CAL) 257
Background of the Case
The petitioner, Permender Singh, owned two goods vehicles that had been hired by a transporter to carry mild steel (MS) scrap from Guwahati, Assam, to Purnea, Bihar. The vehicles commenced their journey on 9 July 2025.
On 11 July 2025, GST authorities intercepted the vehicles in Jalpaiguri, West Bengal, and detained the trucks along with the goods. The action was initiated after the authorities discovered that the GST registration of the supplier had been suspended.
Considering the tax invoices and e-way bills to be invalid in the circumstances, the authorities initiated proceedings under Section 129 of the CGST Act and the corresponding provisions of the WBGST Act.
Show-cause notices proposing penalties were issued on 17 July 2025, directing the petitioner to appear by 24 July 2025. However, the final penalty orders were not passed until 15 January 2026.
The authorities imposed penalties of ₹12,67,640 for one vehicle and ₹12,55,600 for the other, taking the aggregate demand to ₹25,23,240.
Aggrieved by the prolonged detention and delayed adjudication, the vehicle owner approached the Calcutta High Court challenging the legality of the penalty orders.
Petitioner’s Arguments Before the High Court
The petitioner contended that Section 129(3) of the CGST Act prescribes a specific time limit for completing proceedings relating to the detention of goods and conveyances. According to him, the proper officer was required to issue the penalty order within seven days of serving the notice.
Since the notices were issued in July 2025 and the final orders were passed only in January 2026, the petitioner argued that the statutory deadline had been breached by several months.
He further submitted that he was merely the owner of the vehicles hired for transportation and had no involvement in preparing the invoices or e-way bills. The legality of the penalty orders, therefore, had to be examined in light of the statutory restrictions governing the exercise of GST enforcement powers.
Revenue’s Explanation for the Delay
The State authorities sought to justify the delay by referring to proceedings before the Gauhati High Court concerning the supplier’s suspended GST registration.
However, the Calcutta High Court noted that the Gauhati High Court had not stayed the proceedings initiated under Section 129 of the CGST Act. Moreover, the petitioner was not a party to those proceedings.
Consequently, the pending litigation concerning the supplier’s registration did not provide a sufficient justification for keeping the vehicles detained and passing the penalty orders after an extended delay.
High Court’s Findings on Section 129(3) of the CGST Act
The Calcutta High Court held that the time limit prescribed under Section 129(3) was mandatory and could not be disregarded by the tax authorities.
In reaching its conclusion, the Court relied on decisions of the Patna, Gujarat and Tripura High Courts dealing with statutory timelines under GST detention proceedings.
The Bench observed that the State had neither satisfactorily explained the delay of nearly six months nor cited any contrary judicial precedent supporting its position.
The Court also addressed the objection that the petitioner should have pursued the alternative statutory remedy of appeal under Section 107 of the CGST Act. It held that the availability of an appeal does not automatically prevent the High Court from exercising its writ jurisdiction when the impugned order has been passed without jurisdiction.
In the circumstances, directing the petitioner to file a statutory appeal would serve no useful purpose because the challenged orders were legally unsustainable on account of the breach of the mandatory statutory deadline.
Final Order of the Court
Allowing the writ petition, the Calcutta High Court quashed both penalty orders aggregating ₹25,23,240.
The Court directed the authorities to release the two vehicles within seven days of communication of its order, without insisting on payment of the disputed penalty amount.
However, the relief was confined to the challenged penalty orders and vehicle detention. The judgment did not prevent the authorities from initiating other proceedings against the supplier or recipient of the goods, wherever legally permissible.
Legal Significance for GST Taxpayers and Transporters
This judgment is significant for transporters, vehicle owners, suppliers and businesses involved in the movement of goods under GST.
It highlights the importance of examining whether detention and penalty proceedings comply with the procedural safeguards prescribed by the CGST Act. Where an order is passed beyond a mandatory statutory deadline, the affected party may have grounds to challenge its validity.
However, the decision should not be interpreted as making every delayed GST order automatically invalid. The applicable statutory provision, the nature of the proceeding, relevant facts and binding judicial precedents must be carefully examined in each case.
For businesses facing detention of goods under Section 129, timely legal scrutiny of show-cause notices, adjudication orders and the statutory chronology can be crucial in determining the appropriate remedy.
Disclaimer: This article is for general legal information and educational purposes and should not be treated as case-specific legal advice.