Section 129 of GST – Detention, seizure & release of goods

GST Act 2017: Section 129 of GST Act 2017 – Detention, seizure and release of goods and conveyances in transit. Check out details for GST Section 129 as per CGST Act 2017

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Section 129 of GST

Statutory provision

(1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,-

• (a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;
• (b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty;
• (c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed:

Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.

(2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances.

(3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c).

(4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.

(5) On payment of the amount referred to in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded.

(6) Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within fourteen1 days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130:

Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fourteen days may be reduced by the proper officer.

Related provisions of the Statute

Section or Rule	Description
Section 67	Power of inspection, search and seizure
Section 68	Inspection of goods in movement
Section 130	Confiscation of goods or conveyances and levy of penalty

Analysis and Updates

Introduction

This section provides for the basis relating to detention of goods or conveyances or both in case of certain defaults under the law. A common man would understand the meanings of the three terms detention, confiscation and seizure as follows:

 Detention means keeping or holding back either by force or otherwise;
 Confiscation means to appropriate to the Government account;
 Seizure means to take forcible possession of.

Analysis

(a) If a person contravenes any provision of the Act or Rules while transporting or storing goods during transit, then such goods and the conveyance in which such goods are carried and all the documents relating to such goods and conveyance can be detained or seized. The proper officer detaining and seizing the goods and/ or conveyance has to provide proper opportunity to the transporter or such other person to explain his case by issuing a show cause notice to him. After hearing the transporter, the officer shall pass an appropriate order.

(b) In case of default, where the owner of the goods comes forward for the payment of tax, penalty will be levied equal to 100% of the amount of tax and in case of exempted goods 2% of the value of goods or ` 25,000/- whichever is less. The sub-section has two limbs to it-

• i. When the goods are taxable and the owner comes forward to pay the tax and penalty – then the amount payable would be equal to:
  Tax + Penalty equal to 100% of tax.
  For example, if the taxable goods valued at ` 100,000/- (tax rate 12%) is being transported without documents and subject to detention, then if the owner of goods comes forward to pay tax and penalty, the amount payable would be equal to: Tax ` 12,000/- + Penalty ` 12,000/- = ` 24,000/-. Please note that the taxes paid under this provision would not be eligible to be claimed as input taxes by the recipient – refer section 17(5).
• ii. When the goods are exempt and the owner comes forward to pay the penalty – then the amount payable would be equal to:

Penalty at 2% of value of goods or ` 25,000/-, whichever is lower.
For example, if the exempt goods valued at ` 1,00,000/- is being transported without documents and subject to detention, then if the owner of goods comes forward to pay the penalty the amount payable would be equal to: ` 2,000/- or ` 25,000/- whichever is lower, in this case it is ` 2,000/-.

(c) In case where owner of the goods does not come forward for payment of tax, then an order shall be passed for payment of amount of tax and penalty equal to 50% of the value of goods reduced by tax amount paid (to be paid by any other person other than owner) and in case of exempted goods, 5% of the value of goods or Rs 25,000/- whichever is less. The sub-section has two limbs to it:

1. When the goods are taxable and the owner does not come forward to pay the tax and penalty – then the amount payable would be equal to:
Tax + Penalty equal to 50% of the value of goods (as reduced by the tax amount paid thereon)
For example, if the taxable goods valued at ` 1,00,000/- (tax rate 12%) is being transported without documents and subject to detention, then if the owner of goods does not come forward to pay tax and penalty the amount payable would be equal to: Tax ` 12,000/- + Penalty ` 38,000/- [i.e. 50% of value of goods less tax amount (` 50,000/- – Rs.12,000/-)] in all = ` 50,000/-. Please note that the taxes paid under this provision would not be eligible to be claimed as input taxes by the recipient – refer section 17(5).
2. When the goods are exempt and the owner does not come forward to pay the penalty – then the amount payable would be equal to:
Penalty at 5% of value of goods or ` 25,000/-, whichever is lower.
For example, if the exempt goods valued at ` 1,00,000/- is being transported without documents and subject to detention, then if the owner of goods does not come forward to pay the penalty the amount payable would be equal to: ` 5,000/- or ` 25,000/- whichever is lower, in this case it is ` 5,000/-.

(d) The proper officer shall release the goods upon the payment of tax and amount of penalty in the above manner or upon furnishing a security equivalent of the amount payable and all the proceedings under this particular section shall be deemed to be concluded. However, if the person (either owner of the goods or any other person) fails to discharge the amount of tax and penalty under this section within 14 days, than the goods and/ or conveyance shall be liable for confiscation. The period of 14 days can be reduced by proper officer if goods are of perishable or hazardous nature. Further, such goods can be released on provisional basis under bond as per the provisions of section 67.

(e) Penalty under section 129 is an ‘penalty in action’, that is, penalty cannot be imposed after completion of movement in case goods are NOT intercepted during movement and found to be deficient on the prescribed documents. If subsequent evidence is collected that clearly proves that goods have been moved without issuing EWB, even then penalty under section 129 CANNOT be imposed if such investigation is conducted after movement has ended. Decision of Patna HC in the case of Ram Charitra Ram Harihar Prasad vs State Of Bihar (CWP 11221 of 2019) where the HC held that if EWB generated had expired but another EWB was generated just before vehicle was intercepted which was produced to the inspecting officer. HC held that intercepting officer cannot be question if a valid EWB was produced even though, from the facts, the vehicle can be understood to have travelled without a valid EWB but not intercepted. Offence cannot be reconstructed ‘in theory’. Penalty under section 129 will arise only when offence is ‘in progress’.

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