🚛 GST Detention of Goods & Provisional Release Process under Section 129

[Tushar Malik]

Introduction

When businesses move goods under GST, their vehicles can be stopped by GST officers for checking documents.

These checks are part of GST rules and may result in goods or vehicles being detained if mistakes are found, such as missing documents or errors in records.

Section 129 of the CGST Act, 2017 allows officers to temporarily hold goods and vehicles if GST rules are broken.

What is Section 129?

Section 129 is about detaining goods and vehicles during transport if there is a violation of GST rules.

This is different from confiscation under Section 130 (which is permanent). Common reasons for detention:

• Missing or expired e-way bill
• Wrong or mismatched invoice
• Suspected undervaluation or wrong HSN code
• No proper documents with the goods
• Officer suspects tax evasion

Step-by-Step Detention Process

1. MOV-02 Inspection Report

• The officer stops the vehicle and prepares a report called MOV-02 which notes the goods and documents inspected.

1. MOV-06 Detention Order

• If any issue is found, a MOV-06 detention order is issued explaining why the goods and vehicle are being detained.
• Goods and vehicle are either held at a secure location or left stationary.

Provisional Release:

• Businesses can apply for provisional release under Rule 140 of CGST Rules, 2017.
• To get provisional release, you need to:
  • Submit a bond (Form MOV-08) equal to the value of goods plus taxes and penalties.
  • Provide security (bank guarantee or cash deposit) equal to the tax + penalty.

  • After provisional release is granted, you can use the goods and vehicle while the final decision is still pending.

Final Tax & Penalty Notice (MOV-09)

• Even after provisional release, the GST officer will issue a final notice (MOV-09) demanding:
  • Tax on goods
  • Penalty: 100% of tax if no evasion is suspected or 200% if evasion is suspected

What Can the Assessee Do?

✔ Option 1: Apply for Provisional Release

• Submit bond and security to release the goods and vehicle quickly and continue your business.

✔ Option 2: Challenge the Detention

• If you believe the detention is wrong (e.g., your documents were valid), reply to MOV-06 explaining your case.
• If needed, you can file a writ petition in the High Court to challenge the detention.

Important Documents You Must Have

• Valid tax invoice matching the goods in transport
• Valid e-way bill (if required)
• Vehicle’s registration certificate (RC) and driver’s license
• Completed MOV-08 bond form
• Proof of bank guarantee or cash deposit

Recent Legal Updates

• Budget 2024 proposes removing Section 129 and 130 from GST blocked credit rules (Section 17(5)) – this will reduce restrictions for businesses (yet to be notified by CBIC).
• The Finance Act, 2021 increased penalties – now up to 200% of tax in some cases.
• The pre-deposit for appeals has increased from 10% to 25% of the penalty, making disputes more expensive.
• Courts have ruled that minor mistakes should not lead to detention but may attract a small fine (₹500 only).