“Explore the critical aspects of GST Section 129 governing the detention, seizure, and release of goods and conveyances in transit. Get insights into the applicable penalties, types of goods covered, and the necessary compliance steps. Prakasha & Co. offers comprehensive guidance on the intricacies of Section 129, ensuring businesses stay compliant with GST regulations. Stay informed and navigate the complexities of goods and conveyance detention under the GST Act with our expert insights.”
Q.1 When Section 129 invokes?.
Ans. Section 129 comes into play when a taxpayer transports any good or stores any good while they are in transit in contravention to the provision to this act or rules made there under.
Q.2 What types of Goods are covered under Section 129?.
Ans. Both Taxable and Exempted Goods.
Q.3 Is it necessary that Goods has to be in Transit for applicability of Section 129?.
Ans. Yes the Goods has to be in Transit.
Q.4 Does Sub Section (6) of Section 67 is applicable ?.
Ans. Sub Section (6) of Section 67 that is release of goods seized provisionally upon furnishing of bond and security shall not be applicable.
Q.5 Can goods or conveyance be detained or seized without service of an order?.
Ans. No the order of detention or seizure has to be furnished to the person transporting the goods.
Q.6 In how many days the notice shall be issued?.
Ans. Within Seven days from the date of detention or seizure and pass an order within seven days from date of service of notice.
Q.7 What shall be the penalty in case of taxable goods if owner comes forward?.
Ans. 200% of the Tax Payable on Such Goods.
Q.8 What shall be penalty in case of exempted goods if owner comes forward?.
Ans. 2% of value of goods or Rs 25,000 whichever is less.
Q.9 What shall be penalty in case of taxable goods if owner does not come forward?.
Ans. 200 % of tax payable or 50% of value of goods whichever is higher.
Q.10 What shall be penalty payable in case of exempted goods if owner does not come forward?.
Ans. 5% of the value of goods or Rs 25,000 whichever is lower.
Q.11 In how many days the penalty has to be paid?.
Ans. 15 days from date of receipt of order.
Q.12 Can goods or conveyance be disposed by proper officer?.
Ans. Yes the goods or conveyance shall be liable to be sold or disposed in such a manner and time as may be prescribed.
Q.13 What does the term Confiscation and Detention means?.
Ans. Detention means not allowing access to the owner of goods by a legal notice /order. Whereas the term Confiscation means expropriate the private property for public use without compensating the owner, to the public treasury by way of tax, penalty etc.
Q.14 Whether Section 129 and Section 130 applied simultaneously?.
Ans. In most of the cases related to movement of goods without valid documents particularly without e-way bill , the revenue authorities wishes to apply section 130 of the GST ACT but taxpayer demands Section 129 needs to be applied as the detention of goods allows to keep ownership and get sufficient time to pay penalty and such goods get released. The Tax so evaded shall becomes payable in GSTR-3B to be filed on or before 20th of the next month. As per our opinion direct confiscation of goods or conveyance and invoking section 130 is little bit unjustifiable.
Judicial Decision:
1. Order u/s 129 of the CGST ACT determining tax liability is bad in law and liable to be quashed. (HC)
2. Tax and Penalty cannot be determined u/s 129 if owner of goods does not volunteer to pay tax.(HC)
3. Tax Department can seize goods only in transit and not from godown.(Allahabad HC).
****
Extract of Section 129 of CGST Act, 2017
What does Section 129 say: Section 129 talks about detention, seizure and release of goods and conveyance in transit where the intent of taxpayer is to evade tax payment. The reference from the law hereby described as below:
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 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 tax and penalty;
(b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods or two hundred percent of 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 tax and penalty;
(c)(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.
(d) (2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances.
(e) (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 within seven days from the date of service of notice for payment of tax and penalty under clause (a) or clause (b) or clause (c).
(f) (4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.
(g) (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.
(h) (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 [fifteen days] from the date of receipt of the copy of 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 a manner and within such time as may be prescribed to recover penalty payable under sub section (3). Provided the conveyance shall be released on payment by the transporter of penalty under sub section (3) or one lakh rupees whichever is less.
(i) 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.
****
The above said article is author viewpoint only, please refer the respective sections, rules framed under GST .
Author Bio
The provision of security / bond under section 129 removed w.e.f. 01-01-2022. Stay money is now 25% of the penalty amount for filing appeal.