Decided 16 September 2026. The Ernakulam Bench of GSTAT has quashed a demand of Rs 39,21,831.06 under section 129 because the penalty order in MOV-09 was passed 230 days after the MOV-07 notice, far beyond the seven days allowed by section 129(3). Following several High Courts, the Tribunal held the time limit mandatory, and also found no intent to evade in a Covid-era stock transfer between the appellant's own godowns.
Case at a glance
| Case | Lachmandas & Company v. Commissioner of Kerala State GST |
| Forum | GSTAT, Ernakulam Bench, Division Bench Court I (Vice-President Subramanya Rayaprol and Member (Technical) Ramamoorthi Sriram) |
| Appeal No. | APL/32/ERN/2026 (Final Order No. 06/EKM/KERALAM/2026) |
| Date of order | 16 September 2026 |
| Demand | Rs 39,21,831.06 (tax and penalty under section 129) |
| Result | Order set aside; bank guarantee to be released |
Facts of the case
The appellant, a cigarette trader, moved goods on 30.07.2020 from the ITC godown to its Aluva godown under an invoice and e-way bill for one vehicle. Due to a Covid lockdown in Aluva, goods were unloaded at a small godown in North Paravur and part was moved in another vehicle with a delivery challan; both premises were registered additional places of business.
The second vehicle was intercepted on 31.07.2020. MOV-07 was issued on 04.08.2020 and the MOV-09 order on 22.03.2021. The appeal was dismissed on 30.11.2023.
Issue before the Tribunal
Is a penalty order under section 129(3) valid if passed far beyond seven days from service of the MOV-07 notice?
What the Tribunal held
- The limitation point arose from dates already on record, so it was not a new ground; the first appellate authority had failed to examine it.
- Section 129(3) uses 'shall' for both the notice and the order. In a coercive fiscal provision, the seven-day limits are mandatory, as held in Mohd Hazzak Lohar (J&K and Ladakh HC), Allcargo Logistics and Khatu Enterprises (Gujarat HC), Deepam Roadways (Madras HC), Pawan Carrying Corporation (Patna HC) and K.P. Sugandh (Orissa HC).
- The MOV-09 order, passed 230 days after MOV-07, was illegal and without jurisdiction.
- The movement was a stock transfer between the appellant's own godowns during Covid restrictions, with no tax involved and no intent to evade. The order was set aside and the bank guarantee directed to be released.
Practical takeaways for taxpayers
- Count the days from service of MOV-07 to the MOV-09 order; an order beyond seven days can be challenged as void.
- Raise limitation even at a later appellate stage where the dates are on record.
- For stock transfers between registered places, carry a delivery challan and generate a fresh e-way bill when vehicles change.
Frequently asked questions
Is the seven-day limit in section 129(3) mandatory?
GSTAT Ernakulam, following several High Courts, held it is mandatory and an order beyond it is void.
Can limitation be raised for the first time before GSTAT?
Yes, where the relevant dates are already on record, the Tribunal held it is not a new ground.
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This summary is based on the order of the GST Appellate Tribunal, Ernakulam Bench (Final Order No. 06/EKM/KERALAM/2026) in Appeal No. APL/32/ERN/2026. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.