Author: Ashwarya Sharma, Advocate, Co-Founder & Legal Head, RB LawCorp
Published on: 16/06/2026
Introduction: Does the Use of “Shall” Always Make a Provision Mandatory?
One of the most persistent assumptions in statutory interpretation is that whenever the legislature employs the word “shall”, the provision automatically becomes mandatory, while the use of “may” necessarily indicates a directory provision. Though this appears intuitive, Indian courts have consistently rejected such a simplistic approach.
The distinction between mandatory and directory provisions is not determined merely by the language employed. Rather, it depends upon the legislative intent, the purpose of the provision, the consequences of non-compliance, and the larger object sought to be achieved by the statute.
This issue has acquired considerable significance under the GST regime, where the statute contains numerous procedural requirements and timelines. Whether a particular requirement is mandatory or directory often determines the fate of proceedings themselves.
The controversy recently came under judicial scrutiny before the Hon’ble Allahabad High Court in Shiva Enterprises v. State of U.P. [(2026) 42 Centax 316 (All.)], where the Court examined whether the seven-day timeline prescribed under Section 129(3) of the GST Act is mandatory or merely directory.
In a significant departure from the views expressed by certain other High Courts, the Allahabad High Court held that the timeline is directory and not mandatory, while simultaneously laying down important safeguards and operational guidelines for GST officers.
The judgment offers an excellent opportunity to revisit the broader principles governing statutory interpretation and the law relating to mandatory and directory provisions.
Language Alone Does Not Decide Legislative Intent
The traditional assumption that “shall” means mandatory and “may” means directory has long been diluted by judicial interpretation.
As early as State of U.P. v. Babu Ram Upadhya, the Supreme Court observed that while the use of the word “shall” creates a prima facie presumption of mandatory character, the real intention of the legislature must be gathered from the entire scheme and object of the statute.
Thus, the inquiry does not end with the words used by Parliament.
Courts are required to examine:
- the purpose of the provision;
- the consequences flowing from non-compliance;
- whether any penalty or invalidity is prescribed;
- whether the provision is procedural or substantive; and
- whether treating it as mandatory would advance or frustrate the legislative object.
The issue, therefore, is not one of semantics but of legislative intent.
The Tests Developed by Courts
Over decades, the Supreme Court has evolved certain well-established principles to determine whether a provision is mandatory or directory.
One of the most important indicators is whether the statute itself prescribes consequences for non-compliance.
Where the legislature expressly provides that failure to comply shall invalidate proceedings or render an act void, the provision is ordinarily mandatory. Conversely, where no such consequence is provided, courts are generally reluctant to infer mandatory invalidity.
Another important consideration is the object sought to be achieved.
A provision cannot be interpreted in a manner that defeats the legislative purpose or produces unreasonable or absurd consequences.
Courts also distinguish between procedural and substantive provisions. Procedural requirements and timelines are generally treated more liberally, particularly where no prejudice is caused to the affected person.
Equally important is the prejudice test. If non-compliance causes no real prejudice, courts often lean towards treating the provision as directory.
However, where the provision constitutes the only safeguard against arbitrary exercise of power, courts have consistently held such requirements to be mandatory irrespective of the language employed.
Thus, no single test is decisive. The exercise is ultimately one of harmonising legislative intent with practical consequences.
The Controversy Under Section 129(3) of the GST Act
Section 129 governs detention and release of goods in transit.
Following amendments, Section 129(3) provides that upon detention of goods, the proper officer shall issue a notice specifying the penalty payable within seven days, and the order thereafter shall also be passed within seven days.
The use of the expression “shall” gave rise to an important controversy.
Could any breach of these timelines automatically invalidate the proceedings?
Prior to the Allahabad High Court’s decision, the Patna, Gujarat and Orissa High Courts had taken the view that the timelines were mandatory.
The Allahabad High Court, however, adopted a different approach.
The Allahabad High Court’s Reasoning in Shiva Enterprises
The Court first examined whether Section 129(3) itself prescribes any consequence in the event the timelines are breached.
It found that the provision nowhere states that proceedings shall become void or that jurisdiction would lapse if the notice or order is not issued within seven days.
The absence of any statutory consequence weighed heavily with the Court.
The Court further noted that prior to amendment, no timeline existed at all. The legislative intent behind introducing the seven-day period was to ensure procedural discipline and efficiency, and not to create an automatic jurisdictional bar.
The Court characterised the timelines as procedural in nature. The issuance of notice under Section 129 forms part of procedural law and does not affect the assumption of jurisdiction itself.
Accordingly, the Court held that breach of the timeline does not invalidate the proceedings.
However, the Court simultaneously clarified that directory does not mean inconsequential.
Delays must be explained and justified, and officers responsible for habitual or unexplained delays may invite departmental action.
Thus, while declining to invalidate proceedings automatically, the Court insisted upon procedural accountability.
Directory Does Not Mean Discretionary
One of the most important aspects of the judgment is that it does not permit arbitrary delays.
The Court made it abundantly clear that officers exercising coercive powers must remain vigilant and ensure adherence to the statutory timelines.
Unexplained delays cannot be ignored merely because the provision is directory.
Reasons for delay must be recorded in the order sheet and reflected in the final order itself.
The Court further observed that repeated or habitual delays should invite administrative scrutiny by superior authorities.
In other words, while the timeline may not be jurisdictional, procedural discipline remains mandatory.
Operational Guidelines Issued by the Court
The judgment goes beyond mere interpretation and lays down practical guidelines for the conduct of proceedings under Section 129.
The Court directed that physical verification and preliminary inquiries should ordinarily be completed within seven days of interception so that the show cause notice may be issued within the prescribed period.
The assessee should be granted approximately three days for filing objections.
The hearing should thereafter be completed within two days and the final order should ideally be passed within seven days from issuance of notice.
Requests for adjournment must be made in writing and reflected in the order sheet.
Where delay occurs, complete reasons must be recorded both in the proceedings and in the final order.
The Court also directed that habitual delays by officers should be examined by superior authorities for appropriate administrative action.
These directions seek to balance procedural flexibility with accountability.
Implications for GST Litigation
The decision has important implications for detention proceedings under Section 129.
Assessees can no longer seek invalidation of proceedings merely by demonstrating that the seven-day period was exceeded.
At the same time, the judgment does not grant unrestricted liberty to the department.
Where delays cause prejudice or where proceedings are conducted without affording reasonable opportunity, courts retain ample power to interfere.
More broadly, the principles laid down in Shiva Enterprises are likely to influence interpretation of numerous other provisions under the GST framework involving statutory timelines.
The judgment reiterates that legislative intent, rather than mere linguistic form, remains the decisive factor.
Why the Judgment Matters
The significance of the decision extends far beyond Section 129.
It reaffirms a foundational principle of statutory interpretation:
“Shall” is not always mandatory, and “may” is not always directory.
The mandatory-directory distinction is not governed by grammatical expressions alone.
It is determined by the purpose of the provision, the consequences of non-compliance, and the larger legislative scheme.
By holding the timeline under Section 129(3) to be directory while simultaneously insisting upon procedural discipline and accountability, the Allahabad High Court has attempted to strike a careful balance between flexibility and fairness.
Conclusion
The judgment in Shiva Enterprises v. State of U.P. serves as an important reminder that statutory interpretation is not an exercise in mechanical reading of words.
The true inquiry lies in discerning legislative intent through the text, context, purpose, and consequences of the provision.
For taxpayers and practitioners, the ruling underscores that procedural timelines cannot always be converted into technical weapons to invalidate proceedings.
At the same time, the decision sends an equally important message to the tax administration:
Directory does not mean optional.
Procedural discipline remains indispensable when coercive powers affecting property and commercial rights are exercised.
Ultimately, the judgment strengthens the broader principle that the rule of law demands both effective administration and accountable exercise of statutory powers.
📎 Attached PDF for detailed reading 👉
📎 Full Published Version: https://www.centaxonline.com/latest-news-updates/gst/105010000000028503/OPINION
(The author is a practicing advocate, Co-Founder and Legal Head of RB LawCorp.
He specializes in GST law. Suggestions or queries can be directed to
ashsharma@rblawcorp.in. The views expressed in this article are strictly
personal.)
