Introduction of Detention, seizure and release of goods and conveyances in transit :
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
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 i.e details of Form under MOV :
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Serial No.
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Form Number
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Description of Form
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1
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FORM GST MOV-01
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Where the person in charge of the conveyance fails to produce any prescribed document or where the proper officer intends to undertake an inspection, he shall record a statement of the person in charge of the conveyance in FORM GST MOV-01.
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2
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FORM GST MOV-02 [Order of physical verification] FORM GST EWB-03
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In addition, the proper officer shall issue an order for physical verification/inspection of the conveyance, goods and documents in FORM GST MOV-02, requiring the person in charge of the conveyance to station the conveyance at the place mentioned in such order and allow the inspection of the goods. The proper officer shall, within twenty-four hours of the aforementioned issuance of FORM GST MOV-02, prepare a report in Part A of FORM GST EWB-03 and upload the same on the common portal.
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3
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FORM GST MOV-03 [Written Permission]
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Within a period of three working days from the date of issue of the order in FORM GST MOV-02, the proper officer shall conclude the inspection proceedings, either by himself or through any other proper officer authorised in this behalf. Where circumstances warrant such time to be extended, he shall obtain a written permission in FORM GST MOV-03 from the Commissioner or an officer authorized by him, for extension of time beyond three working days and a copy of the order of extension shall be served on the person in charge of the conveyance.
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4
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FORM GST MOV-04 [Report of Physical Verification] FORM GST EWB-03
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On completion of the physical verification/ inspection of the conveyance and the goods in movement, the proper officer shall prepare a report of such physical verification in FORM GST MOV-04 and serve a copy of the said report to the person in charge of the goods and conveyance. The proper officer shall also record, on the common portal, the final report of the inspection in Part B of FORM GST EWB-03 within three days of such physical verification/ inspection.
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5
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FORM GST MOV-05 [Release Order]
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Where no discrepancies are found after the inspection of the goods and conveyance, the proper officer shall issue forthwith a release order in FORM GST MOV-05 and allow the conveyance to move further.
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6
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FORM GST MOV-06 [Order of Detention] FORM GST MOV-07 [Notice u/s 129(3)]
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Where the proper officer is of the opinion that the goods and conveyance need to be detained under section 129 of the CGST Act, he shall issue an order of detention in FORM GST MOV-06. and a notice in FORM GST MOV-07 in accordance with the provisions of sub-section (3) of section 129 of the CGST Act, specifying the tax and penalty payable. The said notice shall be served on the person in charge of the conveyance.
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7
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FORM GST MOV-08 [Bond]
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Where the owner of the goods, or the person authorized by him, or any person other than the owner of the goods comes forward to get the goods and the conveyance released by furnishing a security under clause (c) of sub-section (1) of section 129 of the CGST Act, the goods and the conveyance shall be released, by an order in FORM GST MOV-05, after obtaining a bond in FORM GST MOV-08 along with a security in the form of bank guarantee equal to the amount payable under clause (a) or clause (b) of sub-section (1) of section 129 of the CGST Act. The finalisation of the proceedings under section 129 of the CGST Act shall be taken up on priority by the officer concerned and the security provided may be adjusted against the demand arising from such proceedings.
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8
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FORM GST MOV-09 [Order of Demand]
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Where the owner of the goods or any person authorized by him comes forward to make the payment of tax and penalty as applicable under clause (a) of sub-section (1) of section 129 of the CGST Act, or where the owner of the goods does not come forward to make the payment of tax and penalty as applicable under clause (b) of sub-section (1) of the said section, the proper officer shall, after the amount of tax and penalty has been paid in accordance with the provisions of the CGST Act and the CGST Rules, release the goods and conveyance by an order in FORM GST MOV-05. Where any objections are filed against the proposed amount of tax and penalty payable, the proper officer shall consider such objections and thereafter, pass a speaking order in FORM GST MOV-09, quantifying the tax and penalty payable. On payment of such tax and penalty, the goods and conveyance shall be released forthwith by an order in FORM GST MOV-05. Further, the order in FORM GST MOV-09 shall be uploaded on the common portal and the demand accruing from the proceedings shall be added in the electronic liability register and the payment made shall be credited to such electronic liability register by debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act.
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9
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FORM GST MOV-10
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In case the proposed tax and penalty are not paid within Fourteen days (‘earlier seven days’ amended vide Circular No. 88/07/2019 dated 01.02.2019) from the date of the issue of the order of detention in FORM GST MOV-06, action under section 130 of the CGST Act shall be initiated by serving a notice in FORM GST MOV-10, proposing confiscation of the goods and conveyance and imposition of penalty. Where the proper officer is of the opinion that such movement of goods is being effected to evade payment of tax, he may directly invoke section 130 of the CGST Act by issuing a notice proposing to confiscate the goods and conveyance in FORM GST MOV-10. In the said notice, the quantum of tax and penalty leviable under section 130 of the CGST Act read with section 122 of the CGST Act, and the fine in lieu of confiscation leviable under sub-section (2) of section 130 of the CGST Act shall be specified. Where the conveyance is used for the carriage of goods or passengers for hire, the owner of the conveyance shall also be issued a notice under the third proviso to sub-section (2) of section 130 of the CGST Act, proposing to impose a fine equal to the tax payable on the goods being transported in lieu of confiscation of the conveyance. No order for confiscation of goods or conveyance, or for imposition of penalty, shall be issued without giving the person an opportunity of being heard.
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10
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FORM GST MOV-11 [Order of confiscation of goods]
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An order of confiscation of goods shall be passed in FORM GST MOV-11, after taking into consideration the objections filed by the person in charge of the goods (owner or his representative), and the same shall be served on the person concerned. Once the order of confiscation is passed, the title of such goods shall stand transferred to the Central Government. In the said order, a suitable time not exceeding three months shall be offered to make the payment of tax, penalty and fine imposed in lieu of confiscation and get the goods released. The order in FORM GST MOV-11 shall be uploaded on the common portal and the demand accruing from the order shall be added in the electronic liability register and, upon payment of the demand, such register shall be credited by either debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act. Once an order of confiscation of goods is passed in FORM GST MOV-11, the order in FORM GST MOV-09 passed earlier with respect to the said goods shall be withdrawn. An order of confiscation of conveyance shall be passed in FORM GST MOV-11, after taking into consideration the objections filed by the person in charge of the conveyance and the same shall be served on the person concerned. The order in FORM GST MOV-11 shall be uploaded on the common portal and the demand accruing from the order shall be added in the electronic liability register and, upon payment of the demand, such register shall be credited by either debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act. Once an order of confiscation of goods is passed in FORM GST MOV-11, the order in FORM GST MOV-09 passed earlier with respect to the said goods shall be withdrawn. The order referred to above i.e., the objections filed by the person in charge of the goods (owner or his representative), and the objections filed by the person in charge of the conveyance, may be passed as a common order in the said FORM GST MOV-11.
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Cases where in detention of goods may not be initiated:
In a case where consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, proceedings under sec 129 of the CGST Act may not be initiated in certain situations as given in circular no. 64/38/2018-GST dated 14.09.2018 such as:
- Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is correct.
- Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject to the condition that the error in the PIN-code should not have the effect of increasing the validity period of the e-way bill.
- Error in the address of the consignee to the extent that the locality and other details of consignee are correct. iv. Error in one or two digits of the document number mentioned in the e-way bill.
- Error in 4 or 6digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned is correct.
- Error in one or two digits/characters of the vehicle number.
Further it was clarified that for such cases penalty to the tune of INR 1,000/- underCGST/SGST Act (INR 500/ towards CGST and INR 500/- towards SGST) and INR 1,000/- under IGST Act may be imposed A record of all such consignments where proceedings under sec 129 of the CGST Act, have not been invoked in view of these situations shall be sent by the proper officer to his controlling officer on a weekly basis.
Detention, seizure and release of goods and conveyances in transit :
Section 129 (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 penalty equal to two hundred percent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two percent. 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 penalty equal to the fifty per cent. of the value of the goods in case of exempted goods, on payment of an amount equal to five percent. 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.
(3) The proper officer detaining or seizing goods or conveyances shall issue a notice within seven days specifying the penalty payable and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of tax and penalty under clause (a) or clause (b) or clause (c).
(4) No penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.
(5) On payment of amount referred 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 penalty as provided in sub-section (1) within “ fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3)
Provided that the conveyance shall be released on payment by the transporter of penalty under subsection (3) or one lakh rupees, whichever is less;
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 fifteen days may be reduced by the proper officer.
Action to be taken by owner w.r.t. the order :
On receiving the notice to pay tax and penalty, the owner of goods may take the following actions:
- Accept the tax and penalty
- Dispute the tax and penalty
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
✔ 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
Concluding remarks on 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).
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