Section 129 under CGST Act-2017 kind of penal provision deals with detention seizure and release of goods and conveyance during transit of goods under contravention of the provisions of this Act or the rules, in fact it is critical provision, used by accessing authorities under state as well as central to prevent tax evasion during movement of goods.
Bare Act of Section 129 CGST Act-2017
This provision belongs under the Chapter XIX Offences and Penalties and containing Detention, seizure and release of goods and conveyances in transit with proceedings.
says:
(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 madthereunder, 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,-
1[(a) on payment of penalty equal to two 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 penalty;
(b) on payment of penalty equal to fifty per cent. of the value of the goods or two hundred per cent of the tax payable on such goods, whichever is higher, 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 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.
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(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, 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 penalty under clause (a) or clause (b) of sub-section (1).]
(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 such goods fails to pay the amount of penalty under 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 further 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.
In view of provision, now let us try to understand what the circumstances are when goods and conveyance are intercepted, détente or seizure by accessing authority as under;
1- GSTIN Suspended or Cancelled.
2- Bill or E-Way Bill not available.
3- No any Documents are available.
4- Where excess quantity than the quantity shown in the bill. But section 126 under CGST Act-2017 should also be observed by accessing authority which in reality does not happen, which says
Bare Act of Section 126 CGST Act-2017
(1) No officer under this Act shall impose any penalty for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in documentation which is easily rectifiable and made without fraudulent intent or gross negligence.
Explanation.-For the purpose of this sub-section,-
(a) A breach shall be considered a “minor breach” if the amount of tax involved is less than five thousand rupees;
(b) An omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on the face of record. This means any exercise to imposing penalty under section 129 of CGST Act-2017 must be taken along with section 126 of CGST Act-2017 where there is minor breach or such mistake available on face on record without fraudulent intention and should be taken only after that by accessing authority. In fact the accessing authority want to complete all proceedings in earliest without paying any attention to facts and are in gross violation of Section 129as well as subsection 4 of Section 129.
Key Provisions
1. Detention and Seizure (Sub-section 1):
A-If goods are transported in contravention of the provisions of the CGST Act or rules, they can be detained or seized, along with the vehicle/conveyance.
B-They will not be released unless:
Situation Tax to be Paid Penalty Owner comes forward Applicable tax 200% of tax payable Owner does not come forward Applicable tax 50% of value of goods (or 200% of tax,
whichever is higher
2. Time Limit for Action (Sub-section 3): If the person fails to pay tax and penalty within 7 days, the authorities may initiate confiscation proceedings under Section 130, in addition
to other actions.
3. Release of Goods (Sub-section 2): Instead of paying tax and penalty, the detained goods can be released on provisional basis by furnishing a security equivalent to the amount payable.
Legal Action under Section 129: If goods are detained under Section 129, the following legal steps may be taken
1. Notice (Form GST MOV-07): Issued to the person in charge, demanding tax and penalty.
2. Reply and Hearing: Taxpayer may respond with a justification and supporting documents. A hearing may be conducted by the Proper Officer.
3. Order (Form GST MOV-09): Final order is passed specifying the liability.
4. Appeal: If aggrieved, the taxpayer can appeal the order under Section 107 of the CGST Act before the Appellate Authority within 3 months of receiving the order.
5. Confiscation (If no compliance): If no tax/penalty/security is paid within 7 days, authorities may confiscate the goods and vehicle under Section 130.
Conclusion
Section 129 is a powerful anti-evasion tool but must be applied judiciously. Legal recourse is available for the taxpayer, and authorities are required to follow due process. Immediate payment, reply, or appeal is the available remedies.
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