Background

Auto parts supplied under two e-invoices were intercepted on 18.04.2022 without an e-way bill. MOV-07 was issued the same day and the goods were released on bank guarantee, but the MOV-09 order confirming penalty of Rs. 1,38,706 was passed only on 04.06.2022. The First Appellate Authority upheld the penalty. Before the Tribunal the appellant raised limitation under Section 129(3); the department objected that the ground was new and caused no prejudice.

Final Verdict

The Tribunal rejected the department’s objection, holding that the dates of MOV-07 and MOV-09 were undeniable facts on record, noted by the First Appellate Authority itself, so the limitation plea was not a new ground. On merits, it held that the use of “shall” in Section 129(3), both for issuing notice within seven days and for passing the order within seven days of service, shows that the timelines are mandatory; a fiscal statute is strictly construed, and the absence of a stated consequence does not make them directory, following Mohd Hazzak Lohar (J&K & Ladakh HC), Allcargo Logistics and Khatu Enterprises (Guj HC), Deepam Roadways (Mad HC), Pawan Carrying Corporation (Pat HC) and K.P. Sugandh (Ori HC). It also found no mens rea, since the e-invoices auto-populated GSTR-1 and tax was paid in the April 2022 return. Holding that MOV-09 issued 47 days after MOV-07 is illegal and without jurisdiction, the Tribunal set aside the Order-in-Appeal, allowed the appeal with consequential relief and directed immediate release of the bank guarantee.