Detention, seizure & release of goods & conveyances in transit under GST

Section 129 CGST ACT, 2017 Detention, seizure and release of goods and conveyances in transit

(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.

Here sub-section (6) of section 67  is ,” The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be.

(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 fourteen 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.

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).

Relevant circulars, notifications, clarifications

Circular No. 41/ 15/ 2018-GST dated 13.04.2018.

Circular No. 49/ 23/ 2018-GST dated 21.06.2018.

Circular No. 64/ 38/ 2018-GST dated 14.9.2018.

Notification No. 2/2019-Central Tax, dated 29-Jan-2019.

Practical Analysis for Computing Tax and Penalty Payable as per Section 129 of CGST Act 2017.

Where Owner Comes forward to make the payment as applicable and Goods are

Taxable .

Amount Payable would be equal to  Tax applicable on the value of Goods + Penalty equivalent to 100% of Tax Applicable.

Exempt

Amount Payable would be equal to 2% of the value of goods or Rs.  25,000/- whichever is less.

Taxable Goods

For example- Value of Goods Rs 50000/- and GST @ 12%.

Amount Payable = 12% of 50000/+ 100% of 12% of 50000/-=12,000/-

Exempted Goods

For example- Value of Goods Rs 50000/- and GST exempted.

Amount Payable =  Lower of 2% of 50000/- or 25000/-=1,000/-

Where Owner does not Come forward to make the payment as applicable and Goods are

Taxable .

Amount Payable would be equal to  Tax applicable on the value of Goods +( Penalty equivalent to 50% of value of goods  Less  Tax as Applicable)

Exempt

Amount Payable would be equal to 5 % of the value of goods or Rs. 25,000/- whichever is less.

Taxable Goods

For example- Value of Goods Rs 50000/- and GST @ 12%.

Amount Payable = 12% of 50000/+ (50% of 50000/- 12% of 50000) =25,000/-

Exempted Goods

For example- Value of Goods Rs 50000/- and GST exempted.

Amount Payable =  Lower of 5% of 50000/- or 25000/-=2,500/-