Budget 2021- Detention, seizure & release of goods-in-transit & conveyances-in-transit

Section 129 of the Central Goods and Services Tax Act, 2017 deals with the provisions of detention, seizure and release of goods/ conveyances in transit. Budget 2021 has proposed various amendments in the provisions of section 129. The present article briefly explains all the amendments in relation to the provisions of section 129.

Amendment in payment of amount for release of detained/ seized goods or conveyance [substitution of clause (a) and (b) to section 129(1)]-

As per the proposed Budget 2021 amendment, the following penalty amount should be payable in order to release the detained/ seized goods-

• When the owner of the detained/ seized goods comes forward to pay the penalty amount-
  • In all the cases (other than exempted goods)-
    • Penalty payable = 200% of tax payable on goods.
  • In the case of exempted goods-
    • Penalty payable = Lower of the following amounts-
      • 2% of the value of goods; or
      • INR 25,000.
• When the owner of the detained/ seized goods doesn’t come forward to pay the penalty amount-
  • In all the cases (other than exempted goods)-
    • Penalty payable = Higher of the following amounts-
      • 50% of the value of goods; or
      • 200% of the tax payable on goods.
  • In the case of exempted goods-
    • Penalty payable = Lower of the following amounts-
      • 5% of the value of goods; or
      • INR 25,000.

Non-release of detained/ seized goods on provisional basis [omission of sub-section (2) to section 129]-

As per current provisions of section 129(2), on execution of bond and furnishing of specified security, the detained/ seized goods or conveyance can be released on a provisional basis.

However, budget 2021 proposes the omission of the said provisions. Accordingly, post approval of the amendment, the detained/ seized goods will not be permitted to be released on a provisional basis.

Period for the issue of notice and passing of an order thereon [substitution of sub-section (3) to section 129]-

The substituted provisions of section 129(3) mandate the proper officer detaining/ seizing the goods or conveyance to-

• Issue a show cause notice (Form GST MOV-07) within a period of seven days from the date of such detention/ seizure. Notably, the notice should specify the amount of penalty payable; and
• Pass an order (Form GST MOV-09), for payment of the penalty, within a period of seven days from the date of service of the notice.

It should be noted here that current provisions don’t provide any specified time limit for the issue of notice and passing of an order.

Recovery of penalty amount [substitution of sub-section (6) to section 129]-

Entire provisions of sub-section (6) to section 129 are proposed to be substituted vide the Finance Bill 2021.

As per the substituted provisions, in case the person fails to pay the specified amount of penalty within a period of fifteen days from the date of receipt of the order in Form GST MOV-09. Then, in order to recover the penalty amount, the detained/ seized goods or conveyance will be liable to be sold/ disposed of.

It is important to note here that if the detained/ seized goods are perishable/ hazardous the above period of fifteen days can be reduced by the proper officer.

Additionally, the proposed provisions also state that in order to release the conveyance, the transporter of the goods needs to pay lower of the following amounts-

• Penalty amount as specified in the notice/ order passed by the proper officer; or
• INR 1 Lakhs.