Detention against the statutory provisions is void-ab-initio.

Case Title: D.K. Enterprises v. Assistant/Deputy Commissioner (ST), Adjudication, Intelligence-I

Court: High Court of Madras

Petition No.: W.P. No. 22646 of 2022

Category of Dispute: Detention and Release of Goods

Date of Judgment: 29 August 2022

Relevant Section: Section 129(1), 129(3) of the CGST Act, 2017

Relevant Rules: Rule 138B of CGST Rules

Takeaway: Delay in Detention Nullifies the Seizure – Procedural Lapses Render Action Void

Facts of the Case:

1. The petitioner sought a writ of mandamus for release of a consignment (Polystardone XL-10, a life-saving drug) detained by the Roving Squad on 13.08.2022 at 2:15 a.m. [Para 1]
2. Upon interception, Form GST MOV-01 (driver’s statement) and MOV-02 (inspection order) were issued. [Para 3(i)-(ii)]
3. The officer presumed without evidence that goods would be unloaded at an unregistered place. [Para 3(iii)]
4. Form MOV-04 (verification report) was issued on the same day. However, no detention order or SCN under Section 129(3) was issued within 7 days as mandated. [Para 3(vi), 6]
5. Notice dated 22.08.2022 was dispatched only on 24.08.2022—well beyond statutory timelines. [Para 3(x), 6]
6. Petitioner argued the delay contravened the proviso to Section 129(1) and statutory timelines under Section 129(3). [Para 3(viii)-(xii)]

Question(s) in Consideration:

1. Whether the detention of goods and conveyance without a timely issued detention order and SCN under Section 129(3) is valid? [Para 3(vi), 7]
2. Whether procedural lapses under the CGST Act and Circular No. 41/15/2018 render the detention and subsequent action illegal? [Para 6-10]
3. Can the delay be condoned by invoking Section 10 of the General Clauses Act, 1897, due to intervening holidays? [Para 8, 13-14]

Observations of the Court:

1. The court found procedural flaws in the issuance of detention orders and SCN under Section 129(3). There was no detention order passed until 22.08.2022, breaching the 7-day limit. [Para 6-7]
2. Circulars under Section 168 of the CGST Act are binding and establish timelines that must be adhered to strictly. [Para 4-6]
3. The GST system, as amended, treats all days equally—holidays do not extend the timeline for detention or SCN issuance. [Para 10-11, 14]
4. Form MOV-02 (order to station vehicle) cannot substitute a formal detention order under MOV-06; the responsibility remains with the transporter unless such an order is issued. [Para 15-16]
5. The invocation of Section 10 of the General Clauses Act was found inapplicable as the GST regime has explicitly effaced the distinction between working days and holidays for such actions. [Para 13-14]

Judgment of the Court:

The High Court held that the detention and proceedings were vitiated due to violation of the mandatory procedural requirements under Section 129 of the CGST Act and the binding Circular. The writ petition was allowed, and a mandamus was issued for the release of goods and conveyance. The state’s attempt to validate delay using Section 10 of the General Clauses Act was rejected. [Para 17]

Between Fine Lines:

• Detention under GST must follow strict timelines; even a delay of one day may invalidate proceedings.
• Circulars issued under Section 168 are binding and not merely advisory.
• Roving squads operate 24/7, thus GST actions are not bound by holidays.
• MOV-02 is not equivalent to a detention order; formal orders are essential.
• Procedural violations render entire detention proceedings invalid.

Summary of Referred Cases